The internet is a weird fuckin’ place. Perhaps no weirder substrata of the internet exists (outside of being a furry?) than the world that lives on FinTwit.
If you don’t know my story I’m just going to run through it very quickly to give you a little insight. I’m in my early 30’s, I’ve been trading for 13 years, full time for five years now. I in no way shape or form consider myself a “guru”, coach, expert, or adviser. I am an individual investor/trader and do it full time. Prior to trading full time, I was a co-founder of a tech company that ended up acquired by a major tech company. I worked for said company for a couple of years after acquisition. Prior to that I dropped out of grad school at UC Berkeley, and prior to that I was a college athlete. Beyond the list, I’m super competitive, OCD, sleep about four hours a night, hate losing, and quite honestly I don’t know how my friends even put up with me. I’m also pretty minimalist and most my decisions are math driven. Speaking of math, my dad was a nuclear physicist, and I took a lot of it in school. I literally do math “for fun” just to stay “fresh.” Im a big believer in data and analytics (Analytics was a big function of what I did at that major tech company that bought us out) and use data analytics to get better at what I currently do.
I bring all of this up to give you a little bit of an understanding of “who I am.” Give you a little “life” behind the curtain (screen). I also do this as a precursor to the following statement. As “qualified” as I may seem with the above resume, I’m no where near as qualified as the actual market movers.
One of my best friends in LA is a “financial professional” who was a D1 and pro basketball player from Ivy League roots. His firm manages an incredible amount of wealth here in Los Angeles with a clients list that you would not believe. He is more neurotic and competitive than I am on my best day. I only bring this up to give you the following insight and reminder. If there is one thing that I have learned from the financial/tech worlds it’s that the elite are just that, elite.
Why is it that an industry that discards Ivy League grads from the top of their class with Adderall addictions at an alarming rate littered with snake oil salesmen (and women) that get “social clout” for their rags to riches stories?
Secondarily, why are most of these clowns online under the ripe age of 27 and/or uneducated? I’m not saying there aren’t exceptions, the best trader I know used to pump gas for a living before striking it big in the .com boom and preserving his capital long enough to amass a $40,000,000 fortune. But, the abundance of those types online is similar to the abundance of 19 year old “instagram models” that all have yacht photos. Reality is, in both cases, the Yacht’s likely owned by a 63 year old dude named Esteban, and the two posing on it are gonna head back to their shitty apartment, or worse, their mom’s house.
If I told you that you had to give your money to someone who was in charge of managing it for the rest of your life and it would be your only source of income wouldn’t you ask to see their bonafides? Wouldn’t you rather give it to the dude that went to Princeton and has been in the industry for 15+ years as opposed to the chick that drove for Uber and allegedly turned it around without ever showing you her transactions? Or the other dude that’s 20 and didn’t even go to college? Or how about the other dude that is 85% accurate but doesn’t quit his day job and can’t answer your questions in real time sometimes because his boss is around? How about the guy who tells you his losses today were actually a good thing regardless of how the market did because he could have been down a lot more? Or, my personal favorite, the dude that’s not a programmer nor has the mathematical prowess to understand a basic question about regression but somehow has developed an AI algo that you should pay hundreds of dollars for?
The point of this isn’t that I wanna bash people or tell you that everyone sucks and I’m better or anything like that. In fact, the opposite is true. You should be skeptical of me. You should be skeptical of everyone online. You should ask as many questions as you can and you should know your risks.
I was only 20 the last time the market started to roll like this and at first blush I was shocked. The best trades I made at that time were either no trades or sells. The take away from this for me was in blind bull markets everyone’s a “genius.” Everyone’s a prodigy. Everyone makes bank. And I was one of the “smart ones” at the time. I shorted the banking stocks and the housing stocks as the economy crumbled. I warned my parents to save their nest eggs and get out of equities. I was the boy “who cried wolf”, except I did it at the right time.
