Tharp's Thoughts Weekly Newsletter (View On-Line)
Beat the market and even earn absolute returns with longer-term trading systems. You can now stream the digitally recorded Core Trading Systems Workshop and download the companion documents for a special introductory price. Learn five trading systems from the dynamic Dr. Ken Long in your own space, at your own pace!
One of the primary objectives of longer-term systems is that they require less management than shorter term systems. Ken's Core Systems can be operated outside of market hours in less than an hour per month.
At $1,295 it's half the cost of the live workshop. Plus, for a limited time...
...we are releasing it for only $995!
We've complied all you need to know about this new offering. Go to www.vantharp.com/products/core-workshop-video-home-study.asp
For a short video overview about the course, click here.
Online Courses — Thank You For Asking
I’ve always been very pragmatic about my approach to the markets and to the trading education business. Does it work? Is it useful? Can I get 2-3R for it if I decide to take the risk? And this is an approach that most of you should take in your business as well as in your trading. Let me illustrate a way that I apply that principle to running the Van Tharp Institute.
Over the years, I have received many requests to present workshops overseas. Traveling, however, is expensive and time consuming; so I have made my consulting rate fairly high. If someone wants to pay my rate for 3 days plus provide all expenses, then it’s a low risk trip. If I want to visit the particular location and I have expenses covered, then I’ll provide my consulting or do the workshops. Also, I no longer like to do translated workshops because I have no idea whether the translator is really conveying what I intend to say. Since Tharp Think and its related terms probably aren’t part of the local language vocabulary, quite often the translation is inaccurate1. Once, for example, positive expectancy was translated to “having a positive attitude.” As a result, I’ve only done a few translated talks over the last decade.
Between the transportation, lodging, conference room, and printing, the costs for our overseas workshops are quite high so we consider very carefully presenting workshops abroad at all. About five years ago, I decided to do a workshop in Singapore and our experience there shows the risk we face. We had a local organization help us with a pre-workshop talk and they even sent two people to attend the workshop. In addition, about 75 people in our database responded to a survey indicated they would attend a workshop if we held one on in Singapore. But saying “yes” in an email survey and actually committing time and money to a workshop are two different things. In the end, only about 15 people attended - including the two from the sponsoring organization which allowed us to barely cover our costs on that trip. Even though my wife is a Singapore citizen and I’d love to do workshops there regularly, without a positive R multiple setup, we have not taken the risk to go back there again for any more workshops.
On the other hand, we regularly get great attendance at workshops in Sydney and Berlin. We return to those cities almost every year because 1) it makes sense financially, and 2) I like going to these locations. Also, I currently have 4 German Super Traders and 4 more living elsewhere in Europe. We now have 7 Australian Super Traders. Having workshops closer to their homes helps this group of important clients. (We will be back in Berlin this coming September.)
We have a similar situation now to overseas workshops and it involves some risk to our business model. Over the last couple of years, we have received many requests for online workshops. I have often heard people say, “I can’t afford to take that much time off and travel so far for a live workshop.” I understand that, travel is expensive and time consuming for me too.
As a result of these requests, we are converting some of our workshops into an online format – which is less expensive and won’t require any travel for you. Our first recorded workshop we offered online was the Tharp Think workshop. We are now trying another online format for a workshop with the Core Trading Systems workshop from Dr. Ken Long.
Core was the workshop everyone wanted online because even if you can only spend about an hour a month managing your positions, you can still be successful (i.e., beat mutual funds or major indexes) with these systems. The online course is about half the price of the live workshop and you can watch it as many times as you like during your subscription period (one year). In addition, the online students get the same basic set of materials that the live workshop students received.
How will these online courses do? We don’t know yet. So far, we would have been more financially successful to keep Tharp Think as a live workshop rather than converting it to an online course a year ago. The online version of the Core Workshop is off to an OK start but it will take some time before we know if or how successful it will be. Success would be a 2R or 3R trade where 1) we get more business from our online course than the live workshop and 2) it covers our direct costs and provides some margin so we can continue to deliver quality products to you.
Will these online courses offer the potential for a 2R or 3R trade or will they be like my Singapore trip a few years ago? Your actions will let us know and help us decide which direction is best – produce more online courses or continue with the live workshops.
Either way, I am very grateful for your business and I’m grateful for your requests which help make our company better. We will continue our mission here of helping people transform themselves through the trading metaphor in ways that make the best sense for you and for us. Thank you very much.
1. This might also be true for overseas translations of my books, but that’s in the publisher’s control, not mine. My understanding is that one translation of Super Trader in Chinese is something like: “When you think positive you will get a good result.”
