≈ Nobody wants. ≈
Chesky to Bezos: “Jeff, what’s the best advice Warren Buffet ever gave you?”
Bezos: “[I asked Warren,] your investment thesis is so simple… you’re the second richest guy in the world, and it’s so simple. Why doesn’t everyone just copy you?”
Buffett: “Because nobody wants to get rich slow.”
Warren Buffett is rich like a snail. He has a great investment system in his hands, no question about that. It survived all market conditions so far. If only Einstein could witness the power of compound interest…
What about us, mere mortals?
The first thing a trader does, especially the new ones, is they see a strategy that fits their appetite for risk, their ability to forecast movements and then—like they’ve found the Holy Grail of wealthiness—, they go all-in in a heartbeat.
– “Sorry, but I use 100% of my account in one strategy. I trust my skills.”
Going all-in is addictive, for sure. If you trust that the probability of profit displayed on the platform is accurate, then you got nothing to fear.
The problem is that these calculations in the financial markets are based on standard deviations and normal distributions, and the financial markets don’t belong to this realm, the Mediocristan, but to the Extremistan as so wisely stated by Nassim Taleb. The readers of this daily news are well-versed on the Extremistan, as we’ve published a 5-part series on this channel.
So what should be your first line of defense inside this Extremistan world?
Rules, rules, rules, rules. And more rules. And a perfect execution. You need a system.
Stay tuned, traders. We’ve got a new 101 series coming at you and you don’t wanna miss it.
Chart of the Day
S&P without the top 10
On May 17th, we’ve published the second part of the Extremistan series together with the chart above. This very simple column chart shows two numbers, basically. One is the total returns of the S&P from 2000 to 2018 (column on the left) and then, in red, the returns of the same index, during the same period, but without the top 10 largest daily point gains, like they never existed.
Financial markets are not only ruled by randomness but also by extreme events. One day can determine the profits or losses of a whole month. One month can account for the profits or losses of your entire year. Ten days can account for most of the profits in two decades.
Video of the Day
The best advice Warren Buffett ever gave Jeff Bezos
Airbnb CEO Brian Chesky shares the time he asked Jeff Bezos what’s the best advice Warren Buffett ever gave him.
Today’s Lineup
Coaches Lounge 11am EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show 8:30PM EST
This is our weekly MasterMind group. Join the coaches tonight, 8:30pm EST to discuss the markets and help you prepare for the week.
Halftime Report 12:30pm EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Market Recap 4:30pm EST
The Market Recap is designed to give you a quick overview of the day that was. While brief, this report is designed to cover all of the major events that drove the markets that day and help you plan for the trading day ahead.
