Investor's Edge with Gary Kaltbaum - Structure, Discipline, and Other Timeless Lessons [08.26.2025 w Adam Sarhan]

Episode Date: August 26, 2025

https://garykaltbaum.com/

Hey, it's Ryan Seacrest for Albertsons and Safeway. It's stock up savings time now through March 31st. Spring in for store-wide deals and earn four times of points. Look for in-store tags to earn on eligible items from Celsius, Body Armor, ORAIDA, Silk, Capri-Sun, Bavarian Meets, and Charmin. Then clip the offer in the app for automatic event-long savings. Stack up those rewards to save even more. Enjoy savings on top of savings when you shop in-store or online for easy drive-up and go pick-up or delivery.

Restrictions apply. See website for full terms and conditions. Investors Edge with Gary Cultbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. And welcome everyone to Investors Edge. I'm Adam Sarhan, in for Gary Kay, who's out today. We have a great show for you tonight.

I want to thank you very much for being here. Before we dive into the show, I want to remind everybody, if you don't get this show in your city, you can go to GaryK.com. You can listen live or archive 24-7 on any device you want for free anywhere you are in the world as long as you have Wi-Fi. Or you can even download it and listen later. So it's available anywhere you want. All of that's on GaryK.com. You can also follow Gary on Twitter or X, formerly known as Twitter, by just clicking the big button on GaryK.com or going to Twitter and searching up at Gary Colpom.

You get it there. Or if you want to email Gary, ask about his money management services, subscribe to get his, morning notes sent directly to your inbox. You can do all of that on GaryK.com. Now, if you want more, you can go to Convictionleaders.com and sign up to Gary's premium service, where he shares multiple updates all day, every day with members, gives actionable ideas, daily webcasts, shows charts, and a lot more. You can actually see what Gary's saying, because here we listen to Gary on the radio, but with Conviction Leaders, you can actually see it. So that's really powerful. Pre-market reports, you know, during the day updates.

After the closed webcast, sometimes during the day webcasts as well, weekend webcasts, so on and so forth, all available at convictionleaders.com. All right. So a few topics I want to cover today. I get asked a lot for some just best practices when it comes to investing. And I want to spend some time going through that because it's really, really important to have structure. And structure, the beauty of it, you can define it any way you want. So when you're investing before you dive in, and this will be a general conversation today because there's some important lessons that just work.

And it's important things for people to just to know. So all right. And it'll help with every build on everything. It's like building blocks. It'll help with everything else. So again, having structure. I wrote a book. It's called psychological analysis.

If you don't know, you can get on Amazon. It was number one on Amazon every day for three months. The idea they are high level is teach people. how to make rational, not emotional decisions with their money. Again, it's called psychological analysis. The two big schools of thought on Wall Street right now are fundamental and technical analysis. Well, for years, decades, I was studying fundamental and technical analysis. Fundamental analysis, you study the company. Is the company a good company? Earnings growing, revenue growing, you know, valuation, PE ratios, so on and so forth. Technical analysis, you study the stock.

and for years I would view these folks as like they're budding heads. The fundamental people wouldn't like the technicians and technical people and so on and so forth and vice versa. Then I came across, this was early in my journey. Then I came across Bill O'Neill from Investors Business Daily, which you've heard Gary mentioned many, many times. Actually, thanks to Gary. And Bill O'Neill's genius was combining both. He took the good from the fundamentals, good from the technicals, and he built his cancelm investment system and had a great, you know, he wrote a book called How to Make Money in Stocks. and had a great just career.

He passed away recently a few years ago, but had a great career for decades and decades and decades. It's arguably one of the greatest growth investors in history. Okay, great. So I studied it, took his classes. I met him, Bill, I met his son, Scott. I went through the whole programs, all the different things. And young whippersnapper back, this is decades ago,

I was like, all right, great, I'm going to get it. And then I would realize I'd speak, I got invited to speak at different groups around the country that would talk about markets and very few people were out there being the market consistently but there were some people that would consistently beat the market

and I'm asking myself, I'm like, what do these folks do and different than everybody else? There's got to be something. You can't have a 50, 60 year track record of beating the market or just having phenomenal returns. Decade over decade and be lucky. Paul Tudor Jones, Bill O'Neill, Steve Cohen,

the guy who bought the Mets recently, all of these folks are self-made multi-billionaires literally from investing. And they have phenomenal track records. I mean, phenomenal. You don't get lucky. You can't tell me it's a random walk down Wall Street, which is a popular theory saying, oh, yeah, results are random or the efficient market hypothesis. Markets are efficient.

Maybe people believe in that sure are great. I just don't understand that. I'm a very simple, logical guy. How could Buffett beat the market for decades or just have phenomenal returns for decades and all these other folks I just mentioned. And the market be random or efficient market, meaning there's no way to generate alpha, no way to make excess returns in the market.

It doesn't make sense when people do it. So, okay, I had to learn all that stuff and I had to unlearn all that stuff. And then I was like, all right, go back to the drawing board. This was back in the early 2000s. I jumped on a plane. I went to Library of Congress in Washington, D.C., because there were books that were out of print.

This is before Google and AI wasn't around and Facebook wasn't even around. I was doing this. Google was around, but it was in the really early stages of Google. There was excite.com and ask jeeves and all those other stuff, but the information wasn't prevalent like today. So I jumped on a plane, went to Washington, D.C. and Library of Congress, read Bill O'Neill's book, the model books of the greatest stocks in history that was no longer in print. And I read so many other ones to books from a hundred years ago about trading, investing, and so on and so forth, and success and all this fun stuff. And multiple trips to the Library of Congress.

finally it dawned on me after years and years and years. It's like, oh, there's a missing element. And that's where I came up with the concept of psychological analysis, my little contribution to investing in Wall Street. Or my contribution, not little contribution, my contribution to investing. And the idea is like, what are these folks doing that consistently beat the market for decades that the other folks aren't doing? Simple.

