The Stock Market Wizard
Presenting a consistently and dramatically successful trading philosophy and method, based upon applying truly meaningful data, discipline, common sense and the basic facts of life. Opinions, preconceived notions, arbitrary decisions, “ratings” and emotions are not part of the process.
There is actually nothing esoteric, mysterious or complicated about making enormous amounts of money in the stock market, in any economic environment. Algorithms are not required.
The first prerequisite for success is to disabuse yourself of the false, irrational and counterproductive notions that the majority of people associate with the stock market and suffer from, accordingly. One of the most common mistakes is regarding stocks to be synonymous with their companies. Clearly, the best-known or most admired and successful companies and products don’t usually represent the best stock investments at any given time. Another widely held misconception is thinking that volatility is synonymous with risk. A third myth is discarded when you realize and accept that there will never be any such thing as “the House’s money” in your portfolio. The silly concept of supposedly “using the House’s money” wouldn’t be justified or realistic, even when playing Monopoly.
Secondly, you have to ignore all of the ubiquitous and conflicting advice of the “experts”. Have you noticed, for example, that every time stocks go on sale, as they did on January 4th, 6th, 7th, 13th, 15th, 20th and 25th, of 2015; on February 2nd, 5th and 11th, and on June 24th and 27th, as well as on September 9th, of 2016, on March 21st and May 17th, of 2017 and on January 30th, February 2nd, 5th, 8th and 28th and on March 1st, 19th, 22nd, 23rd and 27th, as well as on April 2nd, April 10th, April 24th, June 25th, October 10th, October 11th, October 24th, November 19th, December 4th, December 17th, December 19th, December 21st, December 24th, of 2018 and on January 3rd, 2019, the Stock Market commentators on TV have the same ridiculous debate about whether or not to “buy on the dip”? They’re the people who incessantly report on what the Market is doing, futilely and preposterously attempt to predict the future, including the “Fed Taper” and pointlessly discuss the relative merits of the same dozen or twenty inconsequential and boring stocks every day, as if any of that is newsworthy or helpful. If it weren’t so pathetic, it would be hilarious.
Next, you need to abandon any wasteful preoccupation you have with all of the irrelevant metrics that the fundamentalists use, as well as any reliance on the pseudo-sophisticated chart-patterns that are ritualistically employed by the technicians. Some people actually make their stock-investment decisions based on the “ratings” designated by analysts and brokerage firms. One of the commonly used stock ratings — “neutral”, also known as “hold” — is patently ludicrous. Every stock either warrants buying or it should be sold, so the resultant funds can be used to buy a profitable stock. Analysts who issue a “Hold” rating embarrass themselves, by tacitly admitting that they don’t have a clue about the true merits of the stock. Once having insulated yourself from the distractions and restraints of the aforementioned negative influences, you’ll then be liberated and prepared to concentrate on pursuing the proven policies and practices that will assure your prospects for extraordinary success in the Market.
Further, it must be recognized that it makes very little difference what the Market does — unless, of course, your portfolio essentially replicates and thus, emulates, the Market; as is the case, for example, with owning mutual funds. No one ever made any serious money by owning a mutual fund, a 401(k) or an IRA account.
Then, you must logically decide which stocks to buy, when to buy them and what price to pay for them.
Finally, one must formulate a rational and productive strategy, defining the terms and conditions required for the stocks to sell themselves at the optimal time and price. Don’t cheat yourself by prematurely “taking some of your profits off of the table”.
Surprisingly, there are portfolio managers who are routinely willing to lose as much as 20% of a client’s investment in a poorly chosen stock, before acknowledging their initial mistake of buying the wrong stock at the wrong time — finally selling it and absorbing the unnecessary loss. Of course, any time would be the wrong time to buy most stocks. Ironically, the portfolio managers who work on a fee-basis actually charge those fees, irrespective of whether or not they generate at least a corresponding profit for the client.
* The price of every stock goes up and down every day. Profit can be made by trading any stock on any day — even while its price is declining. There is just one primary factor that influences the price of stocks; and there is only one metric required for consistently and dramatically successful stock-market investing, during any Market conditions.