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This week's trading tip includes an exercise assignment by Dr. Tharp.
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Tharp's Thoughts
Inbox Mentoring
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Feature: A Sizzling Bull Market Propelled by Both Tax Reform AND…, by D.R. Barton, Jr.
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Workshops: Blueprint for Trading Success in Feb in the US and Oct in London
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Tips: Make Friends with Your Inner Interpreter, by Van K. Tharp, Ph.D.
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Our mission at the Van Tharp Institute is to help people transform themselves, and the Peak Performance 101 Workshop is the key workshop we use to teach people how to do it. If you learn how you control your own trading results, you've accomplished something that will help you immensely, plus, this workshop is also a prerequisite to applying for our Super Trader Program. Peak 101 and Blueprint for Trading Success are presented back-to-back in February. This is the only US presentation of Blueprint in 2018. We encourage you to take action now. These two workshops have the potential to change the way you trade, and as so many students report, the way you live your life even aside from
trading. (Note: Peak Performance 101 will also be held in Sydney, Au in March).
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A Sizzling Bull Market Propelled by
Both Tax Reform AND…
by D.R. Barton, Jr.
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An object in motion tends to remain in motion until acted on by an outside force.
—Simplified version of Newton’s First Law
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As a basketball player who is literally more than twice as old as many of the people I play against, I have to provide my team with a reason to give me playing time.
It’s pretty simple, really. I can still shoot 3-pointers.
For those not familiar with basketball, there are three possible ways to score. If you are fouled and make an unguarded free throw (15 feet from the basket), you are awarded one point. Making a shot during regular play within 19’-9” of the basket and you get two points. If you make a shot that is 19’-9” or longer, you receive three points. Here’s the layout of a typical basketball court:
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Since the longer shot receives a 50% premium over the shorter ones, the ability to make those 3-point shots with some proficiency is a sought-after skill. Because 3-pointers are my specialty, it’s pretty easy for me to find playing time on most teams.
That’s my main thing… however, by adding an extra tool to my scoring toolbox, I become even more valuable. So in addition to hitting a relatively high percentage of 3-pointers, if defenders rush out to me too quickly, I can still make a quick move and blow by them for a closer shot.
So my tools include both a 3-point shot and a quick move to the basket. This “both and” combination keeps me playing when most of my peers have hung up their sneakers.
Today, the U.S. stock market has this “both and” effect working for it. And it should keep it moving to the upside despite many pundits thinking that the bull market should hang up its sneakers.
Both And…
The most influential current driver of this bull market continues to be the promise of tax reform, one of the three legs of the Trump Growth Narrative that has been the market’s primary driver since November of 2016. (For curious minds — the other two legs of the narrative are reduced regulation and increased infrastructure spending.)
Here’s why I believe tax reform continues to be the most significant market driver. In classic fundamental analysis, a stock’s price should be the net present value of all future cash flows. Said another way — today’s stocks price should reflect the value of all future cash generated by the company discounted back to today’s dollars.
It’s quite a theoretical exercise to figure out how much extra cash flow the reduction to a 21% top tier corporate tax rate will make. Especially when you add in the effects of accelerated depreciation and the tax holiday for repatriation of corporate cash held overseas and other less impactful items…
Moreover, until companies start reporting their earnings results under the new tax regime, analysts won’t have a full picture of the potential effects of the tax law changes.
And while we’re getting some idea of what to expect during the current earnings season, it won’t be until next quarter when we start to see actual results that are reported under the new law. And I firmly believe the market is still undervaluing the real impact of tax reform.
However, there are astute analysts out there who have come out with numbers to show that the strong first three weeks of 2018 are not because of tax reform, but are just the results of continued strong earnings and robust global economics.
Johnathan Golub, the Chief U.S. Equities Strategist at Credit Suisse just published some fascinating data backing up that claim.
AND…
Golub says that the year-to-date (YTD) market run-up has more to do with global economic strength than the tax cuts. He provides this chart to back up his assertion:
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The EM in the chart above is the Emerging Market returns, while US is, well, the U.S. and EAFE represents Europe and the Far East.
