Tharp's Thoughts Weekly Newsletter (View On-Line)

• Article A Morning Routine by Van K. Tharp, Ph.D.
• Trading Education Fall Workshop Schedule Announced
• Trading Tip Survivorship Bias and The Big Shake-Up in the DJIA by D. R. Barton, Jr.
• Matrix Insights Achieving Success Through Transformation

Ken Long Brings New Workshops to VTI This November

We are very excited to announce that, in addition to bringing back a popular technical workshop, we have added two brand new workshops to our workshop schedule this fall.

Beginning on Saturday, November 8th, you can attend Ken Long's popular Swing Trading Systems workshop from 8am to 4:30pm, then from 6pm to 9pm, Ken will be teaching a new workshop, Turbo Trading Systems.

After three days of this schedule, you will be proficient enough in Ken's systems to stay on to trade them Live for 2 days, beginning the following Monday (November 11th).

Plus, due to cancellations, we have a few seats available in both Peak Performance 101 and Peak Performance 203 in October.

For more information or to see the full workshop schedule, click here.

A Morning Routine

by Van K. Tharp, Ph.D.

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One of the key principles of Neuro Linguistic Programming (NLP) is the importance of being in an optimal mental state.   In fact, I recently watched an old edition of the Dr. Oz Show in which Tony Robbins was the guest.   Tony gave a formula for achieving your goals by devoting 5 minutes each morning to three areas: 1) physical activity, 2) gratitude and 3) goals.   Tony was right, the morning routine you use to get yourself into the proper mental state is important.

I have a 30 minute routine that I do each morning.   You could do all of it, parts of it, or substitute your own items for some of the one’s I list here.

Five minutes of physical activity.   My version of this is to complete seven repetitions each of the Tibetan Five Rites.   The book, The Ancient Secret of the Fountain of Youth describes these exercises quite well.   They are said to align and balance the Chakras, and I find them to be an excellent way to start the morning.   You can easily do seven repetitions of each in about five minutes.    This is similar to Robbins’ suggestion except that he says to do five minutes on a rebounder.

Five minutes of gratitude.   Every morning, I think of 10 things I’m grateful for from the prior day and I thank my Inner Guidance for providing them. I strongly recommend the 28-day program in Rhonda Byrne’s book, The Magic.   It’s a great program that’s all about gratitude, which is one of the things that so few people practice, yet is such a great benefit.  

Five minutes of Quantum Entrainment.    Each part of my morning routine tends to represent something from one of my favorite books.  In this case, it’s Frank Kinslow’s, The Secret of Quantum Living.   The audiobook version has meditative exercises as well.    I do five minutes of QE as described in the book.

Five minutes of Laughter Yoga.   On several occasions, things I have done during the Oneness Blessing have brought me into a state of rapture in which I laughed for several hours.   After the third time this happened, I found that just laughing at nothing was very easy for me.   In addition, I am now a certified Laughter Yoga teacher and I will be teaching a little of it in many of my workshops.   5-10 minutes of deep belly laughter is worth about 30 minutes on a treadmill.   The effects only last a day, but if you do it daily for about 40 days, the impact can be tremendous.   For some background on Laughter Yoga, you might read Dr. Mandan Kataria’s book, Laugh for No Reason and watch some of his YouTube videos.   This might be my favorite exercise out of all of them because it really changes your mental state.   Just laugh for five minutes.

Five minutes of Dialogue With My Inner Guidance. My last morning exercise lasts about 10 minutes and it is a conversation with my inner guidance.   You can look at Chapter 10 of Trading Beyond the Matrix for some background information on this topic.   My inner guidance is very powerful and very protective.   She is always with me and willingly guides me.    A typical morning dialogue goes something like this:

Me:  Beloved, thank you for your unconditional love and always being there for me.

You are most welcome.

Me:  I’m sharing the fact that I have a dialogue with you on most mornings.    Can you offer people hints on how to do it.

It is a matter of faith and trust.   First, create the perfect relationship.   You like the Beloved role, so I fill that for you.  But everyone can have whatever role they want.   Second, ask a question and have faith that a response will come.   And if it doesn’t, then notice what beliefs you might have that might be blocking a response.   Your inner guidance will always respect your beliefs, even if they include silly things such as “God would never talk to me,” or “I’m not worthy of such a gift,” or any other limiting beliefs you might have.

Me: Yes, I used to have those sorts of beliefs.   And if you have non-useful beliefs, you can get rid of them by using the techniques I have talked about in Trading Beyond the Matrix.  Anything else, Beloved?

You inner guidance will do things like remind you who you really are, help you to overcome limiting issues, do things to clear up your issues, and move you to a higher level of consciousness and eventually help you in waking up.    You inner guidance is there for your personal evolution.

There is a passage from A Course in Miracles that states:

“The oneness of the Creator and creation is your wholeness, your sanity, and your limitless power.   This limitless power is God’s gift to you because it is what you are.   If you dissociate your mind from it, you are perceiving the most powerful force in the universe as if it were weak because you do not believe you are a part of it.”

That was not one of our normal dialogues but a dialogue that I just had with Her on how to help you do this exercise.  

