Investor's Edge with Gary Kaltbaum - A Few Timeless Lessons [09.27.2024]

Episode Date: September 27, 2024

https://garykaltbaum.com/

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to go to other than go to existences. Investor's Edge with Gary Cultbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. And welcome once again to Investors Edge. I'm Adam Sarnan for Gary Kaye, who's out today. Today is Friday, September 27th, 2024. We've got a great show for you tonight.

As always, we want to thank you very much for being here. Just some housekeeping. As you know, this is a show about you and your money. and all of the fun points in between. Some of those points are not so fun, but we try to keep them fun. Just as a quick reminder, if you don't get this show in your city, you can go to garyk.com. You can listen live for archive. We are live Monday through Friday, 6 to 7 p.m. Eastern.

Also on garyk.com, you can follow Gary on X, formerly known as Twitter, just by pressing the button. You can also subscribe and get Gary's morning notes sent directly to your inbox each and every day for free. You can also email Gary, the money management services, or if you want more from Gary, you can go to convictionleaders.com and join his premium members-only service, where he updates members several times a day

and does nightly webcasts. All right. So a few highlights and message from Gary. Low beta is working right now. Look at the Dow versus the NASDAQ. Gold is extended. Now, a few things that I want to share with respect to putting things in perspective.

Again, I'm not on here often. So when I am, I try to zoom out and just give you some timeless nuggets of wisdom that you can use or takeaways that you can use to really level up, upgrade the user. Think about your phone. You know, if you have an iPhone, I don't know, whatever the latest one is, 15, 16, and, you know, still using iPhone 1. Think about the difference in speed. So one of my passions in life is upgrading the user. That's upgrading myself and anyone else I interact with and I happen to be speaking with you. So here we go.

It's a passion of mine because I've seen it fundamentally changed my life. In other words, grab an iPhone 16 and grab an iPhone 1. You'll see it's much sleeker design. You'll see it's much faster. It's more efficient. So on and so forth. Look at a, I don't know, a car from 50 years ago and look at a car the Tesla today, right? Something along those lines.

So upgrading the user. That's really the key thing because it's freedom and it sets you free. And it gives you the ability to level up. Wherever you are in life, there's always a chance to upgrade and move on to the next level, so to speak. And it doesn't mean you don't enjoy what you have. Exact opposite. Enjoy it. That level of gratitude is something which is just next level ninja superpower.

Because when you walk around always upset, guess what happens? to get more, you're just, you're missing out. You're almost like robbing yourself of happiness and joy. And why should you be happy and joyful? Well, life is short. Enjoy it. It's really that simple. Well, in kindergarten, when my kids were younger, they would have a saying, you get what you get and you don't get upset. Well, all right, what does that mean? I made 50 points in the market or 20% in the stock and then I sold it and the stock went up without me. I'm upset. This was me. This was me before many, many years. Get angry, get upset, get frustrated, whatever word you want to use.

I got out of a stock, it went down, and then it took off without me. And I'm sure you can relate, right? Oh, I bought 10 shares. I should have bought 10 million shares or a billion shares or whatever. I'm exaggerating, but you get the point, right? One of the biggest switches, think of a switch that levels up or light bulb goes off from my head was when I realized that make a trade. Every decision is a trade, right?

And you've got an element of risk and reward for every decision you make. Or don't make. I mean, holding is a decision. Not crossing the street is a decision. Crossing the street is a decision. Doing the setups, not doing this. Reading the book. The decisions, they're trades.

So, okay, when I realized that the decision to choose happiness, happiness is a choice, whoa, did my life change? And change for the better. And I'd never look back. a conscious decision. And why is that important? Because the event that occurs, look, here's the market wrap. Nasdaq today down 70 points somewhere in that area. The S&P 500 down seven points. The Dow, the low beta stuff, is up, I don't know, 140-ish, 137 points somewhere thereabouts. There's the market wrap. Russell 2000, up 13 points, and up points.

