Reblog: 13 Invaluable Lessons From Jesse Stine – Part 1 of 2

Jesse Stine is not the regular stock guru you see on the Internet selling services. Nope.

And he’s not a hedge fund manager trading other people’s money either. Nope. Jesse Stine is an independent stock trader, just like you and me, trading his own hard-earned money.

And Jesse Stine produced a mind-boggling (and fully audited) 14,972% returns in the markets, turning $46K into $6.8M… in 28 months.

Yes, you read it right.

On top of becoming a self-made millionaire through his trading, Jesse also realized another dream of his a couple of years, which completely changed my life forever.

He wrote the book “Insider Buy Superstocks: The Super Laws of How I Turned $46K into $6.8 Million (14,972%) in 28 Months” in which he not only shares his life story, but also the trading strategy he used, as well as many invaluable lessons he learned through his 16 years of experience (at the time the book was publish, in 2013) as an independent trader.

I’d like to now share with you 13 lessons I gathered from his book.

1- Have Faith

“There certainly are no guarantees in life, but with the proper tools, focus, and vision, it is indeed possible to make millions as an individual investor“

If you want to succeed in trading, you have to believe from the bottom of your heart that you can and will succeed. Tune out the naysayers and create your own luck by studying, having a clearly defined strategy, making mistakes, staying positive, being flexible, and never quitting.

2- You’re Trading To Make Money

“When I’m risking precious capital, I’m in the market for one reason and one reason only: to achieve spectacular returns by exploiting irrational market behavior”

“Shift your focus and your efforts from the abundance of activities that DON’T contribute to investment success to the few activities that DO”

Although it might seem obvious, we all have conflicting reasons for trading that make us lose our main focus. Always remember that you are not trading to become the most popular on social media. You are not trading to show off when you are right. You are not here to show how wrong other people were. You are not here to try and guess the future or discuss economic or political events. You are here to make money.

3- Confidence

“The world’s greatest athletes, business people, traders, salespeople (you name it) all have a definitive lack of fear of making a mistake“

“I now know firsthand what they mean by let your winners run. It is definitely something that does not come naturally. I had to cultivate a tremendous level of confidence to enable me to do so.“

Being confident is one of the most consistent trait among successful traders. If you are confident, you won’t dread taking a small loss. If you are confident, you will follow your strategy and won’t deviate from it when under pressure. If you are confident, you won’t have the shadow of a doubt that you will make money.

4- Never Get Attached to Any Stock

“Marriage is simply not an option. You only date supermodels and Superstocks. Never fall in love with a stock. From this day forward, ONLY FALL IN LOVE WITH PRICES.“

You should never ever get emotional about a stock or the story behind a stock. Only trust prices. Every stocks are bad – unless they go up.

5- Never Give Up

“Against all odds, the most successful traders just never surrender; their suffering capacity defines their greatness. Like many aspects of life, it’s when you hit rock bottom that we decide with every fiber of our being that we simply must do whatever it takes to succeed on a massive scale“

I don’t know of any successful trader who didn’t suffer a big drawdown at some point in his career. I, for instance, lost 70% of my net worth on one trade 8 years ago. Like in life, what separates successful people from the unsuccessful ones is the ability to never give up when they get hit hard.

6- Be A Contrarian

“The largest market advances happen when we least expected them to happen. Market advances NEED a gigantic wall of worry to keep as many people as possible on the sidelines“

“If you cannot find a single article in favor of your investment and can find it only on obscure blogs, it could very well be the a winner for you. If you start seeing your idea in mainstream press, it is probably time to sell. And if you start seeing it in books, it’s time to sell short“

One concept that is difficult for beginners to grasp is the need to be a contrarian. Usually the vast majority of people is extremely bullish at major market tops and extremely bearish at major market bottoms. When everybody is on the same side of the boat, it tips over.
For stocks, it usually is a good sign when a stock starts its ascent and only a few people notice. It increases the chances that more people will pile up into the stock, making it rise even more.

7- Be a Lone Wolf

“The reason most investors underperform the market is that they spend a vast majority of their time studying the same concepts and techniques that 99% of other traders have studied before. They read the same books, surf the same sites, and watch the same people on television.“

“The 1% of people who accumulate all of the market wealth are those who do absolutely everything differently. They focus on the one or two game-changing variables that truly make all the difference.“

“Navigating the markets in isolation isn’t easy for most people to do because human nature dictates that we seek the safety of the herd in order to simplify or eliminate the thinking process […] We seek out ‘consensus’ views so as to feel like we are part of a community of like-minded investors. If we end up on the wrong side of an investment, it feels much better to go down with others“

It’s human nature to seek the advice and comfort of the herd as it feels safer.

However, in trading, there is no doubt that relying too much on other people will have a negative impact on your learning curve and on your trading.

90% of traders are not making money in the market. Why would you take any advice from those 90%.

On top of that, having too much interaction with other traders will make it harder for you to find a strategy that suits you, to follow your rules, and it will steal your focus from actually making money.

If you cultivate the ability to develop your own strategy, find your own trades and do your own post analysis, there is no doubt that you will thrive as a trader. Stop wasting valuable time, getting advice from unsuccessful people.

This is the first of a two part series. The second part will appear next week on our blog. It is written by Fred, appears on lonestocktrader.com and is available here.