Introduction

The speaker introduces himself and his topic, which is his personal journey as a trader.

• "I'm a little nervous."

• "This afternoon I'm going to share my personal journey as a trader from humble beginnings...to current day with years of experience and lessons learned the hard way."

• "We're going to take a ride on my roller coaster equity curve over the past two and a half decades."

Lessons from Successful Traders

The speaker discusses how some successful traders eventually veered off course while others learned from their mistakes and became consistent winners.

• Yesterday, the speaker cited several brilliant and highly successful traders.

• Some like Ray Dalio learned from their mistakes and evolved into truly consistent winners with steadily rising equity curves.

• Others like Victor Niederhoffer and Jesse Livermore continued to slide down after each successive run and were relegated to merely being boom-and-busters.

• Sadly, there's another traitor to add to that unfortunate list: himself.

Speaker's Personal Journey

The speaker admits that he too has sabotaged his success by breaking just about every rule he stands up here telling you not to break year in and year out. He shares his personal journey as a trader.

• "I too have not achieved that coveted and elusive status of consistent winner that all traders aspire to."

• "This afternoon I'm going to share my personal journey as a trader from humble beginnings...to current day with years of experience and lessons learned the hard way."

• The speaker warns that this ride is not for the faint of heart.

Speaker's Equity Curve

The speaker talks about his equity curve over the past 20 years in the firm.

• The speaker's performance over the past 20 years in the firm resembles a stair-stepping equity curve that hit an all-time peak earlier this year.

• He has had drawdowns or periods of underperformance that were larger or lasted longer than he would have liked, but he's never made any mistakes in the firm that would destroy his equity curve.

• When you are accountable to another person who not only entrusts you to grow their money but also to protect their money then you are less prone to making some of the egregious mistakes that can destroy a portfolio.

Speaker's Personal Performance

The speaker emphasizes that this section is not presented in your workbooks and is his own personal journey with his own personal money.

• This section of the workshop is not presented in your workbooks.

• The speaker wants to make crystal clear that this is not his performance in the firm in the various accounts he manages for O'Neill.

• All numbers shown are truthful and accurate because if there's one thing that he has done consistently over the past 25 years, it's keeping meticulous notes and records.

Beginning of Speaker's Trading Career

The speaker talks about how his training career coincided with his hiring at William O'Neill and Company as a research analyst.

• The beginning of his trading career really coincided with his hiring at William O'Neill and Company as a research analyst.

• For five years prior to that, he was an analyst at a boutique real estate consulting firm.

• He had always been interested in the stock market, but back then, he didn't know anything.

Introduction to Stock Trading

The speaker talks about how he got interested in stock trading and his initial strategy.

Getting Started with Stock Trading

• The speaker's strategy was to look for the report that had the biggest projection and increase in price over the shortest period of time.

• He invested in a little company called Today's Man based on an analyst recommendation, but lost 50% of his investment within a month.

• He learned an important lesson from this experience - never trust an analyst recommendation.

Learning the Ropes

• The speaker started reading books on stock trading, analyzing charts, and studying for the CFA exam.

• He liked buying low-priced stocks and limiting his portfolio to one or two stocks at a time due to high trading commissions.

• His early months were haphazard, but he was making money overall.

Investing in SRS Labs

The speaker talks about investing in SRS Labs and how it impacted his account.

Investing in SRS Labs

• The speaker invested in SRS Labs after it went public and made a triple-digit gain by the end of August.

• He added more money to his account when he saw that the stock was doing well.

• Unfortunately, he didn't have any sell rules and ended up losing 24% of his gains by year-end.

Developing Trading Rules

The speaker talks about how he developed rules for trading after losing half of his money.

Developing Trading Rules

• The speaker did a post-analysis and wrote down some rules to govern his trading.

• His basic rules were: preservation of capital, always have an expectation of what a stock should do and if it violates that expectation sell it, and trade in line with your personality.

• He considers himself a singles hitter when he trades and swings for the fences only occasionally.

Learning from Mistakes

In this section, the speaker talks about his early experiences in trading and how he learned from his mistakes.