Golub is quoted in the Financial Times, "if taxes were the driver, the US would be outpacing other regions."
Also, Golub claims that YTD returns can be more attributed to interest rate sensitivity than to tax impacts. He provides this chart to defend his position:
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Business Insider quotes Golub’s description of the chart saying that if taxes were spurring the stock market's strength, "sectors benefitting more from tax changes would be leading sectors with smaller tax burdens (lagging)."
Instead, we see interest rate sensitivity being the vital factor.
My conclusion? Like my 3-point shot punctuated by an occasional drive to the basket, I believe we’re seeing a “both and” market. A market where both tax reform and global growth are driving the broader market. AND a market where sectors that will be hurt by rising interest rates are being pushed aside early in the year.
The bull rages on. We’re seeing historic numbers like the most consecutive positive months since the 1950s and the S&P 500 index above its 50 day moving average by more than 5 ½ % (which I believe is the most significant gap ever).
So yes, we’re due a pullback. And a drop of 3 – 5% would be healthy for the market so that it can make the next push up. However, a monumental drop from these levels would have a very low probability because as I’ve said many times, broad market indexes just don’t like to crash from all-time highs.
I always love to hear your thoughts and feedback — just send an email to drbarton “at” vantharp.com.
Great Trading,
D. R.
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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 analyst on Fox Business' Varney & Co. TV show (catch him most Thursdays between 12:30 and 12:45), on Bloomberg Radio Taking Stock and MarketWatch's Money Life Show. He is also a frequent guest analyst on CNBC's Closing Bell, WTOP News Radio in Washington, D.C., and has been a guest on China Central Television - America and Canada's Business News Network. His articles have appeared on SmartMoney.com MarketWatch.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at
"vantharp.com".
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Did You Miss The Cryptocurrencies Webinar?
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Make Friends with Your Inner Interpreter
by Van K. Tharp, Ph.D.
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Some of you may have seen this exercise before (it's in my book Super Trader), but our experiences change over time, so exercises like this are worth repeating.
Think about some problem you have with your trading. It could be almost any problem. Perhaps you have trouble taking profits too soon. You might get angry when a trade gets away from you. Perhaps you frequently second-guess yourself. Whatever your problem is, write it down. You can apply this exercise to almost anything that you think might be a problem.
Once you have that problem, write down several statements about the problem. Why do you think you had the problem? What caused it? What’s your reaction to the problem? Your statements could be almost anything. You might say things like: “Why do I keep doing that?” “That behavior just shows that I’m stupid.” “I just can’t seem to control myself.” “The problem is really nothing, but it just seems to repeat itself continually.”
These statements are all your interpretation of the problem. In fact, without this interpretation, you probably wouldn’t even have a problem. Thus, perhaps it’s important to now work with your inner interpreter.
You need to use your imagination with this exercise. Be willing to play like a child.
- Now that you have listed a problem and some statements about it, ask yourself how you can best explain the way the problem happened. Perhaps you’ve already done that with one of your statements. If not, that’s your next statement. Write down what you hear. Also, notice the qualities of the voice making the statement. Where do you hear the voice—which direction does it come from? Whose voice is it? Is it your own? Is it someone else’s voice?
- Now find two more problems and repeat step number one. Make sure that the problems have some emotional significance for you.
- Look at the three statements you’ve written about how your three problems happened. What do they have in common? Also, notice how permanent and how pervasive the statements are. Also notice the overall personality behind the voice.
- Rewrite the three statements and make them more optimistic, specific to a time or occasion, and to the place that they happened. Also, make them impersonal to separate them from your behavior.
- Let’s assume that a part of you—your inner interpreter—is responsible for these statements. Where does this part of you seem to live? Notice, once again, where the voice seems to come from.
- Think of this part of you as a friend that you created for some positive intention. Thank your part for helping to bring you to where you are today. It’s been a friend to you, and you need to acknowledge it.
- Once again, now that you are in communication with your inner interpreter ask it to come up with some even more positive excuses for your three experiences.
