So, let me start out by saying that $4,000 for a seminar is a lot of money to me. Trading is a business and I plan for a certain level of expenses each year, but $4000 for seminars wasn’t in this year’s budget. That’s twice as much as I have ever spent on a seminar and I don’t attend $2K seminars that often either. Needless to say, when Mark Minervini announced his seminar I wasn’t the first one to sign up.
Mark is featured in Jack Schwager’s, Stock Market Wizards, the third book in his series. The book originally published in 2001 featured 13 of America’s top stock traders. At the time of publishing, Mark had compounded 220% return over 5 1/2 years. This included his 155% first place finish in the 1997 U.S. Investing Championship. In other words, the man knows how to print coin. This past year Mark has been blogging and tweeting. My ears perk up whenever he sends out a tweet. Mark’s pedigree was definitely an attraction, but 4000 bucks. However, as I reflected back on my journey to this point in time – there was no way I could pass up on this opportunity.
I opened my trading account in October of 1995 with $3000. I was an engineer by training and the stock market was something I dabbled in during lunch breaks. Over time I added more money to the account and worked my magic. By the time the market peaked in March 2000, I was sitting on 7000 shares of CMGI at $145 per share. That was my largest position, but I had other significant holdings as well.
That being said, you have to understand that I was completely self-taught. Everything I knew about the stock market I had learned from books. Unfortunately, I hadn’t discovered the books that discussed when to sell. By the end of 2000, those same freaking shares of CMGI were only worth $5.60 per share. I sold a few shares on the way down, but for all practical purposes I was wiped out. Fortunately, my engineering job paid the bills so life continued as though those 5 years never happened. In 2002, I got serious about the market again. By 2005, I had grown my account large enough that I could walk away from my full-time gig in March of 2006.
When I began trading full-time, it became apparent that my trading style had to change. The crash of 2008 really drove this point home. Although, on two separate occasions I had proven to myself that I could grow small sums of money into much larger sums. I had accomplished my success while holding through significant draw downs. This was possible since my real job was paying the bills.
From Schwager’s book:
Most traders and money managers would be delighted to have Minervini’s worst year during this span – a 128 percent gain – as their best year. But return is only half the story. Amazingly, Minervini achieved his lofty gains while keeping his risk very low. He had only one down quarter – barely – a loss of a fraction of 1 percent.
Unless I had experienced everything that I have over the past 15 years that statement would simply be words on a page. However, those words spoke volumes. The concepts of high return with low risk may be in another undiscovered book, but I can’t afford to blow up again before reading it. Time was of the essence, so I forked over the dough.
I signed an Non-Disclosure, so I can’t share specifics of the seminar. I couldn’t do it justice anyway. However, I want to share some of the general insights learned. Hopefully, it will help someone.
1) High risk and high reward are not one in the same. Mark stated on several times during the seminar that he is the most risk adverse person in the room. He consistently produces triple digit returns and has very few +100% winners in his portfolio. He uses the power of compounding to his advantage. It is much easier to find 20% winners than 100% winners. So, he compounds as many 20% winners in a year as possible. The other side of that is cutting his losers quickly. His absolute “Uncle Point” is a 10% loss. However, his average loss is much smaller than that.
2) Mark combines technicals and fundamentals. Both have to line up. The fundamentals provide the story, but the technicals provide the entry point. His goal is to buy stocks right as it starts its move. His best winners are winners immediately.
3) Focus on one strategy and learn as much as possible about that strategy. He pointed out that Warren Buffett and Bill Gates are best friends. However, over their entire friendship Buffett has never owned a share of Microsoft’s stock. Buffett sticks to what he knows. I often find myself drifting from swing trading to position trading to options. Mark’s advice is to narrow your focus and know it well.
4) The most important lesson that I learned was that making money in the market should be easy. If it is not either one of two things can be wrong. Either your selection criteria is flawed or the market is flawed. I have proven to myself that I can pick winners. So, when I am struggling getting stopped out constantly – the market must be “flawed.” In other words, it is not the appropriate time for my strategy. When the market is “flawed” it is time to step aside. Being constantly invested in the market is not smart. Leave that to the people on TV.
Finally, a side benefit of a seminar in such an intimate setting is that the people in attendance are serious people. They are there to learn, but interestingly you can learn from each other. Obviously the questions asked add insight to your understanding, but the talks during breaks are as valuable.
I have known Joe Fahmy through StockTwits and his show “The Next Big Move.” It was a pleasure to meet him in person. The beauty of Twitter is that it is the real you. If you have generated over 1000 tweets – your real personality will reveal itself. Joe was exactly as I expected – a really sharp down to earth guy. I also met Pradeep Bonde. He runs an investing site called StockBee. I hadn’t heard of the site before the seminar, but it boast over 1100 members. If your site has 1100 paying members you must be doing something right.
I also met a trader that had been trading with Mark for eight years. He wasn’t generating triple digit returns, but he was attaining significant returns and was running a large sum of money. That was really the proof in the pudding. It is great that Mark is a superstar trader, but if he is not helping others become better – what’s the point?