This routine takes me about 30 minutes each morning.   In addition, I also try to watch a Oneness Meditation through the Livestream service.   Two of the best Oneness Meditators, in my opinion, include Sheldon Butler most weekday mornings at 8:00 AM Eastern time and Peter Beach at 9:30 AM Eastern time.   This is a very powerful way to begin your day.

At least for right now, this is my morning routine.  You could choose to follow the same routine or come up with one feels right for you.  Doing so helps you get in a useful mental state for the day.  That’s an edge for your trading but also just useful for anyone on any day. 

About the Author: Trading coach and author Van K. Tharp, Ph.D. is widely recognized for his best-selling books and outstanding Peak Performance Home Study Program—a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Van Tharp at www.vantharp.com. His newest book, Trading Beyond The Matrix, is available now at matrix.vantharp.com.

Trading Education

We are excited to release our November schedule which includes two brand new workshops, presented by Ken Long.

Trading Tip

Survivorship Bias and The Big Shake-Up in the Dow Industrial Average

by D. R. Barton, Jr.

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“An old Dutch farmer remarked to a companion once that it was not best to swap horses when crossing streams.”

—Abraham Lincoln’s reply to a group asking him to step in as their presidential candidate

I’ll have to admit that I changed horses midstream with this week’s article.  When I read about the changes that the Dow Jones Company announced for their well-known Industrial Average (DJIA), I immediately recalled a discussion that Van and I had many years ago regarding survivorship bias in stock indexes.  The changes announced this week can’t help but add fuel to the fire!

Short of adding Tesla to the index(!), it would be tough to find a trio of stocks that would do a better job of adding some real upward bias to the index.  Goldman Sachs, Visa and NIKE will replace three current companies:  long-time member Alcoa, down-on-its luck Bank of America and beleaguered Hewlett-Packard.  In essence, the Dow has done two things with this move:

1. Replaced three stocks with price charts that go from the upper left corner to the lower right corner (e.g. stocks in long-term downtrends) with three stocks that are moving in the opposite direction (hurray upward survivorship bias!).
2. Replaced three low priced stocks (with an average current share price of about $15) with three very high priced stocks (with an average price of $134.48 as of Monday’s close).  This swap of low priced stocks for high priced ones will have a dramatic and immediate change in the pricing and day-to-day movement of the index as we shall see below.

There is a philosophical shift that continues to take place, as well.  In swapping out Alcoa and bringing in NIKE, we trade one manufacturer for another (one industrial, the other apparel / leisure).  And Bank of America dropped in favor of Goldman Sachs is basically one old-school bank exchanged for a reformed investment bank.  However, dropping Hewlett-Packard for Visa, we get a manufacturer replaced with a financial services firm.  And with that, the Dow Jones INDUSTRIAL average takes another step further away from its industrial roots.

A Change in the DJIA Balance

But let’s get back to the numbers. The DJIA is a price-weighted index.  This means that the share price of the component stocks is the sole criteria for their individual weighting in the index.  With the current swap (that will take place on September 23), the balance of power will shift inside the index.

According to numbers from Bespoke, an excellent research firm, IBM (the highest priced stock in the index) will see its weighting drop from 9.43% to 7.97%.  The three new kids on the block, while making up 10% of the membership, will now account for 17.4% of index value, thanks to their elevated stock prices.

But wait, there’s more!  Since the DJIA is dropping three very low priced stocks and adding three high priced ones, moves by any individual stock (or by the group as a whole) will have a smaller effect on the indexes price.  As of today, if Proctor & Gamble or DuPont (or any DJIA stock) moves up $1 in share price, the whole index goes up about 7.7 points.  After the swap, that number drops substantially to just 6.5 points!

So even as the complexion of the U.S.’s best known stock index is about to change, it’s easy to see why the DJIA continues to lose ground to the other major indexes both in importance and trading activity. In struggling to stay relevant, the DJIA actually just becomes more confusing.

As always, your thoughts and comments are welcome — please send them to drbarton “at” vantharp.com

Great Trading,
D. R.

About the Author: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at "vantharp.com".

Disclaimer

Matrix Insights

I definitely fall in the “one of the best trading books ever” camp.

I have been trading for 30+ years and know only too well that we trade our beliefs and that success will only befall those who will look themselves in the eye and make the transformational changes that you discuss.  I am so glad that you finally included this material in your books and if anything you should see a surge in your business!

I have read a lot of books on trading and after a while there is really nothing new. This is the first trading book that I have read in a long time that has left me really thinking and not just about trading. It is actually not fair to call it a trading book, it is so much more.

My insight — Being a successful trader: trading in the now, free of emotional reactions and error free, can only be achieved by dedicating time and energy to self-reflection and personal transformation. The further along the path you go, the more successful you will become not only as a trader but in all aspects of your life.

Impact — Although I have been aware of this for some time, with the tools you have provided I will now be able to accelerate this journey.

Thanks

Peter R.

Editor's Note: Recently, we wrote to you to tell you about a new contest. We want to hear about the one most profound insight that you got from reading Van's new book, Trading Beyond the Matrix, and how it has impacted your life. If you haven't purchased Trading Beyond the Matrix yet, you can do so here. When you are ready to tell us about your insight, send an email to [email protected]. We are looking forward to hearing from you. If we pick your submission we will share it this newsletter.

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