There is a phenomenon going on that I’ve never seen in my 17 years of trading: EXTREME FEAR. What makes it so strange to me is that it exists with people who are both in the market AND out of the market. I’ll give you two examples:
EXAMPLE #1 – I speak to many potential investors. It amazes me how many people have been in 80-90% cash for the past 3-5 years. They’ve missed out on such a strong run in the market. When I ask them what would it take for them to get back in, they freeze up and can’t answer. These are people who are NOT in the market, and they are horrified of getting in.
EXAMPLE #2 – Today is May 22, 2013. The general market declined by less than 1% (0.82% to be exact) and my phone has been blowing up with panic by people who are IN the market!!! My trading friends are either calling or texting me with serious worry, and even a few stories of mini “blow-ups” today. I’ve never seen anything like this in my 17 year career! God help these people when (not if) we get a serious correction.
I have discussed this topic on my weekend show and on Twitter recently, and I get TONS of responses as to what has created this fear. Some reasons include: lack of trust in the market, the market is rigged, high frequency trading, it’s not healthy for the market to keep going up like this, and we’re doomed as soon as Bernanke hints that quantitative easing will slow down.
Whatever the reason doesn’t matter. The bigger question comes down to figuring out how to overcome your fears because fear is unhealthy to your general livelihood. If you find yourself fearful, you might need to ask yourself a few questions: Maybe the market isn’t for you? Maybe you need to reduce your leverage? Maybe you need to reduce your position size to deal with the volatility? Maybe you need to get better entries and stop chasing extended stocks? Maybe you need to stop watching 1-minute charts tick by tick? Maybe you need to view your trading as a business, and not gamble so much?
Whatever the reason, one thing I can guarantee is that you’ll never be successful at trading if you are doing it with scared money or too emotional with your approach. I do everything possible during the trading day to keep a level head and a strong state of mind. As a trader, you must find a way to do this or else you will be trading too much on emotion and increase your chances of making bad decisions.
Tickers: Joe Fahmy
Here is an interview with fund manager J.C. Parets (@allstarcharts on Twitter and StockTwits). J.C. is a Chartered Market Technician with a great eye for charts. In addition, he looks at all the Global Markets, so he has a great feel for what is happening worldwide. Enjoy the video!
Over the years, as I built a presence on Twitter and StockTwits, many people approached me about managing their assets. The only investment vehicle I had setup was a hedge fund. That structure was fine because it was mainly my money, some friends, and family. As more outside investors wanted to get involved, I needed to change my structure for the following reasons:
1) Transparency. My number one priority was to give investors 100% transparency and visibility. Specifically: Access to trades, positions, and balances in real-time.
2) Retirement accounts. Most people have a 401k at their job which is managed by their Plan Administrator. When people leave their job, they are allowed to rollover their funds into an IRA account, however, they usually don’t have anyone to manage it for them. My new structure allows for both taxable and retirement accounts.
3) Custody. I was looking for a reputable custodian that offered a platform to make trading simple for me. In other words, I wanted to make one trade that would get allocated proportionally to all the accounts.
4) No lock-up period. Because the accounts are under the client’s name, they have the ability to leave or add money whenever they want.
5) One-man shop. Potential investors would often ask me: “What happens if you get hit by a bus?” I would tell them “I don’t take the bus,” but they never found that answer to be funny.
The bottom line: I wanted a structure to give people comfort with their investments.
I recently moved to New York City and partnered with Zor Capital, LLC. Frank Zorrilla, the firm’s founder, already had the structure in place that I was looking for, and it was a homerun to join his firm. Zor Capital provides managed accounts for accredited investors and institutions. If you would like more information, please email me at [email protected] or visit the company’s website.
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VIDEO: Interview with J.C. Parets, CMT
Posted by Joe Fahmy on May 21st, 2013 at 8:28 pm, Comments: 0
Here is an interview with fund manager J.C. Parets (@allstarcharts on Twitter and StockTwits). J.C. is a Chartered Market Technician with a great eye for [...]
VIDEO: The Next Big Move – The Health Continues
Posted by Joe Fahmy on May 18th, 2013 at 1:30 am, Comments: 0
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Posted by Joe Fahmy on May 12th, 2013 at 12:47 am, Comments: 0
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VIDEO: The Next Big Move – Stick With The Trend
Posted by Joe Fahmy on May 4th, 2013 at 6:14 pm, Comments: 0
In this weekend’s show, I discuss 3 topics: 1) Liquidity 2) Uptrend vs. Downtrend and 3) The subtle differences I have noticed in the market’s [...]
Learn To Think For Yourself
Posted by Joe Fahmy on April 30th, 2013 at 6:49 pm, Comments: 0
I received 5 emails recently all saying the same thing: “I see that you are invested in the market and mentioning stocks on StockTwits and [...]
Joseph Fahmy is the managing director at Zor Capital, LLC, a New York based investment management firm. Joe has over 17 years of trading experience...More »