95%/5%

[MichaelD]

Hi,

Trader Vic is Victor Sperandeo not Victor Niederhoffer.

MichaelD, Would you say these characters are not in the top 5%??,because they blew up.

Or were they in the top 5% before??

Oops - not very familiar with either Victor - my error.

They were never in the 5% - they placed themselves in positions where it was possible to blow up (= took excessive risk).

 

[motorway]

In a discussion about the 5% compared to the 95%, I would like to ask about the following characters.

1. Jesse Livermore. Died broke. Was he in the 5 or the 95?

What do you know about Livermore ?

He became a media celebrity... A name used to sell all sorts of things

even back in 1923...

EDWIN LEFEVRE: Who Couldn’t Separate His Facts from His Fiction.

Does trading with inside knowledge put you in the 5%...
What about if the knowlege is wrong ?

Why was he so good in the Bucket shops ?

Livermore came to wall street in 1906 confident and ready to conquer.
Too cocky for his own good, he lost it all in his first bust. never being one to diversify his risks, the ego maniac also didn't understand how hard it is to build a big position.

Buying stocks is different from reading the tape. If he saw a stock at 20 in the bucket shops and thought it would go to 24. He could buy at 20, and when it got to 24 he could "sell" for a 20 percent profit.

But on Wall Street he would take his $50,000 and plan to buy 2,500 shares of the stock. That was a hefty position in a market much smaller and less liquid than today's and the spread between bid and offered prices was often huge. It wasn't abnormal to see a stock quoted at 20 bid, offered at 25 - a 25 percent spread.

Suppose a stock traded last at 20 but was quoted 19 bid, offered at 21. He started buying at 21, plus commission. But then his own buying would drive the stock up. It might take him until 24 to get his entire portion built. Then, if he thought it would fall and started to sell , it might be quoted at 23 bid, offered at 24. he'd then start selling but never get a better price than 23, less commission, and take a loss on his first sale.

Then he would drive the stock down and take a loss on the liquidation of his remaining 2,500 shares. It's a lot harder to make money in reality than it is to do on paper - something which few people today, except for institutional money mangers, seem to realize. For instance, investment newsletters "manage" portfolios the same way Livermore traded bucket shops. But actually operating off the newsletters' advice is like Livermore's buying on Wall Street.

Livermore didn't get that at first. He thought he couldn't read the tape fast enough on wall street. So doing the only thing he knew to do, he headed back to replenishing his capital via bucket shops. En route, the 29-year-old stumbled upon Union pacific Railway - on a lucky hunch.

As Union Pacific rose, he sold short, anticipating a big swing. Then , just as he was about to be wiped out, his swing came in in the form of the San Francisco earthquake, halting East-West money flow and sending the railroad plummeting! Livermore quickly covered his short, took a bundle, booming a second time..... ( from Ken Fisher 100 minds that made the market

 

[MichaelD]

How about if you have the mindset and understanding but your (recent) realtime trading results are absolutely sh**house (Like mine! ), what does that mean? LOL.

This is worth exploring. The KEY point here is the value you have assigned to your recent trading results.

Did you trade a plan?
Did you follow the plan?
Were the trading results within the plan's parameters?

If yes to all of the above, then you have traded well.

If you have traded well, why do you wish to assign a perjorative adjective to your results?

 

[nizar]

This is worth exploring. The KEY point here is the value you have assigned to your recent trading results.

Did you trade a plan?
Did you follow the plan?
Were the trading results within the plan's parameters?

If yes to all of the above, then you have traded well.

If you have traded well, why do you wish to assign a perjorative adjective to your results?

LOL was I wishing to assign one of those???
I dont even know what that word means!

The reason we all trade is to make money. Nobody here can dispute that.

 

[tech/a]

Michael has pretty well covered my way of thinking to most posts.

On mindset.

Its all about mindset.
If you truly dont think you wish to be one of the 5% in ANYTHING then you can just about guarentee you wont be.

Its been mentioned that you may not wish to be in the 5% of anything.
That to is fine---my problem is those who are in that boat shooting cannon balls at those who dont wish to be in their boat.

The reason we all trade is to make money. Nobody here can dispute that.

I dont know about that statement.
The end thermometer of our ability to master this challenge is to make money.

Firstly you need an interest---very few out there have the same interest in trading that we do.

You definately need passion!