So you've got to mix back. That's an event. Stock stops me out. That's an event. The meaning that I assigned to that event determines the quality of my life. Is the event good or bad? NASDAQ's down 70 point, Dow's up 140. Is that good or bad? Look at something else that fundamentally changed my life. The events that occur externally are events. They're neutral. For the most part, right? It's raining. Is rain good or bad? We just had a hurricane pass through Florida.

Everybody impacted. Hope you stay safe and thoughts and prayers and all that fun stuff because I've been through several hurricanes. I literally had the eye of the storm pass over me years ago. And it's not fun. Devastating. We walked into an office. My office building was a one-story building after one of the hurricanes hit way back when.

We opened the door. We walked in, looked up. and we saw this guy. The roof of the building was peeled off like a can of sardines, like a tuna fish grenade, and just pop it off. It was crazy. So you've got rain. Is rain good or bad?

Well, for the person trying to go to the beach and takes a big expensive trip or goes to Cancun, cancun was impacted by this hurricane and is booked that weekend for their dream vacation and a hurricane hits or it rains. Forget the hurricane. That's extreme. It just rains. that's not good because the meaning it's not what they want. There's a disconnect there.

Well, what if it's raining and there's a drought? That's really good. We'll take it all day long. So again, the event itself tends to be neutral and how it's your interaction with that event. Just because it's raining and you're on vacation. Does that mean it's the end of the world or on a beach kind of vacation? No. You could choose to be happy.

You could choose to be upset. It's empowering. Again, I want to empower. shift gears from the victim to the victor and taking responsibility because when you're trading and you're investing, whose responsibility is it for you to do well? Mine? Someone else is Joe's, Jimmy's, like Gary says, Aunt Mary, Uncle Bob's, or yours. That's another big fundamental thing that changed my life for the better.

it's taken relentless responsibility for everything good bad and the ugly and you win instead of losing you learn yeah there's losses you can be delusional and pretend like you don't lose i don't subscribe to that school of thought no people win people lose very simple they give trophies everybody now and the kids are young and stuff you know if i didn't grow up in that world i understand it i just not my my personal preference. But instead of, okay, great, you lost at something, that's fine. You can choose to be upset about it or you can choose to learn from it. Think of that shift.

I got stopped out of a stock. Tom or Joe or Mary or Sally. Well, okay. First off, most likely nobody outside of you cares. Second off, the second thing, is that good or bad? Well, do you stop out for a winner or long? And then you can try to be like, oh, what happened afterwards? Well, the stock went up after me.

So that's bad. That's called outcome bias, not to judge a decision based on the outcome. So it's really tempting to fall into that trap. Oh, it was wrong for me to sell it because it went up afterwards. But you had no idea that that was going to go up. So the question is, if you take that same, all the information you had at the time the decision was made a thousand times, would it be the right thing to do? A thousand trades, two thousand trades. And that's another thing that just changed my life because it's no longer about one trade.

As long as you keep those losses small, remember, respect, risk, and defense first, guess what? Over time, it's about a system. It's about having what they call a positive expectancy. Knowing that any one trade, as long as you keep the loss of small, doesn't matter. and you're going to have winners, you're going to have losing trades, that's okay. That's the other side of it. It's inevitable. Somebody was talking me the other day about, oh, how many wins do I have, how many losses do I have,

and all this kind of fun stuff. And he was saying, oh, well, when I talk to this person, I only hear the wins. I never hear the losses. That's another thing, the intellectual honesty, right? Most people don't talk about their losses. They hide them in markets and in life. It's not just markets. Markets are just a reflection, right?

So as you learn to embrace it, and in fact, later I'm going to talk to you about post-analysis, which is really, really powerful, it's not just embrace the losses, it's lean into it. And lean into it in a very big way. Look, Monday's the end of month and end of quarter. Today's the end of week. We're three quarters of the year done. That's it. we're entering the fourth quarter.