Starting Over with a Fresh Set of Rules

• In 1997, the speaker started over with a fresh set of rules that he vowed to follow.

• He was focusing on individual stocks and trying to pick some short-term winners.

• The market corrected about 15 percent off the highs but he wasn't paying any attention to it.

Concentrated Portfolio and Quick Profits

• The speaker was trading a very concentrated portfolio relative to the small size and was looking for quick profits doing swing trading.

• He did well in stocks like Maverick 2, Engineering Animation, Peregrine Systems, Act Networks, and Simulation Sciences.

• With the use of full margin and short-term compounding, he was up 130 percent by the end of May.

Discovering Options

• In August of 97, the speaker discovered options as a way to increase his leverage.

• Instead of buying a large position in the stock, he would buy a fairly large position in the option ranging between 10 and 15 percent of his account which is pretty big for an option position.

• He made trades in DSP Group, Whole Foods Market Inc., Avid Technology Inc., Radical Software Group Inc., System & Computer Technology Corp.

Trading Aggressively into 1998

In this section, the speaker talks about how he continued to trade aggressively into 1998 although his focus turned back to stocks having sustained a few bad option losses at the end of the previous year.

Strong Market in the First Half of 1998

• The market was strong during the first half of 98 with an asset moving up 29 percent to its peak.

• The speaker continued to trade aggressively into 1998 although his focus turned back to stocks having sustained a few bad option losses at the end of the previous year.

My First Bear Market

In this section, the speaker talks about his experience during his first bear market and how he lost a significant amount of money.

Making Money in a Bull Market

• The speaker's stock had moved up 300% in the previous 18 months.

• By the end of June, he was up 110% and his account was up to $73,000.

• The market peaked on July 21st at 2028 and within three months lost 33% of its value.

• In August of '98, the Russian government was forced to devalue their currency and default on their debt.

• In four months, the speaker's account went from being up 110% to being down 24%.

Two Things Led to His Ruin

• The speaker's persistence in fighting against the market trying to swim against the tide.

• His insistence on trying to pick bottoms.

Buying Pullbacks in a Bear Market is a Terrible Strategy

• The speaker kept coming back to Engineering Animation again and again but it fell by 60% when the market corrected.

• Buying pullbacks in an established uptrend is profitable and least risky strategy in a bull market but not so much in a bear market.

Bouncing Back After Losing Confidence

• After losing confidence due to losing most of his gains, he started looking for a job.

• The market bottomed in October of '98 and the speaker's account bounced back to $45,000 by the end of the year.

Trading in 1999

In this section, the speaker talks about his trading experience in 1999. He made over 700 trades and was up an astonishing 86%.

Trading Statistics

• The speaker made over 700 trades in 1999, averaging about 60 trades a month.

• The speaker's win-loss ratio in 1999 was about 60%, with an average holding period of seven days.

• Despite not having impressive stats, the speaker was up for ten out of twelve months and ended the year up by over $1 million.

Personal Experience

• The speaker took out $180,000 to pay his tax bill after ending the year with over half a million dollars in his account.

• The speaker thought he was a market wizard and got a license plate that said "MARKT WZRD."

• Bill O'Neill visited the research department and offered the speaker a position as a research analyst to support portfolio managers (PMs).

Moving Up at O'Neill

In this section, the speaker talks about how he moved up at O'Neill after being offered a position as a research analyst.

Promotion

• After accepting the position as a research analyst, the speaker moved into a cubicle outside Bill O'Neill's office.

• As an analyst for PMs, the speaker wrote one-page reports on stocks but was mostly able to trade his own account with few distractions.

Market Conditions

• The market was euphoric in the first two and a half months of 2000, with the NASDAQ up 26% and climax tops abounding.

The Rise and Fall of a Trader

In this section, the speaker talks about his experience as a trader during the dot-com bubble. He discusses his biggest winners and how he made significant gains in a short period of time.

Trading During the Dot-Com Bubble

• Noven Pharmaceuticals and Cell Genesis were some of the speaker's biggest winners during the dot-com bubble.

• By March 10th, 2000, the market had peaked and the speaker was up 240%.