Combo Discounts available for all back-to-back workshops!
See our workshop page for details.
The Bull Still Runs
Global Data Supportive — For Now
The S&P 500 made new all-time closing highs on Monday and Tuesday of this week. As I’ve written several times, we have had a long up-move whether counted from the 2009 post-recession lows or the 2011 post-presidential election lows. Polls of both the pundits and retail public show that the majority think stocks are overpriced — yet they’re still bullish on the market.
How long can this bull continue to run?
The long-term mantra of central bank quantitative easing (QE) continues to play a central role. Even as the Fed continues to taper (but remember they’re STILL buying $45 billion of assets per month), the European Central Bank this week reiterated Draghi’s famous “whatever it takes” stance.
While analysts can argue over whether this economic recovery is strong or tepid, the widely discussed Purchase Manager’s Index (PMI) shows global private sector purchases increasing their rate of growth, especially in Europe.
Let’s dig into how PMI is calculated, what it tells us and then look at an interesting graphic — a heat map that shows the global trends for PMI in all 74 categories over the last two and a half years in a very cool way.
PMI – What It Tells Us, and What It Doesn’t…
I’ll try to make this part as quick and painless as possible — however, it is useful to understand how we get the PMI numbers so we can use them properly.
Two different organizations report PMI numbers. In the U.S., the Institute for Supply Management (ISM) conducts its survey of supply chain managers. Globally, Markit (along with various partners like Bloomberg and HSBC) assembles another set of numbers.
The ISM asks between 300 and 400 private manufacturing organizations to give a qualitative measure of five different areas, for the current month only:
- New Orders
- Supplier Deliveries
For each area, the respondents answer with only one of three responses — either “Better”, “Same” or “Worse” versus last month. Responses for five categories are equally weighted, collated, put through an additional statistical diffusion filter and then rated on a scale where:
Above 50 = Expansion
50 = No Growth
Below 50 = Contraction
The ISM also produces a PMI for services based on the first four questions (inventories are excluded) but it gets less attention than the manufacturing index.
Markit actually asks the same categories of questions of its survey participants globally as the ISM does, but weights the answers differently in their calculations.
Even with this basic understanding of the PMI calculations, we can see that it’s a fairly blunt instrument. The indexes show no quantitative differences — e.g. a “better” answer for the new orders question could mean slightly better than last month or massively better, but both scenarios garner the same response in the survey.
With that said, the PMI data does provide a useful qualitative look at private sector business and shows some indication if it’s expanding or contracting. Let’s look at a very broad swatch of data to see where we have been recently and where we stand currently.
Lots of Data and A Few Conclusions
Fair warning — there’s a bunch of data in the chart below, however, I believe the color-coded heat map format makes it fairly easy to get the main points. Take a look and then we’ll draw a few conclusions:
(To see a larger version of this chart, click here.)
Here are a few things that jumped out at me in the chart:
- Only 13 out of 74 categories are currently below 50 (or in “contraction” phase). This shows relatively good growth throughout much of the globe.
- Eurozone countries have shown a strong recovery from their 2012 lows with the exception of the construction sector.
- Overall numbers are showing expansion — services are at 53 and manufacturing is at 52
- Caution flags:
- Japan is really struggling with services and manufacturing, both in contraction.
- China manufacturing shows a continuing contraction for the last three months which has also been getting slightly worse during that period.
The Bottom Line
The continuation of two primary market driving factors - central banks still showing strong QE tendencies and global PMI data holding in expansion mode - points to no imminent demise for this bull.
There’s a definite yellow flag, however — the bifurcation between the blue chips + broader large caps (Dow + S&P both making all-time highs) versus the small caps + tech (Russell 2000 + NASDAQ definitely off their highs). Beware, this yellow flag could turn into a red one very quickly...
As always, your thoughts and comments are always welcome - please send them to drbarton “at” vantharp.com
The Strangest Secret
Dear Dr. Tharp,
I’m new to your material but not new to the world of personal development in relation to trading. For over a decade I’ve pursued the embracing of my real ‘self’; The ‘self’ I know that is free to trade unencumbered by negative thoughts and unhelpful beliefs; the ‘self’ that I know would fully welcome financial freedom though successful trading. For many years I too have believed that psychology plays a huge part in our trading success. My path towards my desire for a transformed ‘self’ has led me to some of the greatest documentation ever produced on personal development. I’ve read everything in my library multiple times and taken numerous programs specifically geared towards personal development. I actually love the process.