I personally trade because I have the above AND it is a massive challenge----an on going and exciting learning process and something that stimulates and challenges my thinking on a daily basis---it doesnt bore me. Its something I can do into my nineties if I'm lucky enough to get that far.
When I lost my starting capital of $20k in the first 6 mths of trading it became a challenge.
Techtrader came about accepting that challenge.
So did my results.
I'm still accepting the challenge as the market changes.


Business WAS originally about money but as failure and success combined it became challenge.
So did Property---success failure--challenge.

With acceptance of challenge and the combination of Entrepeneurial thinking,innovation,ambition,commitment and application,money follows behind---in all things money orientated.

The Money DOES come if the above is combined---with good management.

Same happens with sport.
Same happens with interests,like becoming a pilot,learning Art,Restoring a car,collecting antiques.(Only no 1 interests me so I'll likely be in the 95% for all the others.)

 

[wayneL]

Its all about mindset.
If you truly dont think you wish to be one of the 5% in ANYTHING then you can just about guarentee you wont be.

Hah Nonsense!

An individual can wish to be 100% of what he/she can be without thought or concern of where they fit in the overall picture. They could end up in the 5% of the 5% without ever thinking about whether they are in any 5%.

In any case, if a person's 100% only gets them 20% up the ladder, I dips me lid to them. They gave what they could. They're 100%ers.

Its been mentioned that you may not wish to be in the 5% of anything.
That to is fine---my problem is those who are in that boat shooting cannon balls at those who dont wish to be in their boat.

ROTFLMAO You just don't know which boat anyone is in here. Typically, you presume anyone with a different outlook is in a different boat achievement wise. That could be true, but the different boat could be bigger and more luxurious than yours... but they could be in the same boat, you just don't know.

You believe they are cannon balls because you have an ego than can be dented, but they are just thoughts/concepts and can't hurt anyone. So desperate are you to be known as this mythical 5%er, that any challenge to the concept is like a red rag to a bull, a challenge to the ego that must be defended.

Alas, I guess you must do what you must do.

It reminds me of the allegorical story of the caterpillars and the butterfly....

Conclusion. Be what you can be, whatever that is. But comparing yourself to others an anxiety... status anxiety.

 

[2020hindsight]

well I'm confident that me (and my bank account) are in the 2/3 of 3/5 category

 

[tech/a]

Ah I see your usual ploy.

Nothing to add so Wayne hides behind Moderator status and resorts to personal attack.

Love it!

 

[wayneL]

Ah I see your usual ploy.

Nothing to add so Wayne hides behind Moderator status and resorts to personal attack.

Love it!

A genuine observation is not an attack Tech/a. I'm trying to help you with your problem.

 

[nizar]

Michael has pretty well covered my way of thinking to most posts.

On mindset.

Its all about mindset.
If you truly dont think you wish to be one of the 5% in ANYTHING then you can just about guarentee you wont be.

I dont know about that statement.
The end thermometer of our ability to master this challenge is to make money.

Firstly you need an interest---very few out there have the same interest in trading that we do.

You definately need passion!

I personally trade because I have the above AND it is a massive challenge----an on going and exciting learning process and something that stimulates and challenges my thinking on a daily basis---it doesnt bore me. Its something I can do into my nineties if I'm lucky enough to get that far.

Actually -- Yes I take back my comment.

You are 100% correct.
You need passion. Definitely.

I try all the time to get people interested in trading and lend them books and give them links. Several weeks later I ask them if they had had a look or a read. The usual answer, "Nah, too Busy". Busy with school, work, etc, etc.

Its because they dont have the interest and they don't have the passion. I mean -- Im busy too! Even though I also work and go to school (well not now but for the last 4 years) I was always busy as well, but not busy with work and school, rather Im busy with trading!

You always somehow seem to make time for the things you have a passion for and that are important to you.

For me, well I don't count the time I spent trading and learning about trading. Im almost always doing something related to trading.

My mum says that when I talk about trading she can see the sparkle in my eyes.

With acceptance of challenge and the combination of Entrepeneurial thinking,innovation,ambition,commitment and application,money follows behind---in all things money orientated.

I like what you're saying here.

 

[tech/a]

Gee thanks.

I'll bring up your points at my next Ego Anonymous meeting.

Catch you all in the morning.

 

[wayneL]

Gee thanks.

I'll bring up your points at my next Ego Anonymous meeting.

Catch you all in the morning.

