A huge earnings calendar next week. 

A huge earnings calendar next week.

In addition to any escalation of the coronavirus, the stock markets will be tested next week by a plethora of earnings announcements.  The “Who’s Who” of companies will be announcing.  Below is the schedule of the major releases (subject to change):
Monday, January 27
  • DR Horton
  • Whirlpool
Tuesday, January 28
  • 3M
  • Starbucks
  • Apple
  • Pfizer
  • Lockheed Martin
Wednesday, January 29
  • Tesla
  • McDonald’s
  • Microsoft
  • Boeing
  • Facebook
  • AT&T
  • General Electric
  • Paypal
Thursday, January 30
  • UPS
  • Amazon
  • Coca-Cola
  • Electronic Arts
  • Biogen
  • Raytheon
  • Verizon
  • Northrop Grumman

Friday, January 31

  • Chevron
  • Honeywell
  • Caterpillar
  • Exxon Mobil
  • Colgate-Palmolive

Know yourself.

 Easier said than done, but it’s worth spending time understanding who you are in relation to risk, money, hard work, uncertainty, and a number of other things you will face as a trader. While you’re at it, also consider what skills you need to develop: a better understanding of probability? Deeper knowledge of financial markets? Any specific analytical techniques?

There are many ways to work toward the goal of knowing yourself, and it’s probably the process that matters more than anything. Some people will talk to a therapist, some will go on long walkabouts, some will journal and reflect, and some may work on the answers in the quiet moments each day. There’s no wrong way to do this, but the market is going to make you face the best and worst in yourself.

Poor Traders & Rich Traders

  1. Poor traders have ‘picks’, rich traders have “high probability entries”.

  2. Poor traders “make great calls”, rich traders have robust systems.
  3. Poor traders have ‘conviction’, rich traders follow price action.
  4. Poor traders have ‘opinions’, rich traders follow trends and chart patterns.
  5. Poor traders ‘like’ certain stocks, rich traders like to make money.
  6. Poor traders make predictions, rich traders have quantified entries and exit levels.
  7. Poor traders ‘go all in’, rich traders have maximum bet sizes.
  8. Poor traders are gamblers, rich traders are casinos.
  9. Poor traders have hope, rich traders have mathematical probabilities.

5 “Common” Rules of Great Traders.

1. They react and make few decisions. They do plan every trade. They just plan a lot faster. The market moves fast, so do they. A plan is somehow neglected by many. Would you start a business without any plans? Do it already. You will improve.

2. They make most of their money on the highs or lows. There will be interest at the highs and lows, they use it to buy and sell into. They are already in a position when it gets there. It is a place that most people are looking at. The market actions will dictate further moves. I disagree that they stop picking tops and bottoms. They just are aware that is the type of trade they are taking. High risk, high reward.

3. They get out on the best tick. On a winner or a loser. See rule 1 and 2. I am not sure why no one ever talks about this, including here. Execution is as important as any other skill.

4. They accept responsibilities for their actions. They do not socialize losses and privatize wins. It is all privatized. They eliminate mistakes and learn more cheaply than others. I do not know if they only trade one market but they are experts on themselves.

5. Success is the end point. They can already pay their bills. They are actually trading with risk capital. They can focus on the market and keeping their TEE in balance. Percentage gains are very important but they are not indicative of future returns. Their measurement is based on how well they executed their plan.

Big Mistake Done By Traders

The big mistake traders make is labeling challenges as problems.  A challenge is a function of growth, pushing one’s boundaries, becoming more than you presently are.  A problem is a shortcoming, a deficit, something to move past.
If you are never anxious, you are never pushing your boundaries.  Growth requires movement outside our comfort zones.  That brings uncertainty, nervousness, and doubt.  
The big mistake traders make is trying to eradicate uncertainty, nervousness, and doubt.  They want to trade with confidence and conviction.  They want to fearlessly pull the trigger.  So they stay in their comfort zones and they never grow and they never adapt to changing market conditions.
The trader who wants to develop embraces uncertainty, doubt, and fear.  Growth comes from mastering those, not erasing them.
The big mistake traders make is justifying stasis by calling it “sticking to a process”, “controlling emotions”, and “staying disciplined”.  Every uncertainty is a challenge.  Every challenge is an opportunity for growth.  Mastering challenges means we continually evolve our processes and make growth our discipline.  
If you want to overcome a “problem”, find the developmental challenge it brings to you.  Your problem is a gift.  Unwrap it.  Figure out how it will make you better.  Then tackle one small piece of the challenge and set yourself up for success.  Once you’ve gotten that under your belt, tackle the next piece, then the next.  Bryan was right: confidence comes from doing the things we fear, not from living a static life free of uncertainty.  

Preparation-Purpose-Protection For Traders

  • Preparation:  If you put yourself in the best possible position and you lose money at least you spent that money wisely.  Good things happen to those that are prepared because 90% of people do not know how to do it or are unwilling.  
  • Purpose: Acting with purpose.  You prepared, you knew the risks, you executed the way you wanted to execute.  In cold blooded evaluation you would do it the same with the information you had at the time.
  • Protection:  Losing the invisible money is how I have seen many people blow up.  Invisible money is not locking in profits or losing more than your plan allowed.  If you lose what you intended to risk you own the trade, if you lose more the trade owns you.

Your goal as a trader is to always reduce the time it takes to analyze, react, and recover.  The best traders do this effortlessly after much thought, experiment, and practice.  I lacked confidence because I thought about the wrong things or not at all and I was doing random things all of which made it too costly, emotionally and financially, to practice.

The Dragon bubble

something to remember as you hear this idiocy about China being the most powerful country on earth…

chinadragonChina is still a poor country. Notwithstanding the complexities of measurement, income per head, according to the World Bank, is roughly $3,000, a little less than Jordan and Tunisia.

In the extreme scenario in which US income per head remains the same forever more, and China’s income per head grows by a constant 8 per cent a year, convergence would happen in 2045. But this is silly maths.

The US will not stand still and China’s economic path is likely to be punctured sooner or later by a credit or asset crisis.

Further, it cannot grow by 8 per cent a year for that much longer, not least for demographic reasons. China is the fastest-ageing nation on Earth, with an age structure rather like that of Germany.

Its labour force will begin to decline in 2010 or so and fall every year for the foreseeable future. For a while, the transfer of the 80 million rural migrant pool to higher-productivity urban jobs will mask much of this impact, but only for a few years. (more…)

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