The year's almost over. So when you look at your trades, I'm like, oh, well, the market's up X percent. Is that quote unquote good or bad? Well, I'm up or down X percent. Improve. It's how can I get better? Look at it objectively and then pause and say,

okay, reflect on it, learn from it. So we don't repeat the same mistakes over and over again. Up next, we'll talk about post analysis. We'll talk about a whole lot more. I'm Adam Sarhan. This is the one and only Investor's Edge. Hi, I'm Gary Kalbaum, hosted a nationally syndicated radio show Investors Edge. We're not just handsome radio people.

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In this episode, we are diving into gut health with CVS pharmacist Victoria Motola, who explains why so many of us live with stomach issues we should not accept as normal. A lot of what I see is just like chronic bloating, chronic stomach aches. Like I get a stomachache every time that I eat.

And it just becomes like a lifestyle where, oh, yeah, you know, I just have a stomachache every day. Or I'm constantly feeling like gassy. And all of those things are not something that generally, if you have a healthy gut, you should be living with. So that's when we deep dive. We deep dive into your medication. We deep dive into your OTC medication. And then at that point, we can probably identify something that we can change. Hear the full conversation, plus some fascinating facts about how gut health affects so much more than just your stomach on Beyond the Script, a podcast from CVS Pharmacy and IHeartRadio.

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Don't wait. Text IHeart to 50505. For delicious meals, you could go out to eat or spend hours in the kitchen. Or you could just make a Marie Callender's meal. Yeah, you heard me. Marie Callender's classic chicken parmesan bowl is delicious with scratch-made marinera sauce, creamy mozzarella cheese, and no preservatives.

It's high in protein with 30 grams per serving. Marie Callender's what having it all tastes like. It's time to switch on the integrator units and get the brain cells working. You're listening to. Hey, this promises to be fun. Investors Edge. The last bastion of quality programming. with Gary Coltbaum.

It doesn't get better than this. And welcome once again to Investor's Edge. In case you're just joining us or missed any part of the show, you can go to GaryK.com, rewind, fast forward, pause, listen at your convenience over and over again as many times as you want. I know I have a lot to say and I tend to speak on the faster side, but you can always slow it down and listen or speed it up. Do whatever you want to do on GaryKKKK.com, all for free 24-7 on any device you want. All right. So we left off talking about the embracing, looking at the losing trades. Think about this. Humans are programmed to seek pleasure and avoid pain. One-on-one, right? Okay, great. You touch a hot stove. You're probably not going to touch it again. I learned. Okay, great. Or hopefully you learn. But when you look at pain and pleasure and then divide your trades into winning trades and losing trades, most people avoid looking at their losses. I did for many, many, many, many, many years. And there's something called post analysis.

This is what some of the greatest traders and investors in the world do. And even athletes, look, any sports team, they study the footage. What does that mean? They're studying their actions. They're studying the competition, the competitors. What are people doing? That's price action, by the way. You know, we're not privy to what the big institutions, their trades are or what they're going

to be buying. but they show up in price and volume. And that's a beauty. They can't hide. It's price and volume. So when you look at price and volume, those are executed traits. Those are facts. When you do post analysis, what I like to do, I do this with a lot of coaching clients,

is we want to study our behavior. We want to look into that, quote, unquote, painful area that people, most people avoid. we're looking at and they don't improve. They just keep repeating their stuff every year, year, year over year, same mistakes. They chase. They buy extended stocks or they don't have a discipline plan of when to exit or when to enter and they're just kind of making emotional decisions and running around and going

up, down left and right and sideways. And the whole premise of my book, psychological analysis, which was number one on Amazon, thank you everybody for the kind words and the feedback. It was number one for three months every day, is remove the emotion from the decision-making process. So, all right, rationally, is it a good idea to look at your mistakes? Yes or no? Well, all right, the answer is yes.

Let's look at those mistakes. Is it? I did that. It took me many, many years to learn that, but I did it. So, I have two folders. Keep the winning trades in one folder and keep the losing trades in the other folder. Study your winners. Where did you enter?

