Hey everybody, happy Tuesday. Thanks for being here. I’ll have ganja on tomorrow. We have a really good episode planned and he’s really great. He’s making great strides in his own endeavors and we have big plans for the show here. I appreciate everyone and their feedback. I it’s really quite remarkable to build a community here and give back to the community I wanted to address. Alexander left a message or comment on how I embraced the uncertainty around trading earlier in my career, and he said something that I can identify with. He said, I learned from my trading that if I watch trading psychology videos more than once a week, I needed to cut my trading size in half. And that’s kind of the truth, right? In the minute that you start to feel like you have those feeling tones in your body about maybe you’re position sizing or you’re feeling a little bit antsy, that you want to cut your risk a little bit and deal with it that way.
I think the world in the universe can give you a little feedback mechanism that way as it relates to your trading too, in that you can develop a sixth sense on and a feel for the market. I know I have that market feel that for me at least, came with lots of iteration, a lot of practice, a lot of making mistakes, a lot of going through the trades. That way over time you can develop a feel for things again, just from experience, right? So when you look at NVIDIA’s earnings last week, they had all time numbers. I’m not going to go over the specifics here. You can go read ’em for yourself, but if you watched the technicals didn’t necessarily align with how good the fundamentals were and something was awry. If you watched the previous earnings announcement in May, I think it caught a lot of folks off guard.
I can only say that in retrospect. And the stop jumped what? 26% overnight and into that following day, and I think folks might’ve been hoping for something similar. They in fact reported really, really good numbers, but the response was kind of muted when you think about the price move itself. And so when the thing starts to move like that and it’s muted, even though dollar wise, it might mean a lot to all of you from a percentage standpoint, it wasn’t that big of a percent move, at least the way I think you might feel differently, which of course makes for good horse racing and the markets seem to weaken almost right away. And so that’s why you have to be careful when you’re trying to trade these events. You need to keep in mind, okay, well where’s my uncle point? And I don’t mean uncles where someone has you in a financial or emotional headlock and you have to throw in the towel.
It just means where does it make sense for you to remove the risk for the risk that you were willing to take to be in the trade in the first place you see? And so when you don’t again see the follow through, which is something that seems to be somewhat of a theme in this type of market environment, even the darlings that put up all time great numbers from an earnings standpoint and increased the forward-looking numbers as well, you still see the thing sell off. What it went from over 500 to four 50, so it had a 10% pullback on record numbers, which doesn’t make sense when you think about it. Why would that happen? How could that happen? Sometimes that’s the way the world works as far as trading is concerned, and I remember more than one of the guys that I know who are like you would consider market wizards because they either have that ability or they were in the book itself, would say you’re looking for a spot if you’re trading stocks anyway, because a lot harder to get fundamental information on futures.
For most of you, where the fundamentals and the technicals are aligned, they do matter. Fundamentals matter. It’s harder to learn. So if most folks don’t do it like, Hey, I’m just going to be a chart reader, which okay, it’s a good way to start, but that’s a lazy man’s way of doing it. So I think after a while you have to understand some basic fundamentals because to be frank, if you don’t, you’re at a disadvantage. You’re at a disadvantage. And so sooner or later you want to fill in whatever you would consider your weakest link is, do some work towards that. It’s not going to get solved overnight, and I don’t think you need to go get the C F A because none of it really helps you with prediction. It just helps you understand the world as we are in the ever evolving moment of right now, and that could help you make better decisions.
I don’t think it helps you make any prediction, right? Seven out of eight managers, mutual fund managers don’t outperform the benchmark s and p, and they absolutely all have CFAs. That’s kind of part of having the job. They might have MBAs as well. So none of that is really necessarily a benefit until you know how to turn it into a benefit, and that’s the rub. And that to me is experience. That’s why I’ve said the best coach for you, I think in learning how to trade isn’t buying somebody else’s course. It’s you actually putting on the trades and learning how to become you as a trader.
That’s the quickest way to do it. It’s also the cheapest. And so you could consider all the money that you would pay in tuition, and I know this, I’m talking on deaf, I’m speaking to deaf ears because many of you just want to buy your way out of it, or maybe you want to get a headstart. And for as far as I’m concerned, there’s lots of videos that are available for free on YouTube that can give you a heads up on how to approach certain things, but buying somebody else’s system or buying somebody else’s work to me is precarious because there’s no guarantee that just because those rules worked for other people that they’re going to work for you just the same way. You might’ve gone on a date with somebody who was really good looking and successful, but the date was a dud. Why?
Well, there’s no chemistry, and I’ve mentioned that before. I think. So ultimately, just like your trading rules, you need to have chemistry with them. They could be really good rules and other people can be smashing it and creating outsized gains as the marketers like to say. But that doesn’t mean that it’s going to be that way for you, and you don’t want to have to find that the hard way after spending hundreds to maybe thousands of dollars to buy somebody’s technical trading rules. Again, I know people are going to do it anyway because curious, and I know from studying the marketing language on these pages, they’ll jack ’em up with trading results of other professional managers who have resources that you’ll never have. They’ll have educations that you’ll never have. Then the sites will also load up the testimonials, which may or may not be valuable, but it’s one of the reasons why we don’t really get into the how to or sell the trading setups because it’s like I have your money, and even if I could teach you 12 trading setups that I’ve used in the past six to 12 months, I could teach it off the top of my head, but you’d have to tell me in writing that you’re sending me this money with the full understanding that none of these rules might work for you because ultimately, if you don’t have it in your emotional constitution to pull them off, they could have positive expected value, but you might not have it in you to pull them off.
