An important lesson: bad traders and investors

28 окт. 2018 г.

There so many random people starting hedge funds & all they have to do is shadow the market and voila, you are a millionaire (this is 100% true), in a batch of thousands of people some are going to be lucky - simply a normal distribution - and get better results and end up billionaires instead of millionaires.
They are certainly good at marketing and presentation all that stuff to attract dumbvestors.
Alot of people that really know this business say that 95% - or more - are complete frauds. I mean, at least they are able not to lose money.

The cool thing is they have alot of money, and this money is ripe for the picking. They almost always underperform indices, and bring so much cash in, I think in late 2017 they had over 800 billion usd into stocks. Bringing plenty of volatility and volume, so easy to just ride on their backs when something strats trending then they follow the momentum and push it strongly...

So today, let us look first at Bill Ackman. This guy became a billionaire somehow, probably just what a random normal distribution does, and he was bullish on valeant pharmaceuticals at 200$. Now what did it look like back then?

Looks like a complete bubble. He is probably one of these guys that does not believe in TA.
But any way you look at it you can clearly see it lost momentum, and it looks like a bubble.
There was 1 small support and that is it. The price skyrocketed, of course there is a strong possibility it just skyrockets down...



What did he do? Buy "the dip" at 200$, then he refused to sell because "it cannot go lower I am sure about this" and he even BOUGHT MORE "cheap" as the thing was going down. He wanted to hold it "for the long term" but under pressure and to convince investors he had not entirely lost his mind he ended up selling at something like 10-15$. Cringe.
His fortune was over 2 billion, and now he only has 1 left. He used to be called "baby Buffet". No more. People just do not understand normal distributions.

Second story.

"Vadim Perelman was a young hedge fund hot shot not so long ago, overseeing a portfolio in the hundreds of millions at the age of 31, hopping on corporate boards, and issuing lengthy slide presentations about his favorite stock picks. But then Perelman placed an enormous bet on a single company, Walter Investment Management."

Translation: Freshly out of school nerd started with wins due to how normal distribution works. He ended up with hundreds of millions quickly. And he probably considered himself a "legend". The new Warren Buffet, the genius of finance that would reinvent trading.

Let's look at the story. I cannot find the chart in trading view so it is going to be all text.
Trading legend and young prodigy Vadim Perelman hedge fund was the largest shareholder of Walter Investment Management in June 2015 when the share was quoted 23$.
Perelman’s U.S. stock portfolio has gone from $854 million in 2013, including the notional value of a large number of options, to $35 million in September 2016, SEC filings show.

Trading legends never cut losses...

THIS
ACTUALLY
HAPPENS
IN
REAL
LIFE
REALLY????

There are so many examples, but I had enough for now.

So not be one of those. Trading is easy, seriously, but some qualities are required, such as IF you go all in on something (why?) do not let it drop 95% before getting out. Or in other words, the quality of not being a complete moron.

Nothing warms my heart more than watching an arrogant fool that gets lucky and thinks he is this superhero get struck by reality and fall face first on the hard ground. If they get angry it is even better. An amazing treat.

On the flip side you might get the one that is really good but starts with bad luck, but I doubt that happens often...

I just cannot believe all these "common errors" of trading I keep hearing all the time... but then I see experienced educated professionals make them... what is this? Really?

"Oh I cannot just open a trade and forget about it or just follow my rules" why? why? People are broken lmao.

Avoid all these dumb mistakes never cutting losses not being disciplined overtrading FOMOing etc and seriously it's basically impossible not to make money trading.
Maybe I'll teach a dog or a 5 years old one day.
Oh I think Dan TheChartGuys daughter knows how to make money and she is 10. Not sure but I think that is what I heard.

Now that the crypto bubble is over, I will miss seeing a new "legend" pop out of nowhere get a lucky streak of 3-4 winners once every 3 days, call himself the son of god himself, blow up and disappear.
People that are interested in trading - I think - are less dumb than alot of the people that appear during bubbles such as crypto.

In all seriousness, I hope this never changes, thousands of morons playing with hundreds of billions of dollars, booooii I'm feeling tingles as I type this, the potential to rob them is enormous. For someone addicted to charts and that learns new things every day. Luckilly I am one of those.
I CANNOT WAIT for my trading week to start, see some fear, see some panic selling and buy these dips then run away with their money.

6 нояб. 2018 г.

Заметка

Another hot stock to add to your watchlist, it drop so much it can't go lower, the risk to reward is amazing!


Omegalul I am not making this up trading view is literally showing this as minus 100% XD


"Buy total garbage when there is blood in the street, the risk:reward is humongous"
- Warren Buffet