Where did you exit? And literally write down the logic, the reasons why you entered, the reasons why you exit, and then the percent change on the chart. Why not? keep a trading journal, however you want to do it. On the losing trades, if you want to print them out, print them out, you want to take screenshots and keep them electronically, whatever you want to do. On the losing trades, similar situation. Why did I sell? Why did I enter? Why did I exit? Why? How could I improve? What can I learn from here? Do I notice that I'm over-analyzing the stock, which I did? I'm guilty of all these things I'm sharing with you. And I learned this from my post-analysis.

I was looking too closely at the market intraday. And I was getting shaken out because of a few bad ticks. But stepping back and looking at the daily chart, or even now, it's the weekly, end of the week, did it even matter? Most days in the market don't matter. They don't really move the needle. Most ticks intraday don't really move the needle. It's just the way the markets are. But I would get shaken.

I get spooked. and get shaken out, scared. Notice the language. Fear, pain. And then make emotional decisions. And then zoom out a few days later, a week or two later, and the stock's way higher. I never bought it back and gone. Okay.

Well, how can I protect myself from doing that? Because I did it again and again and again and again and again for hundreds and hundreds and hundreds, it's not thousands of trades over years and years and years. I can keep doing the same thing, expect different results, Einstein's definition of insanity, or I could try something new. After a long time, it took me a while, but I was able to finally get it and say, okay, let me try something new.

I learned that from the post analysis. By the way, I learned lots of other things also, but I want to give you easy, simple, concrete things so you can see the power of doing this. And once you start looking at your winner, you can go do now, go look at the last year of trade or two years of trades or three years of trades. It depends how often you trade.

And just print them out. Winners folder, losing folder. WL. Simple. And then write on each chart the logic that you can remember. But usually after the fact, your brain just forgets. You think you remember. But in real time, it's a very powerful exercise. I do it now where I print out the winner. Great. Print out the loser. Great. And I write the reasons why. What is my logic in real time? Because looking back, hindsight is 20-20. When you're in real time, you don't know what the next bar is going to be or the next tick or the next week or two weeks or three

weeks, but looking back six months ago, a year ago, oh yeah, I thought this. I thought, you know, in real time, it becomes very, very powerful. It's just like journaling. Most people don't like the journal. It's not a quote-unquote fun activity. It's much more fun to watch Netflix. The new Vince McMahon documentary's out and I want to watch that. Okay, great. That's fun. Sitting here writing down, you know, post-analysis at him. This is, for me, this is, it's important to do it. It's just like health, being healthy. I like to walk. I take walks. Try to walk anywhere from 12 to 17,000 steps a day.

I average 12 to 15 somewhere in that range. If I don't walk 10,000 steps, I got a problem. That's just me. I never used to be like that when I was younger, but hey, that's important to me. Is it fun? Could they be doing other things? Sure. So in the couch, watch TV, sure. But I need to do that. It's important.

So if I want to get better, it's certain things I need to do. So this post analysis has been really, really, really helpful. I've seen it change countless other people's trading their lives, their insights into their own behavior. And then you can start seeing patterns, recurring patterns, that I otherwise couldn't see it myself. Oh, okay. So maybe I shouldn't look at the chart all day every day.

Other people that's really, they're really good at that. But me, I know myself, know thyself. I'm very good with big picture zooming out. That's my area of expertise. looking at the minutia, the details, it's not my world. Now I take it to everywhere outside of markets too. Tell my wife, hey, we're going to go north. Great.

How we get there, the details? Yeah, that's so much. But going north, find that north star, no problem. The details on how to do it, not so much. Everybody I work with, it's the same thing. We got Lewis, we got motion, we got this, we got that, the same exact conversation. Hey, this is the goal. How did you get that, Adam?

How did you find that North Star? That's my skill. Okay, great. Now, I'm going to get out of your way, Lewis, or Mosch, or whoever the case is, or Mary or Jane, or whatever it is. And you go do it. I'll help you. I'll coach you along the way. But the details for me doesn't work.

The big picture, great. So know thyself. And then do things that align with your strengths. And also try to avoid things that don't work and are your weakness. Think about the gas is an accelerator of strengths and then brakes are in a car or weaknesses. Do more of what's working and less of what's not. That's been very, very helpful for me. It's so simple, but so powerful.

