The people that “know” more than you do…
The one’s who you NEED to listen to because…
They are “experts” and know everything there is to know about everything.
In this article, we are going to talk about some of the genius calls…
That have come from these “experts”…and exactly what you can do to give yourselves the best chance of making money.
They Do NOT Know More Than You
Above we have a video of the well know and well respected Mark Cuban.
Specifically, in the video above, Cuban is speaking about his predictions for the market if Donald Trump were to be elected. This interview happened before the election and Cuban predicted the market would collapse if Trump were to be elected.
This is a chart of the S&P E-Mini /ES futures for the least year. We notice that on the evening of November 8, the market tanked, being halted at lock limit down before rallying a full 12% until where we are today (today is 12/25/16).
Now, Cuban was right for about 4 hours, but over the next 6 weeks, he was incredibly wrong.
But how wrong was he exactly?
We know that there was 50% chance that stocks would be up after the election…but they have run up pretty far.
As of right now, the $SPX is trading at $2263.79.
Do you want to know the chances on Election Day (November 8, 2016) we would be trading where we are right now?
On March 11, 2008, Jim Cramer (he’s some talk show host on CNBC) was answering viewer emails and specifically one about the former investment bank Bear Stearns.
The viewer asked if he/she should be worried about liquidity concerns at the bank to which Mr. Cramer responded:
No, no, no. Bear Stearns is fine do not take your money out
The shares of Bear Sterns had been under pressure in the weeks before this segment and at the time this clip aired, Bear Stearns was trading at $62.97.
Six days later, Bear Stearns was purchased out of bankruptcy for $2 a share.
So What Does This All Mean???
The truth is, the majority of these predictions that you here about…
Are no better than a coin flip…
And do you know anyone that’s better than others at calling heads or tails?
Of course not!
The truth is…
People that have been in the industry for decades cannot predict markets or price movement better than any random guy off the street.
Mark Cuban and Jim Cramer are very intelligent people with years of experience that far surpassed 99.99% of the population but…
They are susceptible to being wrong just as easily as you and I are.
They are capable of being wrong in a big way.
Then What Am I Supposed to Do???
It takes a lot of effort to bounce around…
Listening to all of these different “experts”…
When it is clear that they are unable to predict the future better than you or I could…
And because of this…
As a trader, you need laser-sharp focus and listening to all of these different “experts” just causes more confusion.
So then you ask, “What am I supposed to do?”
Stop listening to the “experts” 🙂
Stop reading the Wall Street Journal…
Stop watching CNBC…
Stop reading Yahoo Finance…
None of it is better than 50/50…
And the likelihood of those “experts” being wrong is about the same as you or I being wrong.
A Helpful Hint
Coming up with your own strategy and sticking to it is critical to making money over and over again in the markets.
Not bouncing around between ideas and strategies based off what other people say…
It’s no good and you’re done doing that.
Bulls make money, bears make money, and sheep get slaughtered.
Well maybe, but let’s talk about bulls for a sec.
Do bulls just buy stocks every day no matter what is going on? Do they freak out and buy stocks because they fear missing out of the next up move? Do they buy a new high?
They buy stocks when they are cheap or beaten down.
If they hear about a stock that is already up 100% for the year do you think bulls are going to chase it higher?
Rather, they are looking for stocks that have sold off and are cheaper than they were before.
This is a strategy that gets repeated by these bulls over and over and over again and they don’t waver from it.
One of my favorite market studies ever was a study conducted by Dark Bid in which they examined the simple mechanical strategy of buying stocks after they sold off.
They went all the way back to 1990 to conduct this study so the sample size is large enough. Let’s examine how a mechanical strategy of buying stocks when they sell off yields better results when compared to just buying after and up move.
Going back to 1990, if you buy the S&P 500 after an up week (market was positive the week before) and held your position for one week, you would have turned $100,000 into $96,000. Horrible compared to a simple buy and show up 26 years later to find out that $100,000 is worth more than $600,000. So much for the trend if your friend.
But what if we didn’t just chase everything and bought the index for a week when the previous week was down between -0.50% and -3.00%? As you can see, we turned that $100,000 into nearly $600,000. Which would you rather? $96,000 (buying after an up move) or $600,000 (buying after a down move)?.
And literally what was the one difference between the two strategies?
One strategy we bought after the index moved up.
One strategy we bought after the index moved down.
Moral of the Story?
Do not listen to the “experts” because they are just as likely as you are to be right or wrong.
Do not listen to CNBC or read the Wall Street Journal, they are no better.
Come up with a mechanical strategy and focus focus focus on it.
Are you a bull? Buy when stocks are down.
Are you a bear? Sell when stocks are up.