It requires a certain emotional constitution that either you don’t have now or you’re never going to be able to kind of grow into because it doesn’t feel good for you. And there’s no dollar amount that we can exchange between the two of us or value coming from my side and dollar value coming from your side that is going to allay any of those fears until you go and you do it. So you might not like it when I say, just go trade. And you’re like, Michael, how? And it’s like, I don’t care how, have an opinion about something. Be decisive. That’s what the best traders are doing. And if you can’t look in the world and see what other people are doing or what companies are successful, just by observation yourself, this might not be the right profession for you because ultimately there has to be a catalyst that’s going to make the stock move.
People need to want to buy it and own it and hold it, creating imbalances in the short run that lead to higher prices. But at any rate, I feel like we’re talking about trader psychology, so it’s all kind of related because I do get comments about does the online program have any actionable trading setups? One guy wrote and he said, do you have any actionable trading setups in the online program? And I said, no, I don’t because I’m not going to get into selling that stuff. I don’t want to develop that type of reputation where people send you a lot of money, and I am sure I could make millions, but to me, it doesn’t feel right if I know that the majority of the people who go buy that stuff, one might not even have the courage to try, which is funny, right? They spend hundreds of thousands of dollars on something, but they’re afraid to engage. I can’t coach that person.
I think Richard Dennis or someone along those lines had said that they could publish the rules of their trading in the Wall Street Journal and no one would follow ’em. And that’s right. I believe that. And so where we do talk about trade setups would be more in the group coaching or the mastermind because we’re there and we’re able to talk about the feelings of, okay, why wouldn’t you be able to pull this off? People would say like, oh, this doesn’t make sense. And what they’re really saying is they might understand it intellectually, but they do not have the inner strength to trade this type of style. So then we can investigate that. But I’m there to help conjugate the verbs, so to speak. If you sell someone a box of crap or just do it online, the only thing that I can do with any integrity is help you become a better version of yourself because I know how to ask those questions.
And then if you don’t do the homework, well then it’s on you, but at least there’s integrity in the system, you see. So of course those are higher price point services in the mastermind or in the group coaching, but those folks have already passed the interview, so to speak. I like to speak with everyone beforehand just to make sure we’re on the right page and just to make sure that they understand what the heck it is they’re getting into because they say you have to manage expectations. Expectations have built in disappointments, and I do not want to, I don’t need the money. I don’t need the heartache, and I don’t need people asking me for stuff where like, Hey, can we just go over this ticker symbol because I don’t, that means they’re looking to already trade it. You know what I’m saying? When someone asks you a question like, Hey, I got a quick question on Dallas Semiconductor doesn’t exist anymore, don’t bother looking it up,
Can you just go do a little review on that one? And I’m like, just buy it. Don’t wait for me to try to talk you into it. You see what I’m saying? So no one’s ever going to ask you a question about a stock that they want to avoid. You know what I’m saying? They never send in those emails. Hey, I was wondering what you think of Nvidia or that new SPAC that came out from, what was it, better.com, that was off 95%. It’s a dollar 15. And I’m not saying buy it or short it, but people don’t write in emails when they’re not of stocks that they’re not interested in. And since most people are biased long, it’s like, what’s the point of writing in the email? You’re just going to listen for what you want to hear anyway. So that’s why if you’ve written in and I didn’t get back to those emails, it’s because I know human nature and I know you’re just looking for more evidence of the four or the pro argument of why you should get into it. All that notwithstanding, this is like the psychology behind what it is that I do and what I can’t afford to give back to the community given the time that I have. Most of it’s here for free on the show, and I definitely make time to do that in a Think and grow rich kind of way, and to help people learn how to stay accountable. One guy wrote in about accountability. It’s important.
Some people allow themselves to just make bad decisions and without any, there’s no punitive damages because in the end, they really don’t care. But at the end of the day, I feel like I’m not going to develop that kind of reputation for someone who’s selling a newsletter or a watch list or do market breakdown videos because I just don’t find that they’re all that valuable. And all you get are comments and questions and more follow-up stuff that just take up more time, and no one’s really taking any action on it because they’re in their will and they’re going to do what they want to do anyway. So I would much rather create more of a premium community like we have in both the Mastermind or the groups, which really is what, two hours a week or so of my week, maybe a little bit more.
I don’t really watch the clock, but at least I know I’m with like-minded people who are out there facing the failure. They’re embracing the uncertainty, and that’s a big difference. That means the world of difference, in fact, because when I went to Wall Street, you got to remember, I tried to do a lot of different trading. I tried all the different asset classes and all the different timeframes, and it was a disaster, right? None of it worked well, some of it worked, some of it gave me evidence that there was some success, and then I still had to pan for the gold and figure that all out. But at the end of the day, you need to engage, and that’s really on you. There’s nothing that I can do to help you hold your hand with all of that. I don’t want to start down that path and develop a group of people who pay me a lot of money for handholding. Accountability is one thing, but handholding is a different ball of wax, and I really don’t want to get into all of that. But at any rate, appreciate everyone commenting and writing in and subscribing to the show. And that’s all I have for you today. I’ll be here tomorrow with Ganja, will have a good show and I’ll see you then. Take care.
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