SAM CLASS 2

Introduction

The speaker introduces the session and explains that it will be different from previous sessions. He emphasizes the difference between small/mid cap and large cap stocks, and warns against managing them using the same principles learned in levels one to three.

Small/Mid Cap vs Large Cap Stocks

• Small/mid cap stocks are non-liquid and operated by people who are often followed blindly.

• Managing small/mid cap stocks requires a different approach than managing large cap stocks.

• Retail investors often lose money due to lack of knowledge about how to work with non-liquid stocks.

Who Loses Money in the Stock Market?

The speaker questions who loses money when someone like Rakesh makes a lot of money in the stock market. He explains that it is a zero-sum game, and that retail investors are often the ones losing money.

Zero-Sum Game

• When someone makes money in the stock market, someone else has to lose money.

• Retail investors are often the ones losing money because they don't know how to work with non-liquid stocks.

Understanding the Market

The speaker discusses how the stock market is rigged and can be seen as gambling. He emphasizes that having strong fundamentals is important for success in this market.

The Rigged Market

• The stock market is rigged and can be seen as gambling.

• Having strong fundamentals is important for success in this market.

Program Pillars: Doctrines and Rules

The speaker introduces two key components of the program: doctrines and rules. He explains that doctrines are fundamental principles to be followed, while rules are guidelines for safe and clear-cut direction.

Doctrines and Rules

• Doctrines are fundamental principles to be followed.

• Rules are guidelines for safe and clear-cut direction.

Introduction to Trading Doctrines and Rules

In this section, the speaker introduces the concept of trading doctrines and rules that will be covered in the next few sessions. The first doctrine is introduced, which is about accepting losses.

Doctrine 1: Accepting Losses

• Traders will have losses, so it's important to accept them.

• Don't get sensitive to losses.

• Work with what works and drop what doesn't work.

Importance of Accepting Losses

• It's important to understand that just because you've learned a program or studied it doesn't mean you'll make money all the time.

• Examples are given of famous athletes who have lost matches but still moved forward and improved their performance.

Conclusion

• The speaker asks a question about Africa, indicating that this section has concluded.

Understanding Success Rates in Trading

In this section, the speaker discusses success rates in trading and how to approach them.

Success Rates of Hunting

• The success rate of hunting tigers is between 10% and 30%, depending on how people are counting.

• Tigers do not calculate their chances of success before hunting, so it's impossible to know the exact success rate.

• Wild dogs have a higher success rate of around 75% for every hunt they do.

• However, even with a high success rate, wild dogs are not the kings of the jungle because other animals often take their prey.

Applying Success Rates to Trading

• When entering the market, traders should be aware that there is no guarantee of success and that they may fall into the 70% unsuccessful category.

• Traders should take trades when they feel confident, but also understand that missing a trade is okay and they can try again later.

• Cut losses and let profits run. This rule is essential for successful trading.

Cut Your Losses, Let Your Profits Run

In this section, the speaker introduces the concept of "cut your losses, let your profits run" and emphasizes the importance of following this doctrine when trading in the stock market.

Key Points

• The speaker introduces the concept of "cut your losses, let your profits run."

• The speaker emphasizes the importance of following this doctrine when trading in the stock market.

• When confused about a trade, focus on cutting losses and letting profits run.

Stop Being Sensitive About Losses

In this section, the speaker discusses how traders should not be sensitive or touchy about losses. He stresses that managing stocks and self-management are key to success in trading.

Key Points

• Traders should not be sensitive or touchy about losses.

• Managing stocks and self-management are key to success in trading.

• Taking a day off after a loss is not necessary unless it affects one's ability to function at their highest level.

Manage Stocks Through Charts Only

In this section, the speaker emphasizes that stocks must always be managed through charts only. He warns against relying on news or chat rooms for information.

Key Points

• Stocks must always be managed through charts only.

• Relying on news or chat rooms for information can lead to trouble.

• People who want to take money away from traders will often circulate false news.

Understanding the Importance of Action in Trading

In this section, the speaker emphasizes the importance of taking action in trading and explains why it is crucial to monitor the situation constantly.

The Importance of Charts as Action

• Charts are action because buying or selling a stock affects its chart.

• Taking money off the table means taking potential profits away, which is why it's important to act when necessary.

Trading vs. Other Platforms

• Trading involves paying money and taking risks, while other platforms like social media do not require any investment.

• Rule 4 (R4): Most mistakes happen due to a lack of understanding about trading rather than technical errors.

The Need for Constant Monitoring

• Rule 5 (R5): Trading is not a buy-and-forget scene; constant monitoring is necessary.

• Even with long-term portfolios, periodic stop losses may be needed to limit downside risk.

