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1/Mini rant-so all the people saying "we invest in the future" "people think linearly but things move exponentially" and stuff like that are all smoking crack.
Yes, some things-both industries and products-do indeed grow into their valuations and become the future...but
Yes, some things-both industries and products-do indeed grow into their valuations and become the future...but
2/that has always been the case. Literally in all of history the future was hard to discern, the winners won, and the losers lost. Yeah no shit right?
So what makes right now so much greater of a time? Like why tf can you see the future now and everyone else is wrong now?
So what makes right now so much greater of a time? Like why tf can you see the future now and everyone else is wrong now?
3/and this goes 10x for the public market, aka non-control, investor. Like maybe you are right on the future but maybe you are not. In the end you are trading the mo-momentum, also referred to as momo, and hoping, and I cant stress HOPING enough, that your picture is accurate
4/but since you are riding the great wave of momo then please for the sake of risk management realize this. You really dont have a time machine right? If you do then dont listen to me but also just buy lottery tickets.
But seriously way too many investors have become believers
But seriously way too many investors have become believers
5/in this game becoming a believer is the #1 way to blow up. Whether it was a value guy saying "f it maybe Lampert really can fix SHLD" or if you were one of a bagillion people back in 2000 who thought "this rando .com is the future" They all got too mentally invested in the idea
6/the idea doesnt know you and you cant force it on the masses to make it happen.
idk I see a lot of people trading like high growth+momentum investors but they dont realize it. They really think their insights are that much better than everyone elses.
idk I see a lot of people trading like high growth+momentum investors but they dont realize it. They really think their insights are that much better than everyone elses.
7/sometimes your insight really is that clear but when it is not you blow up. We know the math right?
If you are down 20% you need 25% to get back to breakeven. If you are down 50% you need 100%. If you are down 70% you need 233.33% just to get back to even. Down 90%=900%. Crazy
If you are down 20% you need 25% to get back to breakeven. If you are down 50% you need 100%. If you are down 70% you need 233.33% just to get back to even. Down 90%=900%. Crazy
8/so this is my weird rantish plea to realize that you could be wrong, in fact that you will be wrong at least sometimes, and that just because XYZ stock is awesome and is the future and whatever, does not mean that it really is or that it will come back and make you rich.
9/go study ANY raging bull market. EVERY SINGLE ONE had people, perfectly smart people, many from Harvard and Stanford even, who thought "this time is different" and we know how that worked out EVERY SINGLE MOTHER F'ING TIME.
10/we went from horses and buggies to the F'ING engine, way bigger jump than to EV, like light years larger, and most people lost their ass.
We went from the ground to flying in metal tubes if the damn air. Like WTF? Guess what? Most of them lost their ass, and most still do.
We went from the ground to flying in metal tubes if the damn air. Like WTF? Guess what? Most of them lost their ass, and most still do.
11/you want mega innovation? Go find a 100 year old and ask them about getting plumbing in their house? Holy shit they went from outhouses to plumbing. WAY WAY WAY more transformational than anything right now.
But most people lost money in the next downturn.
But most people lost money in the next downturn.
12/this is how it always is. This is also why risk management is a thing.
If you invest in great sounding ideas that are not yet fundamentally sound then learn what position sizing, liquidity, and stops are. No shame in selling and buying again later.
If you invest in great sounding ideas that are not yet fundamentally sound then learn what position sizing, liquidity, and stops are. No shame in selling and buying again later.
13/even if theres a little embarrassment in it, there isnt, it is still WAY better than losing it all. Or losing 90% of it. Dont be one of the housing asshats from 07 who said "no one loses $ in housing" and then proceed to go BK. BK sucks. Both bankruptcy and burger king tbh
14/oh and if you are a value guy and think "yeah Dave if torching the TSLA/BTC bros" you are only half right. If you are not a control investor you do not actually know what you own. You might know a lot but let me ask you what is more important to WarrenB, your king and leader?
15/rule #1 and #2 or "You’ve got to be prepared when you buy a stock having them down 50 per cent or more and be comfortable with it — as long as you’re comfortable with the holding." which is directly at odds with Rule #1 and #2?
The rules are more important. That is the answer
The rules are more important. That is the answer
16/"no, but I buy companies below their intrinsic value" you say. LOL who tf picks "intrinsic value?" Not you that's for damn sure.
So maybe you too might want to look in the mirror and figure out your risk management. Because if you are wrong then intrinsic could be $0
So maybe you too might want to look in the mirror and figure out your risk management. Because if you are wrong then intrinsic could be $0
17/but for real this happens. Remember that Eddie Lampert dude? Sure he still has a billion or 3 and sure he talked himself out of a kidnapping...wtf was that? But anyone who said "SHLD will work out or whatev cause it has to be worth something" got their ass handed to them
18/not Eddie though. He was a control investor and created bagholders out of the people not named Eddie. For real lot of people lost their asses cause of the "intrinsic value" or some bs.
Risk management yo. It is a thing no matter who you are.
Risk management yo. It is a thing no matter who you are.
19/ Larry Hite, a Market Wizard LTTF-long term trend follower has a GREAT quote that applies to us all and is the gospel truth.
“I have two basic rules about winning in trading as well as in life: 1. If you don't bet, you can't win. 2. If you lose all your chips, you can't bet.”
“I have two basic rules about winning in trading as well as in life: 1. If you don't bet, you can't win. 2. If you lose all your chips, you can't bet.”
20/Regardless of your strategy you must make sure you cant lose too much. You can actually mostly control this minus gaps and slippage. So take care of it.
After you do that get back to divining the future, finding intrinsic value, or whatev
As Mando would say "This is the way"
After you do that get back to divining the future, finding intrinsic value, or whatev
As Mando would say "This is the way"
21/As Yoda would say, aka Ed Seykota,
“Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.”
“Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.”
22/He was 100% right.
Anyways I have other stuff to do. That was my risk management/anti-believer rant for the night.
xoxo
Anyways I have other stuff to do. That was my risk management/anti-believer rant for the night.
xoxo