So incredibly powerful. Up next, we'll talk about some more fun things. I'm Adam Sarhan. This is the one and only Investor's Edge. Hi, I'm Dr. Jake Goodman, host of Beyond the Script, the podcast where I sit down with pharmacists to answer the health questions you didn't even know you could ask at the pharmacy counter. In this episode, we are diving into gut health with CVS pharmacist Victoria Motola, who explains why so many of us live with stomach issues we should not accept as normal.

A lot of what I see is just like chronic bloating, chronic stomach aches. like I get a stomachache every time that I eat and it just becomes like a lifestyle where oh yeah you know I just I have a stomachache every day or I'm constantly feeling like gassy and all of those things are not something that generally if you have a healthy gut

you should be living with so that's when we deep dive we deep dive into your medication we deep dive into your OTC medication and then at that point we can probably identify something that we can change hear the full conversation plus some fascinating facts about how gut

health affects so much more than just your stomach on Beyond the Script, a podcast from CVS Pharmacy and IHeart Radio. Listen now wherever you get your podcasts. With record U.S. debt, ongoing geopolitical tensions, and constant market swings, many people are rethinking how to protect their savings. Physical gold and silver have been used for generations during uncertain times to diversify, not replace traditional investments. Preserve gold helps Americans understand these options. eye heart to 50505 to get your free wealth protection guide and explore how precious metals may fit into your retirement planning. For delicious meals, you could go out to eat or spend hours in the kitchen. Or you could just make a Marie Callender's meal.

Yeah, you heard me. Marie Callender's classic chicken parmesan bowl is delicious with scratch-made marinera sauce, creamy mozzarella cheese, and no preservatives. It's high in protein with 30 grams per serving. Marie Callender's, what having it all tastes like. We're listening to. America is talking. Investors Edge. He's got to be pleased with that. The crowd is just on his feet here.

He's a Cinderella boy. With Gary Colbomb. It comes highly recommended. You're going to feel better if you talk to him. And welcome once again to Investors Edge. In case you're just joining us or missed any part of the show. you can go to garykhae.com, rewind, fast forward, listen at your convenience 24-7 for free on any device you want, all available on garyk.com. All right. So we left off talking about the power of post-analysis,

of just pausing and reflecting and looking at your behavior, looking at your actions. Notice, actions speak louder than what? Words. I can talk all day long about wanting to have a six-pack and I'm going to be in shape and I'm going to lose a gazillion pounds and, you know, I'm going to be the next star on Schwarzenegger or Stallone or bodybuilder and get muscles out of my eyeballs and blah, blah, blah, all right. Adam, you want a six-pack? How many setups you do today, Adam? Zero. You sure you want a six-pack? Meanwhile, how many cookies you eat this week or today or cupcakes or cheesecake or ice cream, whatever your thing, you know, your sugar treat is? treat. It's not even a treat. It's all the time. That's hopefully message received. Right. So it's the actions that show us what we want most. We all want conflicting things. I want a six-pack. I also want to eat the ice cream. What do you want more, Adam? That's important. And then how do you align your actions with your wants.

I want to be a great investor, great trader. Okay, great. What you're doing now, is it helping you get there yes or no? If it's not, then let's look, do that post analysis. Let's learn.

Let's look at what those losses. Why do they keep happening? What am I doing? Where are my entries? What are my exits? What are my risk management rules? How can I get ahead? So on and so forth.

So, next thing. important part of this whole process is understanding it's very difficult for people to see themselves objectively. Very difficult. In fact, in psychology, there's something called a personal blind spot bias. What does this mean? Real simple. Ask a hundred newlyweds the night of their wedding, put them all in a room, and raise your hand if you think you're going to get divorced. Nobody's going to raise their hand. Yet statistically, or at least you would assume nobody's going to raise their hand.

Statistically, we know half of them are getting divorced, or more than half now, whatever the latest stats are. That's the personal blind spot bias. It is very difficult for you to see things objectively. Well, how do you do it then? Adam, I'm doing post-analysis, but I can't see myself objectively. Hold on. I struggle with this for years.

