Gosh, I was pleased that so many of you emailed me with your own pearls of wisdom gleaned from ChartCon 2022. It shows once again that investors can look at the same chart and have vastly different takeaways. Likewise, they can attend the same investment conference and have a diverse spectrum of takeaways.
You gotta love it! Welcome to our investor ecosystem. In this blog, I'll share more nuggets and gems from the conference — from both the front of the house (what you saw on your screen) as well as the back after the cameras went dark.
Nugget #1: Science points us to research that specific routines yield the best results. A recent example is the gym where I workout has new elliptical trainers with optimized science-based routines programmed into the unit. Sure, I can do my own custom thing. But lo and behold, I've discovered that the optimized routines do indeed yield the best results.
Similarly, David Keller's presentation at ChartCon highlighted the substantial parallels between trading and piloting a plane. Both have comparable consequences if your approach to either is dysfunctional and undisciplined. In a plane, you crash and die. With investing, you nose dive your portfolio and crash financially. It's ominous in both arenas if you try to operate without guardrails such as removing your emotions from the equation, being disciplined with your checklists and focusing on consistent routines.
Flying and trading are best served with a big dose of stability. Trust me on this! With piloting a plane, there is specific settled science that you must follow to join the essential circle of competence and stay alive. With investing our circle of competence requires a collection of ChartLists and routines which act as our financial fortress to protect our assets and prevent nose dives in our portfolios.
Your collection of ChartLists, your routines and your discipline to follow the program alleviates the failings that novice investors encounter. Grayson and I have made our entire investing ecosystem of ChartLists and routines 100% transparent and available to you if you're interested.
Nugget #2: Last week's Nugget #3 described this rule: "Don't read any investment book unless it's recommended by two or more people you truly respect." A corollary to this rule applies to periodicals as well. There are over 7,000 print consumer magazines circulated in the USA. That's a lot of rabbit holes down which you can get very lost. Many are like watering astro-turf and expecting it to grow. At ChartCon, it was evident that most attendees gravitated to the same three periodicals. Yes, we all have other information pipelines on the internet that we tap into. But for the comprehensive global view of business, commerce and economics, the best view from 30,000 feet is rendered by The Wall Street Journal, The Economist and Barron's. Like a best friend, they consistently stand by your side to enlighten and educate you on current affairs and how these events are impacting your assets.
Nugget #3: This insight was part observational and part conversational. It resulted from knowing the backgrounds of the attendees in detail. I've known some for nearly four decades — hence the observational portion. The other half was reinforced in conversations focused on longevity and survival in the investment arena. These same principles kept percolating to the top.
In a bull market, no one needs staying power. Anyone can coast along with the up trend when the going is good. If you only practice coasting, a coaster you'll become. A successful investor's secret attribute is to never coast. Discipline yourself to adhere to your methodology and follow your routines — even as everyone around you is coasting. When the trend changes, the bear easily catches the coasters. You stand a remarkably strong fighting chance of surviving and prospering if you are faithful in watering the seeds of your methodology throughout all the market cycles. With the probabilities at your back, you become the ultimate financial warrior. Warriors don't coast!
Nugget #4: Marty Zweig often said, "The market is smarter than I am, so I bend." Rigid perspectives and sizable egos will be dealt with promptly. These have no place in your personality as an investor. Any stock market facing us is manageable if we bring to the table the appropriate emotional attitude. It's our own emotional response that determines our profits and losses. You've achieved Nirvana when you are able to calmly remain humble yet still have this reasonable confidence in your emotional abilities to do the right thing in all types of markets. Yes, it's still about Stage 3 — The Investor Self.
Nugget #5: Power is a loaded word across infinite disciplines and arenas , but with different meanings in each. For example:
- The power of weather and Mother Nature
- The power of the Presidency
- The power of our laws and legal system
In our investment arena, I submit to you that power is in large part based on decisiveness. The foundation of such decisiveness rests on multiple pre-formulated scenarios. Multiple plans formed in anticipation of various events that might possibly occur. Bullish and bearish scenarios built during periods of calm and minimal noise. Best fabricated during hours when the market is closed.
Two powers acting hand-in-hand. "The Power of the Calm" facilitates execution as necessary to utilize "The Power of Decisiveness." A compelling combination that holds a higher probability of producing profits. The reason for this essential partnership is that we investors must embrace the reality that we'll never ever have all the information we'd like about an equity or the markets. We each operate at different percentages of information. Some of us will pull the trigger with 60%, while others hope for 80%.
We must understand that the stock market is constantly feeding us a diet of bullish and bearish information — albeit each morsel at a higher or lower price. If you wait for 90% of what is known to show up on your plate, the opportunity will have vaporized and your financial meal spoiled. Focus instead on formulating multiple scenarios and doing those things you can to put the winds of probability at your back. Your objective is to clinch and grasp every probability enhancer to become the ultimate "Investor Probabilitarian" who is then able and willing to exercise his or her own "Power of Decisiveness." The foundation of which resides in calm preparation.
Nugget #6: By now, I assume I've got your buy-in on the fact that consistent winning performances are built on routines. If you missed that point after two days of ChartCon, I'm shattered. But here's the other 50%. Learn to love the structure, the organization and yes, the routines. When I was training and competing in track and field during college, my norm on most days was two workouts. Sometimes it was tough. But surprisingly, I found the routines intoxicating and productive.
Similarly, years later with my investing disciplines, I still find my routines intoxicating. Yes, a portion of my intoxication can be directly linked to winning results. I ran some very competitive collegiate races, and likewise I've achieved compelling portfolio results. My routines are not drudgery. My routines are all about producing my next profitable sequel. I'm addicted to the cycle. I'm intoxicated by my routines. Remember, you become what you practice!
Trade well; trade with discipline!
Gatis Roze, MBA, CMT
- Author, "Tensile Trading: The 10 Essential Stages of Stock Market Mastery" (Wiley, 2016)
- Developer of the "Stock Market Mastery" ChartPack for StockCharts members
- Presenter of the best-selling "Tensile Trading" DVD seminar
- Presenter of the "How to Master Your Asset Allocation Profile DVD" seminar