- Move your interpreter voice to some other part of your body—say your right shoulder. Change the tone of the voice. Make it sound like a cartoon character or a celebrity that you like. Try moving it again and giving it still another new voice. Listen to that voice go over your new excuses and perhaps some even more optimistic ones.
- Notice how you feel about your interpreter now.
- Now let your inner interpreter go to where it feels best. That may be its original spot, or it may be some new place in your body. Give it the voice you find most reassuring.
If you get stuck in this exercise, it is okay to make up an interpreter. When you do so, it will still have a beneficial effect. In fact, you really never make up anything. When you make something up, you are just bringing it up from your unconscious mind.
You’ll find that you suddenly have much more control over your feelings when you do this. Your interpretations are never reality. Instead, they are just judgments, feelings, or beliefs about some particular event. They feel real because they give you an emotional response. However, emotions have nothing to do with reality. They are simply coming from you.
The nice thing about such interpretations is that they are changeable. They cost nothing to change but give you tremendous benefits. It’s now time to put your inner interpreter on your side. After all, it is your friend.
Here’s how one person, let’s call him Bill, went through this exercise. When he thought of a problem, it was the criticism he got from his spouse whenever they talked about trading. He could hear her voice in his head, saying, “trading is nothing but gambling — it’s a waste of time and has no redeeming values."
When Bill wrote down some statements about the problem, he came up with the following.
- I married the wrong woman. She’s an idiot, and she just doesn’t understand.
- Her parents instilled an old work ethic in her and trading doesn’t fit that work ethic—that’s why she gets upset.
- She wants security, and she doesn’t feel comfortable when I tell her about trading.
He noticed that the voice was kind of high pitched and always seemed to come from the right side of his head. It even seemed to be coming from an elevated position down into his head. When he repeated the exercise with several more problems, the voice had the same qualities and came from the same place.
When he tried to move the voice, he first put it in his throat and made it raspy. This didn’t feel comfortable at all. However, he did not have any problem moving it between his eyes and giving it a child’s voice. This seemed very comfortable.
When he made new, more optimistic interpretations of situations, he found that it was quite easy when he kept the voice in this position. As a result, he decided to give his inner interpreter a new home. Now this part seems to appreciate him much more and gives him very few problems.
Try this interpreter exercise at least once a week for the next four weeks. Notice what happens after you do it and keep practicing. You could be adding a very valuable tool to your life.
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About the Author: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his 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 www.vantharp.com.
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February 2018 - Cary, NC
Click the title of the workshop to see more about each.
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Presented by Van Tharp
with co-presenter RJ Hixson
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February 17-19
Saturday-Monday
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Peak Performance 101 is Dr. Tharp's core psychological workshop, and his most transformative course for over 25 years. If you want to know how great traders think, behave and act so you can achieve consistent and profitable results, without stress, then this workshop is for you. Plus, this is a qualifying workshop for traders to apply for the Super Trader Program.
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Presented by Van Tharp
and RJ Hixson
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February 21-23
Wednesday-Friday
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In just three days you’ll see how all of Van Tharp ’s strategic trading concepts fit into one seamless design for more predictable trading results. Your trading will never be the same.
This course illustrates the relationships among the steps so that the process is logical and reasonable. Moreover, you will learn how to take each step experientially, so you really get it. This workshop is filled with time-tested elicitation questions to bring forth each person’s most important issues.
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March 2018 - Sydney, Australia
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Presented by Van Tharp
with co-presenter RJ Hixson
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Presented by RJ Hixson
and Van Tharp
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March 13-15
Tuesday-Thursday
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Do you want bigger and more consistent profits from the market?
If you want consistency and would like to make profits from the market, you'll want to attend this three-day workshop. We'll show you little-known, closely guarded secrets that you're not likely to find unless you accidentally stumble upon them yourself.
Are you a low-risk investor who just wants to make small, consistent profits each month with only an occasional loss? We can show you how to develop a system that will allow you to develop a unique methodology that will give you that kind of consistency!