What’s common in so many of these personal development products is the focus on your thoughts. Earl Nightingale’s ‘The Strangest Secret’ comes to mind. This wonderful audio program produced well before I was born represents, in my opinion, the common thread between many personal development materials. As Mr. Nightingale puts it: “You become what you THINK about most of the time.” OK, great. How, you ask, does this relate to “Trading Beyond the Matrix”?
As this is the first book I’ve read by you, I don’t know if you address what I’m about to discuss in your other books, I presume you do. But nonetheless, you take a different approach to this concept that for me makes all the difference and is definitely the best insight I’ve had in a long time. Your slight variation on the wording of this common thread is, in my opinion, brilliant.
When I read your statement, “You don’t trade the markets, you trade your beliefs about the markets.” I was blown away. For me this statement becomes even more profound and stimulates my mind more if it reads as follows: You don’t trade the markets you trade your beliefs. And leave it at that. By leaving out the last few words “about the market”, I am free to realize that my trade results are impacted by all my beliefs such as: I believe that I am a father that needs to provide a certain lifestyle for my family. Or I believe that I only have a few more years to get this right before retirement. Or I believe that if I can’t make millions trading, then I’m a failure and my dream of living financially free will escape me. When I trade, I’m trading all these beliefs and more. These are beliefs that I can now analyze with the tools provided in your book to see if they are useful and, if not, say goodbye to them.
For so many years, I’ve read and believed that it is my thoughts that make me who I am. And I still ‘believe’ this to be true. But for me, even though thoughts form our beliefs, everything makes so much more sense and becomes so clear if I just replace the idea of ‘thoughts” with ‘beliefs’.
If Earl Nightingale said “You become what you believe” or if Napoleon Hill’s book was called Believe and Grow Rich, I, for one, would have taken away a completely different experience.
When Napoleon Hill says: “Anything the mind of man can conceive and bring itself to ‘believe’, it can achieve”; I conjure up thoughts about the future. I see the word ‘believe’ but the way it’s written, it forces me to envision something in the future and try to believe it can happen, like man going to Mars someday. Although, it uses the word believe, it doesn’t evoke any reflection of the past and how our beliefs impact who we are as people or as a traders.
It is amazing how a single word, read at a time when my mind was ready to see it, can make such a profound impact.
As I write this the trading day is over. It wasn’t any old trading day. It was a big FOMC trading day. And only yesterday I was reading your book and the part about “we trade our beliefs” stuck with me like red on a down candlestick. Under normal circumstances I would be convinced that the market would make a nice little correction today based on the FOMC information. I would typically trade this belief and start the day on the short side even though my system is very clear and has very specific trading rules. Why? Because my belief was that strong. But less than 24 hours ago I was reading your book and I quickly became impartial to the markets and realized my beliefs could jeopardize my trading results. I now believed that I don’t have a clue about the direction of the markets. They could go up, they could go down, or maybe they could just sit there. With this new belief about my utter inability to predict the direction of the market, I traded like I have never traded before. I traded my system, not my beliefs. I made 2 system generated adjustments to my options position and they were ultra-precise. I executed them exactly as my trading plan outlines regardless of an FOMC day. As it turns out, I was on the wrong side of the market when the FOMC information came out and again made another surgically precise adjustment to my options position according the specific instructions in my trading plan. The entire time I was very calm and went with the belief that, I truly believe in my system and can trade my system exactly as it was designed. By the end of the day, my position exceeded my desired profit target and I exited the trade.
There is so much more in your book “Trading Beyond the Matrix”, and I have gained more insights than the one outlined above, but this one is so profound for me and came about from such a simple, new understanding of word phrasing.
Congratulations and my sincere appreciation on a beautiful book.
Enter the Matrix Contest for a chance to win a free workshop!
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 would like to enter, send an email to firstname.lastname@example.org.
If you haven't purchased Trading Beyond the Matrix yet, click here.
For more information about the contest, click here.
Everything we do here at the Van Tharp Institute is focused on helping you improve as a trader and investor. Consequently, we love to get your feedback, both positive and negative!
Send comments or ask Van a question by clicking here.
Also, Click here to take our quick, 6-question survey.
Back to Top
Email us at email@example.com
The Van Tharp Institute does not support spamming in any way, shape or form. This is a subscription based newsletter.
To change your e-mail Address, e-mail us at firstname.lastname@example.org.
To stop your subscription, click on the "unsubscribe" link at the bottom left-hand corner of this email.
How are we doing? Give us your feedback! Click here to take our quick survey.
800-385-4486 * 919-466-0043 * Fax 919-466-0408
SQN® and the System Quality Number® are registered trademarks of the Van Tharp Institute
Be sure to check us out on Facebook and Twitter!
Back to Top