I'm here to serve.

 

[r m]

Assuming that we think we are in the 5% / successful traders (by our own choice of measure).
Don't we need the 95%? Surely we need the 95% to follow the lead and recognise the stocks that we have picked. Is their buying, after ours, what causes the share price to rise and creates our profit?

 

[chops_a_must]

I was going to blog this topic... thanks Wayne. :

But... by definition and inference, didn't the 5% ride Enron into bankruptcy?

And haven't the 5% been buying these financials right from the top?

How can you make money if the 95% of people aren't going in your direction after you get in? Or is it just the 5% that realise that they need the 95%?

Might be a case of measuring the incalculable...

Obviously agree whole heartedly.

Assuming that we think we are in the 5% / successful traders (by our own choice of measure).
Don't we need the 95%? Surely we need the 95% to follow the lead and recognise the stocks that we have picked. Is their buying, after ours, what causes the share price to rise and creates our profit?

 

[dhukka]

Hah Nonsense!

An individual can wish to be 100% of what he/she can be without thought or concern of where they fit in the overall picture. They could end up in the 5% of the 5% without ever thinking about whether they are in any 5%.

This come close to it for mine. If there really is a 5%, which I personally doubt, I bet they don't spend their time talking about what makes a 5 percenter, they just get on with it.

 

[theasxgorilla]

This come close to it for mine. If there really is a 5%, which I personally doubt, I bet they don't spend their time talking about what makes a 5 percenter, they just get on with it.

Yeah you'll notice I haven't posted much lately :

 

[It's Snake Pliskin]

An individual can wish to be 100% of what he/she can be without thought or concern of where they fit in the overall picture. They could end up in the 5% of the 5% without ever thinking about whether they are in any 5%.

This is a good comment because it touches on the fallacy of assigning a percentage figure to something that cannot be fully tested. In the absense of a trading olympic event, what should the parameters be if they didn't change and the conditions were equal. Impossible to study in reality. Perhaps it's mental masturbation to believe in the figures. Many look the part but are they really? What about Livermore? The ultimate operator. Maybe not. You might enjoy this article:http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm

Back into hibernation...

 

[tech/a]

This come close to it for mine. If there really is a 5%, which I personally doubt, I bet they don't spend their time talking about what makes a 5 percenter, they just get on with it.

Obviously youve never read a book.
Been to a seminar.
Been coached at anything.

I bet they don't spend their time talking about what makes a 5 percenter, they just get on with it

I'll bet they dont spend 95% or even 98% of their time talking about their specialty but you can bet that everyone of them would talk freely about what makes a 5%er in their field.

If there really is a 5%, which I personally doubt,

Yeh Soros is just average so is Trump,Tiger Woods well hes plain average.
Sir Edmund Hilary theres another average achiever.J.K. Rowling Very average writer.
You might wish to run through the Nobel prize winners.http://orange.sims.berkeley.edu/cgi-bin/flamenco.cgi/nobel/Flamenco

An individual can wish to be 100% of what he/she can be without thought or concern of where they fit in the overall picture. They could end up in the 5% of the 5% without ever thinking about whether they are in any 5%.

They can and do of course.

Some however have to work at it and some will seek out the qualities of these special individuals and get there themselves knowing full well which direction they wish to head and how high their goal to succeed is.

mental masturbation

Classic.

 

[tech/a]

In reality its not the 95/5% statistic which is obnoxious to some its that some have the audacity to class themselves in it even by implication.

Take Tony Mundene,95% want to see his block knocked off certainly by a quiet achiever like Danny Green.

 

[dhukka]

Obviously youve never read a book.
Been to a seminar.
Been coached at anything.

Geez that was easy, obviously emotionally you're in the bottom 95% tech along with your trading and chart reading, which you proved conclusively back in January.

I'll bet they dont spend 95% or even 98% of their time talking about their specialty but you can bet that everyone of them would talk freely about what makes a 5%er in their field.

Not on chat forums they don't.

Yeh Soros is just average so is Trump,Tiger Woods well hes plain average.
Sir Edmund Hilary theres another average achiever.J.K. Rowling Very average writer.
You might wish to run through the Nobel prize winners.http://orange.sims.berkeley.edu/cgi-bin/flamenco.cgi/nobel/Flamenco

Of course there are experts that separate themselves from the rest of the field by their performance, my point is that 5% is simply an arbitrary and meaningless number.