I'm just giving you the just a fax man like Joe Friday. It's just here we go. It's what I've learned. And if you have a way to do it better, by all means, please let me know. I'd love to know. You can email me at info at findleadingstocks.com. All right.

So the personal blindspot bias clouds our judgment, meaning it becomes very difficult for people to see themselves objectively. So what I do is I create a character. People love stories and characters are an essential part of every story. Look at Vince McMahon with Hulkomania or the Rock or Triple H or any of these great characters that he created legendary characters. It's genius. Okay, good versus evil.

You got the polarity there. It's real simple. Just genius. Okay, great. What is it? Here we go. Create a character instead of Adam. Let's call him Alan.

Or let's call him Freddie or anything. It doesn't matter. Mike. Okay. great. It's called Michael. What would you print out those things? You look at the winners, look at the losers, great. What can you tell Michael or Alan or whoever the character is, the fictitious character, which is you, but it's just codename, so it's not you, to do differently?

How would you generally want to help that person? And if you're stuck, think of that person is your immediate family member or someone you love dearly. Father, son, daughter, mother, sister, whatever the case is. Wife, husband, doesn't matter. How would you, and you generally want to help that person? How do you want to, you know, what would you tell them to do? Well, for me, it was really obvious. It took me a while, but now it's obvious in hindsight.

Again, hindsight is 2020. Hey, stop looking at the market during the day. Just stop. I read this book called How I Made $2 million in the Stock Market by Nicholas Darvice, and it really changed my life. This guy was a ballroom dancer, if you're not familiar with his story decades ago, I think in the 60s or 70s, something like that, before the internet, wait before, you know, all that stuff.

And he had a assignment. He was going, he went out to Asia and he couldn't see the stock market at all, what was happening every day. His broker would fax him or tell Ex him or whatever it was, send him back. Aaron's magazine with charts in it, and he would send back orders. And you would do it once a week or whatever it was, removed from the day-to-day action. Great. Guess what?

He had phenomenal success. I think he made $2 million in the stock market. This was what? Decades ago. Not $2 million today. $2 million, probably $20 or $40 million today or some crazy number. It was just a lot of money. He came back to New York.

He goes into his broker's office. He's thinking, he's on the high horse, thinking I'm the greatest guy in the world, staying at the plaza hotel, you know, love and life, all from his profits of trading, and he loses a bunch of money, not just one day, week after week after week, okay, I need to get out of here. He leaves, he goes to Paris. And then all of a sudden he starts winning again. What?

This confused him, because while he was in a broker's office, he was looking at things daily, intraday. And he was getting caught up in the hype of the office, the excitement, the yelling, the screaming, the jumping up and down whatever it was it threw him off his game what he was doing that was working for him he stopped doing that because he was in the broker's office then he went to parents started doing again and guess what things worked out again great more or less that's the story i'm like oh okay well what would i tell michael to do or tell him you know allan to do back off don't look at the market every two seconds so i started to

coming up with a weekend report. And that helped me remove my personal blind spot bias. Because I told someone else, even if it's a fictitious character, that's okay. You know, when you're a kid, you have imaginary friends, here you go. Giving you permission to have an imaginary friend that you can help. And by the way, this works for all other areas of your life. You want that six-pack or you want that, you know, to sweat or lose the weight or whatever it is? What would you tell and what would you tell Adam to do?

Here we go. I don't have to go any further. If your name's Adam, you say. use someone else's name. Outside of that, what would you tell me to do? That's probably the better way of explaining this. If you notice that you're buying stocks

with no rhyme or reason and you're buying them after a big move, hey, maybe you can plan ahead. The way Nicholas Darvus got in and out was through stops. He would put a buy stop. Tell us broker, let's say it's stocks trading between $195 for six months. If it gets above $100, buy it,

and buy this number of shares. and then if it rolls over, get out, sell it. Real simple. And then he'd know how much in advance he'd lose if he's wrong. He knows how much he's right, so to speak, because when he's right, he can get in and then adjust it next week, but he's got the stops in to enter and to exit and the risk predefined before the move even happens.

