I’ll thrown in my 2cts on this one and on Avi’s methodology.
Every time I hear something along the lines of “something is complicated so it’s difficult to use”, I get interested. I ask myself: is it the thing that is complicated ? or is it that the person didn’t put the effort necessary to master the thing properly ?
As I’ve written previously on KEREPORT, I’ve used the free-trial on Avi’s website in the past, and I’ve been in several of his trading rooms. I’m not a subscriber, and I don’t receive anything from him. So I feel pretty unbiased and “conflict-of-interest-free” to post the following.
I did a free trial on Avi’s website and didn’t follow-up on this w. a subscription because i could not follow the Elliot counts properly. And it is not because the count are complicated: it is because I didn’t put the effort. In other word, the issue is not him/the Elliot Wave + Fibonacci method, it is me. I repeat: without making the effort to learn the method, the problem is myself, not the method.
Many of us believe that we can just start something and in a few hours we’ll “get it”/understand it and bang, we’ll get rich. Financial markets don’t work like that. You can be as smart as you want…. but being successful is a lot of hard work. A lot. And a lot of hours of dedication. A lot. Being smart without hard work doesn’t lead you far.
As most of you know, Doc/Richard and I exchange daily. A few months ago (summer 2015), I was not using Bollinger Bands (BBs) in the array of tools I used back then. Last sumer, I told Richard that, basically, I didn’t use BBs as they seemed complicated and I didn’t really want to put the effort to try and learn them because what I was using as tools was fine for me. However, sometimes, my technical tools (which didn’t include Bollinger Bands back then) could not give me clear signals, while Richard had clear signals and was later on proven right.
So guess what? I’ve made some effort and started to learn about Bollinger Bands. Now I use them ALL THE TIME. And my investing/trading has gone up another notch.
Likewise, I was not using Fibonacci. I’m increasingly using it as I trade. But I keep it very basic. And it works pretty well.
So for me, these are 2 cases were I have the following sequence: INTELLECTUAL EFFORT –> HOURS DEDICATED TO LEARN/WORK –> FINANCIAL REWARD. It’s as simple as that really.
I love driving and I suspect most of us do. I love driving…. fast. And when I say f-a-s-t, I mean f-a-s-t.
Now try to drive fast (again, I mean f-a-s-t) without having a good understanding of your tires quality, your tires pressure, the difference in pressure between the front and the back, if your car as front wheel drive or rear wheel drive or all wheel drive, and lastly and more importantly, a good understanding of what I call “masses transfer”. Or better: if you don’t know all that, for your own safety, forget the driving fast part. Really. Forget it. What I’m trying to say here is the same: without spending the time and make the effort to acquire knowledge, and serious activity is unlikely to produce results.
If you don’t make the effort to lear a few things about physics applied to cars, driving a car fast is likely to end badly. Very badly. If you try to be involved in markets trading stocks, or ETFs, or levered ETFs without having a good grasp of “what you are doing”, it’s also gonna end badly for your portfolio. Soon or later. [You can make money for a while being lucky, but don’t forget luck reverts to the mean]. And to have a good grasp of what you are doing, you need to spend hours of work. Plenty.
Now, because you spend hours learning something about markets doesn’t mean you will be right all the time, or it doesn’t mean that you will not have accident if you are driving. But it means that what you have learned should avoid you fatal accidents/portfolio blow ups. Let’s never forget: managing money is first and foremost MANAGING RISK. So how can one manage risk if he hasn’t got the tools to manage it, or if he doesn’t even fully comprehend what it means to start with? Just food for thought…
Going back to markets, I’ve discussed here about technical analysis as a way of apprehending them.
I am aware many among the KER community think technical analysis is BS and that at the end, fundamentals prevail. That’s right: in the end, fundamentals do prevail. But until fundamentals prevail, it could be days, weeks, months, or… years. Sound familiar ?
A good grasp of technical analysis help in telling now is probably the time to trim/get out of a position, and now is the time to add a bit/add big to a position. Technical analysis is the same as using fundamentals: to make the best use of each, one has to spend hours of work. And without that dedication and work, I don’t think one can discuss them with much legitimacy.
I use fundamentals to look at macro ideas.
I also use fundamentals when I look at stocks: I look at their story, their financial statements, I do some valuation models for regularly. That helps me – but that’s a lot of work to do.
I look at charts and I use technical analysis: that helps me too – but that’s also a lot of work.
And it helps me only because I’ve put the effort to learn it in the first place too.
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So to conclude, I’ll go back to my initial point.
I’ve been on Avi’s website and his various trading rooms. He and his analysts do a very fine job, a VERY FINE JOB.
They don’t get everything right, but they don’t make crazy calls which put your portfolio in trouble.
This, I think, shows the professionalism/quality of the risk management he and his team uses. Anyone who is a sceptic should just go to his website and do a 2 weeks free-trial. No credit card information is required.
As a background, and just to provide some perspective, I assisted managing a few hundreds of millions of USD in the not too distant past… so I believe I have a “little idea” of what proper risk management is about when I see it in action.
As far as his method is concerned, I didn’t really put the effort, so I AM the one to blame. NOT his method.
There are people who say the way Avi looks at markets is always two-sided and he can never be called wrong: that is inaccurate IMHO. There is a way to understand what he says. If you don’t try to learn it, you will not get it. Plain simple.
I feel lucky to be able to converse in several languages.
So I’ll suggest this little experiment: try to express yourself in German the way you express yourself in Spanish. I doesn’t work. Why ? Because the structure of the language is different. So first you have to learn the structure of the language.
Try to express yourself italian the way you express yourself in Arabic. It doesn’t work for the same reasons. You have to learn the language structure first.
Try to express yourself in … Whatever. You get the point.
If you do not make the effort to understand how something works, how something is structured, you will NEVER get it. NEVER. But because you do not get it, you should not blame the thing you tried to mast. You should, humbly, realize/admit/conceal that you just didn’t put the effort. Blame your own “laziness”… and stop looking for external factors/outside excuses.
When I don’t make the effort, I blame my laziness.
When I am not diligent enough in my analysis and miss something, I blame myself for being sloppy – ask Richard/Doc about that: he hears me bashing myself once in a while.
When one of my trades go wrong, I don’t blame the market – I try to find what my analysis missed.
When my fundamental views are not in line with the performance of the asset in the market, I don’t blame/cry manipulation: I FIRSTLY tell myself there is something I am missing.
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I am not that smart so I try to compensate by hours of work.
I also came to a personal conclusion that in life, most of the issues come from ourselves, and our cognitive biases: not the outside world. So in order to be able to master the world better, I work on myself and my biases FIRST.
But that’s just me.
My 2cts.
LPG