• However, within five or six weeks, the NASDAQ had broken 36%, and stocks were crashing.

• By the end of March, Cell Genesis was down 70%.

Making Money During Market Downturns

• Despite market downturns, the speaker continued to make money by cashing in on oversold bounces and buying put options.

• By April, he was up 29% and held his gains despite being down just five percent in May.

Becoming a PM and Mentee

• In May, there was a seven-week tradable rally advancing 24%, which is when Bill made him a PM.

• The speaker became close with Bill during this time as they spoke every day and went on business trips together.

Continued Success Amidst Market Decline

• After an 18% pullback in July, there was one last bounce to challenge July highs advancing 21% off lows. The speaker's personal account was up another 50%.

• By August, the speaker was up 652%, and he had just closed escrow on a brand new home.

• The speaker peaked on September 14th, 2000, up 824% for the year. However, the NASDAQ was down four percent and 24% off its March high.

Protecting Himself from Himself

• After feeling like he was losing control, the speaker began wiring money out of his account to protect himself from himself.

• In September, he transferred another $600k out of his account followed by another $150k in October. He diversified by buying a limited partnership in real estate and putting money into mutual funds for the long term.

Burnout and Break

In this section, the speaker talks about how he was burnt out and needed a break from trading.

Trading Retirement Accounts

• The speaker decided to focus all his efforts on trading retirement accounts at the beginning of 2001.

• He traded his wife's SEP IRA account more slowly and conservatively, which had been growing nicely over the years.

Emulating Bill and Capitalizing on Big Winners

• The speaker decided to emulate Bill and focus on capitalizing on big winners by trading aggressively during the first half of 2001.

• He made big money in Bradley Pharmaceuticals, Physionics, and Entrust.

Cyber Security Turnaround Plays

In this section, the speaker talks about two cyber security turnaround plays that he invested in.

Secure Computing

• The speaker had a precedent for investing in cyber security turnaround plays with Secure Computing.

• The stock fell fulfill after a climactic gap down but then perked up, came back into the 50-day moving average, had a huge move up, and another pullback to the 21-day moving average. It was up 10-fold in 20 weeks.

Entrust

• Entrust similarly had a deep fall from grace with a big climactic gap down consolidation phase before perking up off the 50-day moving average and pulling into the 21-day moving average before rushing up again. It was up over 200 percent by early January based on Secure Computing's precedent.

• The speaker built a 75-position in the stock going into earnings, expecting the gap up, but instead got a gap down. The stock fell 31 percent that day on ginormous volume, and his account was down 25 percent in a day.

Tough Year

In this section, the speaker talks about how he struggled to make money during a tough year.

• The market corrected 41 percent to its low in October of 2002, and the speaker continued to swim against the tide doing his best to make money on the long side in a sea of red but it was just too difficult.

• By the end of September, he was 50 percent off his highs, and his compounded gain had shrunk from 229 percent to just 53 percent. He had busted again.

The Power of Compounding

In this section, the speaker talks about the importance of compounding in building wealth and how it requires both return on investment and time. He also discusses how only consistent winners can harness the power of compounding.

Harnessing the Power of Compounding

• The secret to building wealth is to harness the power of compounding.

• Two essential elements are required for compounding - return on investment and time.

• Only consistent winners can harness the power of compounding.

Trading During a Bull Market

In this section, the speaker talks about his experience trading during a bull market from 2003 to 2007. He mentions some great model stocks during that period and how he traded like a consistent winner.

Trading Like a Consistent Winner

• The start of a new secular bull market was seen in March 2003.

• From 2003 to 2007, there were many great model stocks that made amazing moves.

• During those five years, the speaker traded like a consistent winner and handily beat the market by a wide margin.

Trading During Financial Crisis

In this section, the speaker talks about his experience trading during financial crisis in 2008. He mentions how he tried to find rare winners amongst sea of losers but eventually went down with indices.

Trading During Financial Crisis

• 2008 was the financial crisis and it was a terrible year.

• The speaker tried to find rare winners amongst sea of losers but eventually went down with indices.

