The Traders Journal

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Charts I'm Stalking: Action Practice #15

When you revisit the Action Practice #14 blog, you’ll recall that I presented four equities chosen from Investor Business Daily’s 20 top-rated Big Cap stocks.  (April 5, 2017 edition.) I asked you to choose the best equity from the following four: Western Digital (WDC), KLA-Tencor (KLAC), Priceline (PCLN), and Facebook (FB).  

I have my own money in Facebook. I’ll step you precisely through my reasoning which is described in more detail on pages 56 — 60 of our book. 
https://store.stockcharts.com/collections/beginner-resources/products/tensile-trading-1

 

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Tensile Trading ChartPack Update (2017-Q1) Updated Charts and the Latest Fidelity Moves

Anywhere you see excellence and mastery happening, you’ll discover the same set of recurring universal truths.  Great athletes achieve excellence and make it look effortless. Great investors make market mastery seem natural and make profits look easy.

I love the line “I worked all my life to become an overnight success.”  For me, this embodies the foundation of excellence and the cornerstone of mastery. It’s all about preparation, discipline and organization.  When that all comes together, it’s magical. Stock market mastery demands that investors weave together a string of powerful habits, profitable methodologies and reproducible routines.  It is these all-important routines that allow you to muzzle the bumper car beasts of bad behavior.  

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How I Deal With Investment Losses (And How Not To)

Financial investment losses are the markets’ way of telling you to make adjustments and to correct your present course of action.  The parallels between how American investors deal with financial pain and how individuals deal with physical pain is illuminating.

 

According to a recent article in Consumer Reports, 80% of Americans experience persistent pain of some type and spend over $300 Billion on treatments, drugs and care.  All too often, their solution is to throw opiates, such as Percocet or Vicodin, at the problem.  This mentality has obviously caused an explosive drug epidemic instead of a hoped-for cure.

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Charts I'm Stalking: Action Practice #14

My intent with this Action Practice is not to wax on about the importance of understanding what the markets’ current preferences are.  My point is simply that if the markets are favoring growth over value, then as investors, our probabilities are enhanced when we invest with the growth winds at our backs.  If the markets are favoring large cap equities over mid-caps and small caps, our probabilities are likewise enhanced with the large cap winds at our backs.  

Please refer to the six charts that I presented to you in the Action Practice #13 blog

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35 Years and 5 Key Personal Investment Passages

I stumbled into a gift shop full of tchotchkes today.  It was one of those retailers with endless trinkets and specialty items that encourage you to revisit your youth and marvel at someone else’s creativity.  I became fascinated by one of those intricately detailed Russian “Matryoshka” – the wooden nesting dolls of decreasing size placed one inside another.  Perhaps because the markets were particularly challenging today, I found myself getting pensive about the parallels of my life as an investor to my unbundling of these nesting dolls.  I’ve always felt that investing is like peeling back the layers of an onion one-by-one, and therein lays the parallel.  I realize that like all other investors, my journey has followed the path of the 5 enlightenments as I peeled back my personal investment onion over the years. 

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Charts I'm Stalking: Action Practice #13

For those readers who embrace my CORE and EXPLORE approach (this is actually my version of John Bogle’s approach) with respect to Asset Allocation, you can see why I suggest considering  country funds for a small percentage of your EXPLORE portfolio.  Country funds fulfill the cardinal rule of diversification as their correlations to the USA markets are much lower.  Over the past 30 years, the world’s top performing market has come from this group 100% of the time (outside the USA).  

I personally believe that actively trading a few focused equities in one’s country fund global asset basket can provide the equity growth you seek and can improve your skill in investing in less volatile asset classes within your portfolio.  Make no mistake about what I’m saying. This asset class is for active traders who have the discipline to keep a close eye on these volatile equities, with the additional caveat that it should represent only a small percentage of your total EXPLORE portfolio.

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Market Timing Tools That Work: Pullbacks versus Corrections

Here is how to tell if it’s a regular market pullback versus a serious bearish correction. I strongly disagree with those that claim market timing is toxic.  Review this sample of eight of my charts.  These types of tools have helped me side-step all the major corrections over the past 25 years.  Focus on reviewing these charts at the major turns.  You’ll see that you, too, can effectively separate a pullback from a correction.

At the risk of boring the thousands of subscribers who have already downloaded our Tensile Trading ChartPack and are familiar with these tools, I hope you’ll forgive me and let me indulge in a simple review.  For those who have yet to download the ChartPack, go here

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Investor's Creed

“An investor’s methodology is inseparable from his or her emotional discipline.  Both must be defended and reinforced whenever either is threatened.”  — Gatis Roze

My trading is guided by a collection of beliefs and principles that direct my trading routines, actions and ‘Investor Self’ behavior.  Over the years, it’s been a  process of deconstruction —  unbundling each element to better understand their respective strengths and weaknesses.  This has been followed by a re-construction of the pieces to create the mosaic that I am today. 

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The Secret of Making an Investment Methodology Produce Consistent Profits

“I have heard many men talk intelligently, even brilliantly, about something – only to see them proven powerless when it comes to acting on what they believe.  Investors must act in time.”  -- Bernard Baruch

There is a fine line between embracing your methodology, trading it, trusting it, understanding all its nuances, strengths and weaknesses versus never truly trusting your methodology. Suspecting that your methodology is flawed and therefore constantly tinkering with it and needing to reinvent it will not lead to success.

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Charts I'm Stalking: Action Practice #12

In previous blogs, I’ve sermonized that Asset Allocation is the highest leveraged activity that investors can undertake.  We produced an entire two-disc DVD on how to execute what we call our “Methodology Allocation” process which maximizes the benefits of a CORE & EXPLORE approach and then optimizes it by laying on top a “Best-of-the-Breed” technique.  

I bring this up because the previous Action Practice #11 blog is ideal to use as an example.  In our book, we present the correlations of 59 different asset classes.  We invite investors to pick perhaps ten of these classes which are spread across the entire correlation spectrum so that you achieve diversification with a lower beta.  In other words, when one asset class goes down, another is likely to go up.

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