All my investing friends said they were in it for the long run until the first bear market, then they all ran for the exit tripping over one another getting out.
A post every trader should read, especially new traders.
- Thread starter Chuck Krug
- Start date
Then they didn't understand long term investing.
I wonder why so many of those replying have their panties in a bunch because of the Minervini article. There's nothing objectionable in it and it correctly relates what happened in 1987. It was nasty and it's good advice to have a plan for the dark side for if/when the sh*t hits the fan.
If I may...
Translation: 1987, I was there...but not really.
(My first comment on this thread was that people were offended by his condescension, not the fact that markets can go down).
Now, to read the title, "A post every trader should read, Especially new traders"; you might assume there is some sage advice that has been said elsewhere. In reality, you could sum up the article as, "1987, 1998, 2000, 2008...markets can go down. QED". But instead he just says he was there (but not really), and the qualifies himself to insult these new traders he's supposedly trying to inform.
The point of the article is not to inform. It's pandering to 50-somethings, and their nostalgic view of how much better they did in bear markets than millennials will. A point I take exception with just because it's untested, but also because it's likely untrue. There's not even a hint of irony as he's talking about people jumping in 1987 that they failed to heed the warnings of the 50-somethings when they were whipper-snappers themselves.
So, to turn this one around, what valuable information would you take away from this article?
I have no clue what you mean by "1987, I was there...but not really" when referring to Minervini. Either he was or he wasn't. I was there and and having put in almost 40 years with investing and trading of stocks and options since, there's nothing I'm going to take away from that 15+ short paragraphs article. But perhaps some noobs who don't know any better might might get something from it. I sure wish that I had known a lot more about risk management in 1987.
As I said, I don't get all of the panties bunching. If the article has nothing of value to a reader, move on. Doing the English teacher parsing of content (too many words?) or perhaps use of hyperbole or doing a psychological diagnosis of the writer's attitude adds little to the discussion. All of the Siskel & Eberts offered nothing more than criticism without offering additional substance is worthless. Reply if you feel compelled to do so but I have nothing further to add other than "Protect Your Cities" to those who think that the market always goes up, as it has for the past 8 years.
As I said, I don't get all of the panties bunching. If the article has nothing of value to a reader, move on. Doing the English teacher parsing of content (too many words?) or perhaps use of hyperbole or doing a psychological diagnosis of the writer's attitude adds little to the discussion. All of the Siskel & Eberts offered nothing more than criticism without offering additional substance is worthless. Reply if you feel compelled to do so but I have nothing further to add other than "Protect Your Cities" to those who think that the market always goes up, as it has for the past 8 years.
Re: 1987, he says, "...fortunately I was out before it occurred..."
My complaint is the arrogance "an article every trader should read..." presumably the experienced ones also. And "especially new traders". ...ok, fair enough, the guy had some good experience to share. I'll read on.
Turns out, it's a cautionary tale aimed at young traders and faulting them for their youth. As you point out, it offers nothing to an experienced trader, and as I point out, it's value to an inexperienced trader is condescension.
Now, I'd like to read the horror stories of those who were blindsided by 1987, leveraged and long up to their eyeballs...what they thought, how they recovered, what it meant for them in real time and what it means to them now. Understandably, there's far fewer of these folks than the lucky "sages" who came out ahead...but I digress.
And while I claim to add nothing to the discussion (hence the pith of my first comment here), I do claim to have added as much to the discussion as the author.
I take exception with it on the counts:
1. The author represents himself as exceptionally qualified to the extent he had something to offer *every* trader. (He may well be, but a demonstration of that is appropriate within the article).
2. He doesn't off any practical advise, or even any history, that would be new to even a casual trader.
3. He directly condescends to the very audience the title targets...and not even based on experience, but solely on age. And it's to the extent that (absent 1 and 2 above) that this is the apparent intent.
So, it's not a matter of twisted underwear...in fact, I felt my points were sufficient with one pithy sentence. But an explanation of my statement seems reasonable to the extent it informs someone who believes my commentary was unwarranted.
What can I say...as an old school debater, I have a penchant for academic rigor, and distaste for those who parade under false flags of credibility (which again, not a judgement on the author, just the decision not to include it in the article).
Do your homework.
Read or reread Market Wizards
Read More money than God
1987's krack is well explained in these books, with tons of anecdotes.
For example how Stan Druckenmiller who was dead long Friday 16th of October understood his big mistake before Monday's opening.
How Paul Tudor Jones knew he was ready for an home run.
How Vic Sperandeo bought tons of puts.
Etc
CM
Its healthy that we do not blindly accept all the "common knowledge" about such historical events - past events can only offer a guide to the future, not a precise agenda, but at least we should have an accurate picture of what are past events and what are urban myths.
e.g. The very word "crash" suggests a calamitous market price fall within a very short period of time that comes out of the blue. In fact, that's not how they have mostly happened: "crashes" have usually taken weeks if not months to develop and most of the market's worst one day performances have come within bear markets.
You are wrong.
Of course 1987 crash was the end of the world, not 2000 tech bubble bursting lol.
In 1987, there were no way to exit. Your money and account were frozen, brokers didn't take orders. Too many new comers, buying market after 5 years of non-stop bull market.
Massive suicides, same story in 1929.
CM