Trading During a Bull Market Again

In this section, the speaker talks about his experience trading during a bull market again from 2009 to 2014. He mentions some big winners during that period and how he traded like a consistent winner.

Trading Like a Consistent Winner Again

• On March 9th, 2009, the nasdaq hit what would turn out to be the bear market low.

• Over the next five years, the speaker experienced what it was like to trade like a consistent winner again.

• During that five-year period, some of his big winners included Green Mountain Coffee.

Building a Home Trading Business

In this section, the speaker talks about his experience in trading housing stocks and how he doubled his money in 2012.

Planning for the Trade

• The speaker had been planning and patiently waiting for years to trade in the home building industry.

• He did a whole presentation on this trade at the 2012 master's workshop.

• He doubled his money in 2012 primarily trading housing stocks.

Feeling Good About Performance

• By the end of 2013, the speaker was feeling pretty good about himself.

• He was proud of his performance over the 13 years from 2001, where he was up 4,800 percent.

• This is compared to Nasdaq's 69 percent return or just four percent Kgarb.

Dreaming of Abundance and Wealth

• As we entered 2014, one of the stocks that was following closely was Tesla which had staged a massive move the previous year and had built a second stage cup of handle base.

• The speaker's net worth was building, and he was dreaming about a bright future of abundance and wealth.

Betting on Tesla

In this section, the speaker talks about how he bet on Tesla after observing its behavior during its initial breakout runs.

Similarities with First Solar

• Tesla reminded him of a stock he did very well in six years earlier - First Solar.

• These stocks behaved almost exactly alike during their initial breakout runs.

• The speaker bet that Tesla might act like First Solar coming out of this first second-stage base.

Trading Call Options

• The speaker started buying call options lots of call options on February 25th when Tesla had that huge gap up.

• He had so much confidence and was doing so well in this trade based on the precedent that he started to buy call options.

• He had his first seven-figure day.

Feeling Confident

• The speaker's convictions soared with the size of his position.

• It was uncanny how similarly the stocks traded, and it was as if he could see the future.

• His account was already up 62% on the year, and they weren't even into March.

Dreaming Big

In this section, the speaker talks about how he dreamed big after making a lot of money from trading.

Jesse Livermore Comparison

• The speaker fashioned himself as a modern-day Jesse Livermore.

• He would buy a big home on the beach in Malibu and throw lavish parties for all his friends.

• If he could double his account by year-end, which he thought he'd have no problem doing, then he could pretty much do whatever he wanted and live wherever he wanted from that point on.

Tax-Free Money

• The money was tax-free as the speaker had converted it to a Roth IRA years before and paid taxes.

Not Satisfied Yet

• At this time, by this time, the truth is that the speaker had made enough money so that they could live very comfortably for the rest of their lives.

• But he wasn't satisfied; he was really dreaming big.

The Downward Spiral

In this section, the speaker talks about how he experienced a severe downward spiral in his trading career.

Refusal to Believe the Precedent was Broken

• The speaker refused to believe that the precedent was broken despite other high-flying stocks experiencing a similar trend.

• He believed he had been so right that it was impossible to be wrong.

Long and Severe Downward Spiral

• Something broke inside the speaker's brain, leading him into a long and severe downward spiral unlike anything he had ever experienced before.

• Over the next few years, he turned away from everything he knew about the market and became an emotional, fearful trader who didn't trust himself.

Massive Losses and Struggles

• The speaker bought more call options anticipating a sharp recovery while Tesla came down to the 50-day moving average.

• By March, just four weeks after peaking, he had given back all his gains and then some. He took massive losses on his options with most of them going to zero.

• By October, he was down 36% and 63% off his highs in just seven months. His head was in a bad place as he struggled with trading.

• Despite stabilizing by year-end, by 2014 end, he was down 26% for the year in a depressing 56% off his peak.

Recovery Attempts

In this section, the speaker talks about his attempts at recovering from his losses.

Swing Trading Opportunities

• During the first half of 2015, the market traded in a choppy fashion but with an upward bias. This kind of market offered opportunities for someone who could swing trade.

• The speaker's mental state was still injured, but he had done a post-analysis at the end of 2014 and was eager and confident that he would recover.