I will be the first to tell you that it was undoubtedly mostly blind luck. What wasn't blind luck however was knowing when to step away. For me personally, that date came September 18 2008. I’d been making a “killing” (by my standards back then) by shorting the same bank stocks that were running wild during the housing boom. Specifically I was shorting $C. The SEC put out an emergency cease to shorting of bank securities on that day and I learned the most valuable lesson in my trading career. The game is rigged, and you better learn to accept it, quickly. I’d been short from the 200 level on $C and watched as whatever gains I had were nearly all wiped out quick fast and in a hurry. The stock traded from a low of around $130 to north of $220 in a matter of a day.
FinTwit did not exist back then, and I did not have any friends that understood my plight. I was forced to absorb my emotions, take out my frustrations elsewhere. Unfortunately for me, the only things that existed back then were CNBC talking heads. And contrary to what I’d believed during my entire young trading career, I learned first hand, those guys on tv had no fucking clue what was going on.
In my case, I closed up shop shortly after seeing that entire rally in $C, and then some, evaporate less than a month later without the ability to short it. The obvious trend was down, and I was not allowed to bank it the way I’d learned how. With that understanding, I packed my bags and turned to tech. The market continued to fall for another year or so and I was able to save my nuts. Sure, I’d missed the start of the “next great bull run” by over a year. But I did not lose my worth in the process. I’d also learned another valuable lesson along the way.
Cash is More than a Position
There is an old adage that trading peeps love to throw around in times of crisis; “Cash is a position.” I used to hear it a lot back in 2008 on TV when people didn’t know what the fuck is going on, and I’ll admit, I’m guilty of using it as well. It’s catchy, effective, and makes you look like you know what you’re talking about. It becomes a “hot button” go to in times of volatility about as much as “BTFD” became a staple household during the bull run. Cash is in fact more than a position though. Cash is a peace of mind during volatility that doesn’t make sense. Last week, we witnessed a +1400 and -1400 TICK reading during the same day. That is something that I’d never seen before. You have to be a degenerate gambler to want that kind of action. After the dust settled however, you could find actual trades. So it’s important to note, cash is in fact a position, but when the time is right, you got to know where to deploy your cash. I’ll be frank, if your “guru” wasn’t telling you to sell rips, or was telling you to buy dips during that period, get rid of them.
Cash has benefits beyond saving it. Cash doubles as peace of mind and clear thoughts. having your money in cash when you don’t know what’s going on allows you to think clearly when you do. I can’t tell you the number of times I’ve lost money simply because I had an overnight bad position and felt I had to “recoup” losses.
This is the first time in quite some time that I write something about the markets that is not rooted in data or technicals. I did this as I saw more and more former members who I wouldn’t fucking trust to balance my checkbook start to post that they are “starting up a service.” I’m not going to name names but I will be frank enough to say that I found it more than alarming.
I’ll follow that statement up by saying this; I’ve been trading in front of an audience for four plus years now. I’ve never stopped anyone from leaving the group, and I’ve never asked anyone to join. I’m also very explicit to everyone who signs up that I AM NOT giving advice. I am sharing my own personal opinions and my own risk tolerance. The goal I had and have is to share actual information that I have accumulated over the course of my career and provide in depth (opinion) analysis about market conditions. Secondarily, it is my goal to share how it is that I do what I do. I want to be very clear about the next couple of messages. It is important that anyone who is reading this understands them.
THERE IS NO SUCH THING AS A COOKIE CUTTER FOOL PROOF “SYSTEM” THAT WILL WORK TO ALWAYS HELP YOU BEAT THE MARKETS
THERE IS NO SUCH THING AS A “ONE SIZE FITS ALL PROPRIETARY TRADING STRATEGY”
The reality is, trading and investing is just leveraging probabilities in your favor. The better you are at maximizing the probabilities in your advantage the better your overall outcomes will be. The worse you are at this (taking a bunch of long shots for example) the worse you will be.
