Question: “I just invested all of my savings into TESLA stocks, what is some advice you’d give me?”
Answer: In 1999, we had a great bull market and I was hearing from bartenders at the hotel we were doing workshops at that they didn’t need to attend our stock market workshop, they could teach it. I heard a waiter say that waiting tables was his backup job, but he was really a day trader. I know one guy who retired in 2000 and then his savings were wiped out by the crash.
We are in a bear market and you need different kinds of systems for a bear market. But with a decent exit, you would have exited way before it became a bear market. For example, my supertrader system for trading Cryptos had us out at about $8309. But that system has produced a 1800 times your money return as opposed to about 1000 time your money for buy and hold. The point is we got out and now BTC is about $5300. And we won’t get back in until its going up enough to suggest that market conditions have changed.
I own a Tesla model S since Dec 2014, and I love the car, but I’ve never bought the stock. And now I don’t like the situation with Tesla at all. They’ve been promising superchargers in Arkansas (you can’t go across the country on I40) and in North Dakota (only state I’ve never visited) for about 3 years. Customer service has gone done from the very best I’ve ever seen to average at best. And although I’ve driven around the country three times in my model S, I’m concerned now because I’ve seen the Superchargers out of service and not being updated (that was about a year ago) and now the country is filled with a million of the cheaper cars. I’d never invest in Tesla right now.
Here is what you need to know:
1) You can only trade your beliefs about the market — not the market itself.
2) You were just trading based upon greed. You don’t even know what your beliefs are…. you probably said, it’s a really hot stock so I want in.
3) Bottom line beliefs you should know:
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- Never enter a position without knowing when to get out. That’s your risk.
- Think in terms of reward to risk ratios. And don’t take a trade unless the reward is at least three times the potential risk.
- For most people don’t risk more than 1% of your equity on a given trade.
- IF you bought near $1000 and its now around $542 you can begin to see how many of these “Useful beliefs” you violated.
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4) Take your loss now and then invest in your trading education and especially in self-awareness.
I just did a workshop called Trading Genius II: Systems Thinking and presented a format for trading that would make anyone who is aware enough about their beliefs and the impact of them a trading genius. And then I started a six month contest trading contest using the format we gave them. And it’s still not to late to watch the video of that workshop and enter the contest.
I’m really clear that most people are totally unaware of their beliefs and just acting like Robots. For example, one person said he would immediate invest the entire $50,000 of his contest money in the crypto called Chainlink and hold it for six months. Thus making all the mistakes you made. He had no criteria for entry or exit.
Three days later, Chainlink was down more than 50% and he said he’d changed is mind. But the point was, it was a really stupid trade in the first place.
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- No clue about how to enter except on greed
- No exit
- Way too much risk
- His position sizing was all in
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If trading were easy, big money would make it impossible for you to trade. You’d have to pass some impossible test and then you could only trade their money. Instead, trading is very hard, so big money makes for you and trade and very easy for them to get your money.
We specialize in trading education and we’ve just put up our prior Bear Market Course on Video on demand at www.vantharp.com. And you can still watch the Trading Genius II videos and join the contest.
Be smart and invest in yourself now.
Van K. Tharp Ph.D