Successes and Progress

• The speaker had success in turnaround plays in Lululemon and Mobileye. He did well in NXPI Semiconductor.

• He even caught the turn in Tesla this time sticking to the stock not the options toward the end of June. By then, he was up nearly 30% compared to Nasdaq's nine percent gain.

• Despite being hit hard by August's flash crash, he participated in the bounce so that by September-end, he was still up 19% on the year compared to Nasdaq's 1.6% return.

Struggles Continue

In this section, the speaker talks about his continued struggles despite some progress.

Difficult Market Conditions

• The market conditions were choppy with frequent pullbacks during most of 2015. It was really too difficult to make money particularly on any side for that matter.

• Despite this stay-away market condition, the speaker kept trading full force ignoring every rule in the book.

Downward Spiral Continues

• By year-end, he closed down nearly nine percent compared to Nasdaq six percent gain. He was now sixty percent below his all-time peak in under two years.

Trading While Unwell

In this section, the speaker talks about how he continued trading despite being unwell.

Impossible to Trade Well

• The market was volatile and choppy in 2016, making it really difficult to navigate even for the very best traders who were on their game.

• For the speaker, who had completely lost his way, it was next to impossible to trade well when his head wasn't screwed on straight.

Breaking Every Rule

• The first part of 2016 was terrible with a 19% intermediate correction followed by a recovery and then sharp pullbacks related to Brexit.

• Despite this, the speaker kept trading full force ignoring the fact that the market was not in an uptrend and breaking every rule in the book.

Buying Tesla and Losing Everything

In this section, the speaker talks about his experience buying Tesla stock and losing everything.

Buying Tesla at the Wrong Time

• The speaker bought Tesla stock in 2015, just before the market broke wide open.

• He bought it on a premature breakout above resistance.

• At the time, he was trying anything and hoping for something to work. He was not in a good state of mind.

Holding On for Dear Life

• The speaker became a long-term investor and was done taking losses.

• He held on to the stock as it kept falling along with the general market day after day.

• By the time it broke 150, he was in full-on panic mode. He finally came to his senses and capitulated, suffering a 40% loss in six weeks.

Losing Everything

• After selling his stake in Tesla, holding the stock shot up 90 points in two months.

• The speaker lost so much money that he was ashamed, embarrassed, and depressed. It affected every part of his life.

• Despite everything, he still had a significant stake compared to what he started with. He believed that if he could get back into the zone, he could rebuild his fortune.

Finding the Next Big Winner

In this section, the speaker talks about how he tried to find the next big winner after losing everything on Tesla.

Committing to Finding a New Winner

• The speaker committed to finding the next big winner that would dig him out of this hole.

• A rally happened amongst the fiber optic stocks in July 2016, and that played in perfectly with his new plan to find a big winner.

• He made money in Lumentum, Aclero, and Finisar but the one he really wanted was Acacia.

Hesitation

• The speaker hesitated on buying Acacia even though it had amazing earnings, huge estimates, and a reasonable valuation.

Buying on a Pullback

In this section, the speaker talks about buying a stock on a pullback and how he used historical precedent to inform his decision-making.

Using Historical Precedent

• The speaker bought a stock on a pullback to the 21-day moving average.

• He used First Solar from 2007 as historical precedent for his decision.

• Acacia Communications was similar to First Solar in terms of its IPO breakout, run-up, and pullbacks to the 21-day moving average.

• The speaker expected Acacia Communications to have another huge move based on the historical precedent.

Positioning Aggressively

• The speaker sold his current holdings and other fiber optic stocks with a profit and positioned himself aggressively in Acacia Communications.

• He loaded up and waited for good things to happen.

Ignoring Clear Signs

• Acacia Communications started faltering after a one-day balance off the 50-day moving average.

• The stock gapped down on set on a secondary offering decisively breaking below the 50-day moving average closing at the lows.

• This was an ominous sign that it was time to bail out, but instead of selling, he dug in his heels and became an expert on the fiber optic industry.

Becoming an Expert

In this section, the speaker talks about how he became an expert in fiber optics despite being technically challenged.