Are you a gutsy trader who'd like to make yearly profits of 100%, 200% or even 1,000% per year? Although risky, it is possible, and we can show you how to do it! The interesting thing is that you can do it in such a way that the only money you're risking is the money you've already made from the market. That's real leverage!
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March 23-25
Friday-Sunday
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What You Will Get In This Course
Beginning on Day 1, you’ll learn what the real Wealth Game is and, more importantly, what it isn’t. You will discover:
- Who decides the rules in the wealth game
- What money really is and why it doesn’t even matter
- What is holding you back from creating infinite wealth in your own life
- How different people think about money and why it matters
- The single greatest method for infusing positive beliefs about wealth into your being
- How to achieve infinite wealth in 7 simple steps
We’ll finish the day by playing that’s designed to get you thinking about the game of wealth in a much different way and to look at your patterns of behavior when it comes to money. You’ll learn more about yourself…your beliefs about money, and what’s possible (or not) just by playing this game
On Day 2, we’ll start with a quick review before I share with you the exact same steps I took to create infinite wealth for my family and myself. You will learn how to model my success and achieve real freedom for yourself. We begin by discovering how to:
- Become debt-free in less than 7 years, including your home, cars, credit card debt, student loan debt and more, all on your current income
- “See yourself” infinitely wealthy with the same visualization techniques my Super Traders use
- Invest in yourself to increase your income by 1000%
- Use tax expectancy to your advantage as a trader and investor
- Create inner wealth to achieve the freedom you seek
At the end of the day, we’ll again play the game to reinforce new wealth-building concepts while continuing to think of infinite wealth as a game to be played.
Day 3 begins with a review of the previous day’s notes and discoveries before we cover more in- depth inner work. Before you leave the workshop, you will know how to:
- Overcome your weaknesses while fostering your strengths with SWOT analysis
- Come back from a set-back, all with a unique mental resilience tool
- Begin each day with a clear intention, simply by removing your limiting money beliefs
- Use the matrix model to achieve infinite wealth
- Get your life purpose in alignment with your financial goals
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April 14-15
Saturday-Sunday
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Presented by Gabriel Grammatidis
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April 21-23
Saturday-Monday
Brief description available now. More info coming soon.
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Presented by Gabriel Grammatidis
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April 24-25
Tuesday- Wednesday
Registration open now. More info coming soon.
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April 27-29
Friday-Sunday
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Presented by Van Tharp
with co-presenter RJ Hixson
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Presented by Van Tharp
and RJ Hixson
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May 22-24
Tuesday-Thursday
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More 2018 Dates Coming Soon
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June: Super Trader Program Members only. Options, Advanced Options and Cryptocurrency Trading
July: Peak 101 and Modeling Great Trading Through Mental Strategies (Peak 204)
August: Day Trading Systems and Live Day Trading. Plus, Trading in a Sideways Market
September: How to Develop Winning Trading Systems that Fit You. Plus, Peak Performance 202
October: LONDON! Peak Performance 101, Peak Performance 203, Forex Trading Systems, Live Forex Trading, and, Blueprint for Trading Success
Specific dates for the above events will be released soon and the workshops will open for registration at that time.
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FREE Book!
We pay for the book, you just pay for shipping.
When you add the free book to an item already being shipped there is generally no extra shipping charge (of course, depending on your location).
Read Van’s Latest Book —
TRADING BEYOND THE MATRIX
The Red Pill for Traders and Investors
Eleven traders tell their stories about transforming
their trading results and lives, in this 400 plus page book.
Below is a brief video on how powerful this book is to traders.
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Cary, NC Workshop Information
For a list of nearby hotels for our Cary, North Carolina locations,
click here.
Book your flight arriving to the Raleigh-Durham International Airport (RDU).
When traveling to a three-day course, it's best to arrive the evening before.
To help determine your arrival and departure times, see:
Questions? Click Here to Ask Van...
CONTACT US
This is a supplement to our subscription based newsletter, Tharp's Thoughts.
800-385-4486 * 919-466-0043 * Fax 919-466-0408
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