And if the stock never breaks out above 100, guess what? That's okay. he's not in. The order only gets triggered when stock goes above your predetermined buy price. I started doing that. And I was like, wow, that works for me because it gives me structure

and it helps me remove the emotions from decision-making process. Remember, the three most important questions, folks, before you enter a stock is where am I going to enter, where am I going to exit, how much do you risk if you're wrong? And then all of a sudden my returns improved. And I started doing it.

I'm like, wow, a lot of those careless, silly mistakes I was doing before stopped happening. Shocker. Spoiler alert, there's a story. And my performance did very, very well. But it took me many, many, many years to figure that out. So I hope that helps. Next, I want to talk about something else. Probabilities.

Remember, thinking of probabilities, thinking as trades, every decision is a trade. How do you make smart decisions or smart trades? I spoke about this before on the show, it's thinking in probabilities. And by the way, all this and more is outlined in the book, psychological analysis. You can go on Amazon and grab it or Barnes & Noble, wherever you want, is to think in probabilities. Well, after a big move up, look at gold, GLD. It just had a huge move. What do you think is more likely for it to go up again even more, which could happen,

or for it to pull back a little bit or consolidate? So when you think in probabilities, it helps you plan an... anticipate how you're going to react when things happen. So when the inevitable pullback happens, you're prepared. Up next, we've got a lot more to talk about. I'm Adam Sarhan. As always, this is the one and only investors edge. I want to thank you very much for being here. Hi, I'm Dr. Jay Goodman, host of Beyond the Script, the podcast where I sit down with pharmacists to answer the health questions you didn't even know you could ask at the pharmacy counter. In this episode, we are diving into gut health with CVS Pharmacians.

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We spoke about a lot so far, and I was speaking about probabilities, but then time ran out. So here we go. A few more minutes on thinking in probabilities. Gold just had a big move up. All right. The NASDAQ 100 back in July had a big move up. Well, we know after a big move up, there's most likely the market's going to pause and consolidate that move.

There's two ways to do that. One, it goes sideways, which is the more bullish of the two scenarios. Or two, it pulls back. That's it. After a big move down, there's two ways for the market to consolidate that move. go sideways or retrace a little bit and rally a little bit. But we're talking about going up. All right. So we just had a big move over the last few weeks in the market. And or gold or whatever you want to look at. Okay, great. After your stock has a big, a lot of stocks are extended now.

So after a big move up, most likely it's going to pull back and consolidate. So understanding these natural ebbs and flows cycles in the market gives you an edge. This is a lot of. This is a investors edge, here we go, there's an edge. It doesn't have to pull back, by the way, but most likely it will, because most things pull back as they continue going higher. Okay, great. So in advance, before that pullback, I ask myself, if this thing, let's say I bought it at 100, it's at 125 now, I know it can easily pull back to 115, 120, even 110, it'd be perfectly fine. Where am I going to exit? Am I going to blow out at 120 and just quote unquote lock in a 20% gain? I could. Am I going to move the stop to break even? I'm like going to leave the stop at

let's say 95 and let the profit go negative on me and they get knocked out at 95? What am I going to do? These questions I now ask myself before the market even opens on the weekends because just like Darvester did, it helps me have these difficult conversations before the market moves. Now, some people can do it during the day and they have that skill. I know for myself, I don't. So having those conversations allows me to anticipate my own behavior. I'm not anticipating what the stock is going to do or the market or any that stuff. No, I'm not predicting no idea. Just like Gary says. I don't know what I mean for dinner tonight, let alone where the market's going to be in a week, a month, a year or two. No idea. Nor do I care. You don't have to.

Just stay in tune, in harmony with the market. That's the secret. When the facts change, we change. You know, famous economist said that. What do you do, sir? That's what you ask the question. So when I'm thinking about these, I'm going to make a decision anyway. Let's say I own it at 100 and it goes at 125 and okay, either I think at 125, what am I going to do if it goes down to 110 or I wait for it to get down the 110 and possibly panic and then hit the sell button. What's better to have a plan in advance or to Monday morning quarterback or rush and miss it or I'm out doing something else and miss the move and be upset and frustrated? For me, it's better to plan. Ben Franklin hundreds of years ago said preparing, it's a great line.