In all honesty, most people won’t make it trading. Typically, and this is just my own experience, when an individual signs up, I’m able to tell whether or not that person will make it within three days. If I feel they are not fit, I ask them to take a refund and explain why. Secondarily, if I believe someone will be a detriment to my ability to perform, or others’ ability to perform, I remove that individual. I find it incredibly valuable that in environments such as a “trading group” that everyone is on the same page.
Undefeated, Neva Loss
With any “trading service” the bread and butter of what you are paying for is an individual’s ability to know when to go in, when to sit out, when to go big, and when to get out. You are not paying for anything else other than that. The returns are (mostly) arbitrary when it comes to these “services.” That’s not to say that returns don’t matter, they do. I’m just saying more important than the “returns” are their consistency and loss prevention associated with keeping them. Any idiot can go on a heater and show you how well he once did. Most can’t keep the gains from that heater and end up pissing their money away.
You notice how more and more people are starting to tell you they’re gonna help you beat the markets now that it’s gone to shit? That’s not a coincidence. You notice how more and more people are “taking breaks” because they’re “worn out” now that the market has gone to shit? That’s also not a coincidence. You notice how the dudes that got used to buying the f’n dip are suffering some of their worst losses of their trading careers? That’s not a coincidence.
As I’ve said, the above is the focal point for why I felt the need to write this. I’ve seen more shit-heads who have no business trading, let alone taking your money for it, offer up “services” as of late. I’ve also seen a shift in the FinTwit environment (though I’m not really buddy buddy with the majority of those totem heads on it) that doesn’t want to be caught “wrong.” You can ask any of my ex girlfriends, I am the poster boy for making mistakes. It is okay to be wrong, and it is okay to make mistakes. So long as being wrong doesn’t cost you and your mistakes are small, you’ll be okay.
I don’t follow fin twit like most of you. I use it primarily for trending topics and to share ideas. I’m not “buddy buddy” with most on there and I don’t really care to be. I made the mistake of letting one person know real details about my life in 2011 and the dude showed up to my office in Santa Monica (he was from Miami). Since then, I’ve take strides to veil my life from the digital world. For example, every account I have is registered in my lawyer’s name or my best friend’s name. I have my own life and don’t really care to have a virtual one as well. Since 2012 however I’ve been able to get to know 1SimpleTrader pretty well (by virtual standards) and he’s been as close to a friend as I’ll ever have on here. It got to a point that people believe(d) that he and I are the same person. We are not. I’ve never met the dude.
The fundamental difference between he and I, at least online, is that he’s actually a nice dude and I couldn’t give less of a shit of what “Sheldon” from Biloxi Mississippi thinks of me or what he has to say. In terms of the internet, if you’re not adding value to my monetization goals, or aren’t clever enough to understand sarcasm, go away. I don’t care for your hot takes. That’s not to say I can’t be cordial, I just don’t care, everyone online is just text on a screen.
I bring all of this up because many have of you have slid into my DM’s asking me about him. He is alive and well. He’s been around in our group charting, trading, and bullshitting with us daily. This morning he nailed LULU and PG. I sat idly and watched for once.
To answer the questions, he’s taking a break from FinTwit to avoid a lot of the negativity out there and criticism that caused him to second guess his ideas. In this environment none of you idiots know what is really going on and the attitude doesnt help. I bring this up because that dude has always been super helpful to many of you and the “thanks” he got once shit started to turn is trolling, disrespect, and unnecessary criticism. He could very easily misrepresent himself like many of the fucking twats on FinTwit but chooses to be kind and transparent (I happen to choose “fuck off” but that’s just me). For his helpfulness and transparency, he’s left with the cantankerous, cave dwelling, entitled attitude that does him, or anyone for that matter, no good.
The main point I’d like to make here moving forward is that a majority of what you see on the internet is not real. It doesn’t take a genius to tell you this, and frankly, many of you know this. Ask questions, be critical, and be selective. Don’t expect anything for free and don’t expect anyone to owe you anything. If someone’s nice enough to try to help you, don’t be an asshole. If someone’s super young and “super great” be careful. If someone’s not quitting their job to do it full time, ask why? Hope this helped.
Be skeptical and be careful.