The Importance of Control in Trading

In this section, the speaker stresses the importance of being in control when trading and explains how it can help prevent losses.

The Consequences of Losing Control

• Doctoring number six (D6): If you're not in control, you will make a loss.

• Bad news can cause stocks to drop suddenly, so controlling your actions is crucial.

Long-Term Portfolios Still Require Stop Losses

• Rule 7 (R7): Even with long-term portfolios, periodic stop losses may be necessary to limit downside risk.

• The goal should always be limited downside and unlimited upside.

Introduction

The instructor introduces the topic and explains that he will be teaching a difficult subject in an easy-to-understand manner. He emphasizes the importance of accepting the information first before asking questions.

• The instructor introduces Doctor In, a difficult subject that he will teach in an easy-to-understand manner.

• He advises students to accept the information first before asking questions.

• Students are encouraged to take notes and ask questions later if they don't understand something.

Doctor In D8

The instructor introduces Doctor In D8 and explains that it is best to use alerts. He asks if everyone knows how to use alerts and encourages those who don't know how to learn it in the next few days.

• Doctor In D8 is introduced as a subject.

• It is best to use alerts when dealing with this subject.

• Students are asked if they know how to use alerts, and those who don't are encouraged to learn it in the next few days.

Doctor In D9

The instructor introduces Doctor In D9 and emphasizes its importance. He provides a template for students to follow: enter, exit, re-enter, hold.

• Doctor In D9 is introduced as very important.

• A template for dealing with this subject is provided: enter, exit, re-enter, hold.

Rule R10

The instructor introduces Rule R10: IP (Invest in) performing stocks; exit loss-making stocks. This rule is emphasized as being simple but important.

• Rule R10 is introduced: Invest in performing stocks; exit loss-making stocks.

• This rule is emphasized as being simple but important.

Emotional Attachment

The instructor emphasizes the importance of not being emotionally attached to stocks, entries, exits, stop-losses, or holdings.

• Students are advised not to be emotionally attached to their stocks.

• Emotional attachment should also be avoided when dealing with entries, exits, stop-losses, and holdings.

The Job of a Stock

In this section, the speaker emphasizes that a stock has a job to make money for the investor. If it is not doing its job, then the investor should get rid of it.

A Stock's Job

• A stock has a job to make money for the investor.

• If the stock is not making money for you, then you should fire it and replace it with something better.

• Don't be emotional about your entries or exits. Let your stock do its job.

• Don't treat your stock like your lover. It's doing a job for you.

• If the stock is not doing its job for you, replace it with something better.

Expect Losses

In this section, the speaker emphasizes that losses are inevitable in trading and investors should expect them.

Expecting Losses

• Investors should always expect losses in trading.

• Comparing trading to going to war, losses are expected before entering into any trade.

• Investors who have lost all their trades shouldn't give up but keep trying harder.

Understanding the Bigger Picture

In this section, the speaker explains how to focus on the bigger picture when trading and not get bogged down by individual trades.

Focus on Getting Inside College

• The speaker uses an analogy of getting into college to explain that what matters is whether you achieve your overall goal, not individual achievements.

• He emphasizes that the goal is to make money and not get too caught up in individual losses.

Approach for Smaller Mid Cap Stocks

• The speaker explains that smaller mid cap stocks move quickly and can be sensitive, so it's important not to freeze or become upset when they move down.

• He stresses the importance of focusing on overall score rather than individual trades.

Doctor 14 and Doctor 15

• Doctor 14 refers to measuring yourself on a score basis, while doctor 15 refers to achieving your ultimate goal (getting into college).

Introduction and Program Overview

In this section, the speaker introduces himself and the program. He also provides an overview of what will be covered in the session.

Program Overview

• The speaker introduces himself and welcomes everyone to the session.

• He asks if everything he has said so far makes sense to the audience.

• The speaker informs the audience that they will stop for today as he is just warming up, but they will continue with more content later.

• For those who are part of the full program, there is a group called Sammy that they should join to start receiving tips and making money.

Differentiating B15 from D14 or D15

In this section, the speaker explains how B15 differs from D14 or D15.

Differences between B15, D14, and D15

• The speaker explains that D14 is a sheet for overall scores while D15 is for admission into college.

• He clarifies that B15 is different from both sheets.

• The speaker promises to provide the sheet for D14 by tomorrow.

Starting Tips Tomorrow or Monday

In this section, the speaker discusses when tips will begin.

Starting Tips Tomorrow or Monday

• The speaker announces that tips will start either tomorrow or on Monday.

• He asks if anyone has any questions or doubts about anything discussed so far.

• The audience responds positively to his question.