This Week’s Battle Plan

Most weeks we look at markets and how to best trade them. Strategies,
Money management and Discipline are the primary focus. But this week,
we’re going to focus on exactly how to make money. Lot’s of money. So
much money you are going to be able to knock Bill Gates off the #1
list on the Forbes 400. And you will be able to do it in under four
years…GUARANTEED. Not guaranteed by me. Guaranteed by the mailing
piece I just got sent to me (for about the 10th time in two years).
And, to back it up, I just saw this same gentleman on TV last night at
1:30 AM in an infomercial. So it really must work! And the
headline of his mailing piece reads “Triple Your Money Every
90 Days…Guaranteed!” So, last night after seeing the
infomercial (nothing mentioned about tripling your money in that, but
it was by the same guy so I assume it’s the same technique…unless he
has something that’s now even better!), I took out my
calculator to figure out how long it’s going to take us to see our
names on the top of the Forbes list. Lets see, let’s start with
$100,000 account. That’s a nice round number. And in 90 days, it will
be worth $300,000 if we just connect the dots according to this
gentleman (he says his approach is “very simple to follow”
but let’s not take any chances. We’ll let the smarter guys who won the
Three Stooges trivia question run the trades for us). And, in 180 days
our account will be up to $900,000. Q3 sees us at $2.7 million, and by
the end of the year we’re at $8.1 million dollars. Not bad. Not bad at
all.

Now let’s jump to year two and see where we’ll be. I’m going to round
this off a bit and assume we pull a few pennies out along the way. And
son of a gun, they’re going to be writing about us in the society
columns in the New York Times. We’re at nearly a billion
dollars! And, if we stay disciplined for only another two more
years, we’ll be at over $1 trillion dollars in net-worth. We’ll be
worth 20 times more than Bill Gates. And our net worth will continue
to triple every 90 days until we own mankind! All from going to a free
seminar (free beverage and danish included) and trading his very
simple-to-follow technique!

How To Save 5 Grand

It sure feels good to dream. It also felt good last night thinking
that one of my 40 tickets had a chance to win the $122 million dollars
in the California lottery (I didn’t win the jackpot, but I did
win a free ticket). The above scenario is obviously ridiculous. But,
it will be sold to thousands and thousands of traders because it’s
seductive. Even I’m compelled! But, you need to remember, there
are thousands of very smart people running very sophisticated hedge
funds out there. And many don’t make money. If one really could
triple their money every 90 days, don’t you think these funds (and
every brokerage firm trading desk in the world) would be doing this?
Of course they would. Save yourself, the trip to the free seminar,
save yourself the aggravation of being sold a multi-thousand dollar
course that is “NOT” going to triple your money every 90
days! It’s all BS.

The only thing that works consistently is to find strategies that have
small to medium edges and trade them day after day. That’s what works.
And for some people it works great. A great example is professional
trader John Henry, the gentleman who bought the Boston Red Sox this
past season for over $800 million dollars. How did he do it? Using a
very simple breakout system in the futures markets. And his many funds
were then marketed aggressively. And over a 20+ year period of time,
he was able to amass enough money to buy a professional sports team.
He did it from trading his own money, and taking about 20% of the
gains of other people’s money. Yes, it took over 20 years to do. No,
he never tripled his money in 90 days, no, he is not worth 20 times
more than Bill Gates, no he is not on television at 1:30 in the
morning telling you he will teach you the “closely held secrets
only known up to now by Wall Street insiders.” He did it with
three things. A strategy with an edge (it has huge drawdowns but it
does have a long-term edge), proper money management, and complete
discipline. His methodology is completely mechanized…no thinking
allowed. The thinking was done decades ago when it was created. And,
on top of this, John Henry is a very good businessman. Something many
traders seem to not focus on. But, trading and money management is a
business. And it must be treated no different than any other
successful business.