Be Right or Be Profitable

Jan. 13, 2021

I believe Roger Federer is the greatest tennis player of all time.

Of course, I’m right about that and it’s not open for discussion (no one would dispute it anyway).

I also believe that the stock market is ludicrously overbought. I believe the V-shaped recovery since March 2020 is mind-bendingly non-sensical.

In the first case, I’m right and everyone’s happy.

In the second case, I may be right eventually, but that belief is extraordinarily unprofitable.

The market went up off the bottom and it hasn’t stopped. The people who shut their mouths and traded the charts have been deliriously happy.

A trader can sit around and pout and complain on social media, or a trader can make money.

Here’s one more example (that we mentioned on Monday).

It’s my opinion that Tesla is a smoke-and-mirrors bubble. Other traders think that, too.

But guess what? It’s not about being right or making the perfect call.

It’s about making money.

Here’s a reminder on what a simple trading system has done on TSLA since 2010:

In 2020, the year that traders started screaming about how overpriced Tesla is, a trading system would have made 310%.

A trader can scream or a trader can make 300%.

We have to choose the option we like best.

If we choose profit, then we need to keep our beliefs out of it.

Talk to you soon.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.