Learning About Fiber Optics

• Despite being technically challenged, the speaker read everything he could get his hands on about fiber optics and coherent transmission.

• He had a binder filled with articles devoted to this topic.

• He listened to conference calls and tried to interpret how analysts responded to management's response.

Justifying Staying in Losing Trade

• The speaker's ego made elaborate justifications and rationalizations to keep him in a losing trade.

• He ignored the most obvious facts and focused on any shred of evidence to support his position.

• He protected himself from being wrong at all costs, even if that cost was losing everything he had.

Capitulating

• By year's end, the speaker capitulated and had a large portion of his account on this loser.

• He was down nearly 50% on the stock and another 58% in 2016.

• He was down 83% off his all-time high just a few years earlier.

Personal Journey of Reflection, Awareness and Growth

In this section, the speaker talks about his personal journey of reflection, awareness and growth. He shares how he hit rock bottom in 2017 and how he was able to make progress in the first half of 2018.

Difficult Period

• After 27 years of marriage, the speaker went through a difficult and extremely painful period in his personal life.

• In 2017, things got worse for him as he hit rock bottom and was depressed, confused, embarrassed and ashamed.

Progress Made

• The speaker was able to make some progress in the first half of 2018 by closing up 23 percent outpacing the Nasdaq's nine percent gain.

• The account was frozen until the divorce is final.

Self-Sabotage

• The speaker reflects on why he broke virtually every rule in the book despite his success.

• He explains that deep down he didn't feel worthy or deserving of his success which led him to sabotage it unconsciously.

• Following rules perfectly on every trade is one thing but violating them with a big position can unravel all previous success.

• No amount of money or empirical success can compensate for a lack of worthiness.

Achieving Worthiness

• Feeling valued comes from connecting with others through relationships. Seeking value externally doesn't work as it's a slippery slope when you equate your sense of value with money status cars houses possessions and so forth.

Dealing with Worthiness

In this section, the speaker talks about how everyone deals with their own demons and a sense of worthiness. He emphasizes that it is not enough to just figure out what you're doing wrong, but also why.

The Importance of Going Deeper

• It's not enough to do a post-analysis and promise yourself you'll never break the rules again.

• We have to go deeper and figure out what's holding us back from reaching our potential.

The Power of Vulnerability

• Brené Brown's TED Talk on the power of vulnerability is recommended.

• Connection gives meaning and purpose to our lives, but shame gets in the way of connection.

• Everyone feels shame on some level, which makes vulnerability an act of courage.

Courage to Be Imperfect

• People who live with a deep sense of worthiness are willing to let go of who they think they should be in order to be who they are.

• They don't have an ego to protect, which means there's no reason for them to rationalize or hesitate over trading decisions.

Overcoming Limiting Beliefs

• Until we figure out what's holding us back from reaching our potential, we will continue to sabotage success and struggle to become truly consistent winners.

Rebuilding After Failure

In this section, the speaker talks about how he decided to take his audience on a journey as a trader as part of his own healing process. He emphasizes that bad chapters don't define your story and that the market is always open, offering a constant stream of opportunities.

The Healing Process

• The speaker shares his story as part of his own healing process.

• He still has a stake and the opportunity to rebuild, which is the great thing about trading and the markets.

New Heights

• When you're in the zone, things can happen pretty quickly.

• The possibilities are limitless, and it's not a question of if but when he will reach new heights.

Trading and Building Wealth

In this section, the speaker talks about his experience in trading and building wealth. He emphasizes the potential to build wealth in the market but also warns of the potential to sabotage and squander that wealth if one loses discipline.

The Speaker's Experience

• The speaker is a work in progress when it comes to trading.

• Most elite traders who are consistent winners lose one or more fortunes along the way.

• It takes setbacks to develop a winner's mindset.

Advice for Aspiring Traders

• Don't give up or be discouraged if you haven't achieved consistent winning status yet.

• Inevitable setbacks are necessary for most people to become consistent winners.

Final Thoughts

• The speaker hopes that listeners can learn from his experience.

• There is incredible potential in the market to build wealth, but discipline is crucial.

• Good luck!