I mean, I think it's absolutely brilliant. Summarizes it. He says either you plan to win or not. You plan to fail. By not planning, you're preparing to fail. So he goes, failing to prepare is preparing to fail. When you fail to prepare, that means you don't prepare, you don't plan. By definition, what you're doing is you're preparing to fail. My kids have a spelling test next week. Did you study, honey, for your test? My daughter, no. Oh, you're planning to fail. What? You're preparing yourself to fail. it's it real simple you could see it clearly in someone else that's why I use my daughter as the example that's the plenstone blind spot bias right well we all do it all the time it's it this is for me this is a full time quote unquote job this is my passion my love my vocation I enjoy sharing what I've learned with other people you know all that fun stuff so I treat it that way I want

when think about Michael Jordan you think he just got up one day and started shooting basketballs and was really good? Or did he prepare to win? Was he at the gym at 4.35 in the morning every day and playing all day long? Tiger Woods, same thing. These folks prepare to win. Tiger Woods hits that golf ball till his hands bleed. Well, that's how he was when he was earlier and getting started.

Some guy went up to him, said, oh, I wish I was good as you. She said, show me your hands. Hands has no count. He goes, your hands are soft. He's like, I'm up here at 4.35 in the morning every day. Hit that golf ball until my hands bleed. What do you do all day? Is it the computer?

So it's the same thing with a six-pack versus the cookie, right? How many sets you do today? So align your actions with your highest wants. We have multiple competing wants. What do you want most? And then what action are you taking to get that? So for me, I'm going to plan my trades. I'm going to look at leading stocks.

I'm going to look at the best stocks in the market, the strongest ones, the ones that are outperforming. wait for them to pull back, buy them when they offer a low risk, high reward entry. Before I'm entering, I know where I'm going to enter, I know where I'm going to exit, I know how much I'm going to risk if I'm wrong. How much of my portfolio gets impacted if I get stopped out? Now, could that change? Yeah, that could.

It's rare, but it could. But most of the time, that gives me the ability to make those rational decisions and not get caught up in the latest news du jour, whatever the headlines are that's scarier, whatever. The market's down a lot today or up a lot today, you know, all that stuff. But planning ahead, we know my stock's extended. I'm up a lot. Well, okay, what are you going to do when it pulls back?

If the answer is nothing, that's cool. That's fine. You've had that conversation beforehand. So when the inevitable pullback comes, you're prepared. It's preparation. And that's one of the things that separates. the consistent winners in life in any endeavor, just about any endeavor for everybody else. They prepare.

They do the work. They plan. Now, they still can do the work and fail. I know countless other people that do spend hours and hours and hours hitting that golf ball, they're not Tiger Woods or shooting that basketball. They're not Michael Jordan. That's okay. But to get there, you have two people.

One doesn't work. The preparation, the other one doesn't. Who are you going to put your money on? Who do you think has a higher probability of succeeding? Ben Franklin, 101, the one that prepares. It's the same thing here with the markets. You know, what are the strongest stocks in the market? I don't know.

What? How do you plan to beat the market if you don't know the five strongest stocks in the market or the strongest stock in the market? So, I hope all that helps. I really do. I can go on and on and on, but that's all the time we have for today. As Gary says, hug your kids, hug your family, enjoy it. Choose happy, folks.

Life is short, enjoy it. Time is our most valuable asset. enjoy every minute. Take care, everybody. This has been Investor's Edge with Gary Cult Bomb on BizTalk. To listen to past episodes or to get in contact with Gary, go to GaryK.com. That's GaryK.com. If you've been following the news, you know the world is dealing with a level of uncertainty that isn't going away anytime soon. Inflation pressures, global tensions, and the highest U.S. debt levels on record continue to influence markets day after day. And the result is familiar to anyone

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