They have structure. They're disciplined. They have an approach which takes the emotion out of investing. So when the market goes up a lot or goes down a lot, they're cool as ice. Maybe they yell and they scream and they go, maybe. I don't know. I'm not in those offices with those folks. But what I know is that they stand the test of time. Someone who used to work close to Steve Cohen, the guy who bought the Mets, self-made multi-billionaire from trading, told me the guy doesn't even want the phone to ring. He said in the middle of a room,

a bunch of other traders all around them. And phones just light up. They don't even ring. it's that quiet so it's like peace that like you know that state of like zen or whatever word you want to use where that's the environment he created that works for him maybe phones ring in there i don't know what's hearsay i don't have any proof i've never been in that guy's office so take it for what it's worth it's just what someone had said who did work in that guy's office but again i have no way to substantiate that claim but that's just what i'm told but i believe it because i get it when you at that level of mastery you don't want distractions ding ding ding ding, boom, boom, boom, no, no, no, no.

It's, you know, serenity now, like Seinfelds, right? Serenity now. Peace, quiet. You're in that zone. You're in that state of flow. So when you're bombarded with data information all day long, and the market goes up, market goes down, most people are staring at their P&L all day long, their profit and their loss, their statements, their account, I made money, I'm up a dollar,

or down a dollar, you know, several zeros afterwards. And that distorts their ability to make rational decisions. It's like a doctor. Imagine a surgeon is performing surgery on somebody. And they're literally looking at their bank statement saying, oh, I just made $1,000 for making this incision. Or I made $2,000 for filling this cavity or whatever they want. It wouldn't be a good doctor.

They'd probably fired. But with trading and investing, most people, amateurs or beginners or even professionals get stuck and get caught up in their head staring at the numbers oh I'm down this much I'm up this much I remember years ago I was in an office and the Dow was at 18,000 okay that was at 18,000 this is years and years and years and years and years ago and was in a bare market the market had fallen a lot whatever it was and some guy goes in the room, he was a big money manager. I got to the bathroom.

I just hear this guy like vomiting. I'm like, what is this guy doing? And he comes out and I saw him afterwards. I'm like, you're okay? And this guy, I mean, he just got knocked out. He left the business and he never came back. And all it was, it was like a down period in the market. A little bit, a few weeks.

It wasn't even that bad. It wasn't like it was a crazy 2008 bear market or 1999 to 2000, March or 2000. and dot-com crash, which I traded through both of those events, this is just the guy couldn't handle it. And I've seen many folks leave this business, many get knocked out. Because they put so much pressure on themselves. They think they're the most important thing in the world. Whatever's going on in their mind's eye is just, you know,

it's almost like a distorted view of actuality of what's actually happening. Learning how to just create structure for yourself. and processing the data that comes in all day, every day, filtering out the noise, focusing on the highest ROI data, the highest most beneficial data points that actually matter, is a superpower. Having the discipline, notice, not the motivation, the discipline, to show up day in, day out, day out, and do the work, again, superpower, at least in my humble opinion. those are some of the things with psychological analysis. It's teaching people how to make rational,

not emotional decisions with their money. It teaches people how to get out of their head. Tony Robbins and Jim Rohn have a great line. If you stay in your head, you're dead. Not literally dead, but you've got to get out of your head. Think, obviously. I'm not saying don't think, but understand. It's another one of those. Like Ray Dalio talks about we're humans and have those stops in place and risk, which I'll get to in a few minutes here, and all that to take care of things. All right, up next, we've got a lot more to cover. I'm Adam Sarhan. This is the one and only Investors Edge.

Hi, I'm Gary Kalbaum, hosted a nationally syndicated radio show Investors Edge. We're not just handsome radio people. We manage investors' money for a living, specializing in fee-based discretionary money management. No big commissions, just a fee on the assets that's managed. We also provide a full range of personalized services, including retirement planning, fixed income, and educational needs, all to assist you in achieving your financial goals.

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Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop. You bring the fire, APU will fuel the journey. Learn more at APU.apus.edu. Hey, it's Ryan Sechrest for Albertsons and Safeway. It's stockup savings time now through March 31st. Spring in for store-wide deals and earn four times of points. Look for in-store tags to earn on eligible items from Celsius.

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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. bastion of quality programming with Gary Coltbaum it doesn't get better than this 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 garyk.com rewind fast forward listen at your convenience on any device you want anytime you want all for free on garryk.com I know I tend to speak fast so I have a lot to say in so little time so if you want to

rewind it fast forward pause it you know take notes by all means I strongly recommend it as long as you're in a safe place, not driving, and, you know, you can, you can pause and rewind as you want. So all available on garyk.com. All right. You spoke about structure. Think about this. If somebody's in a performance business, I'm an athlete, I'm an actor, whatever.

There's lots of ways of performing in the world and getting paid for it as careers. Investing is the same thing. It's a performance-based business, right? Someone was an athlete. Use Michael Jordan, for example, would be so disciplined. He'd wake up in the morning at 4 or 5 a.m. every day. go to the gym for hours, shoot the ball. You know, Tiger Woods one time was golfing.

And somebody said, I wish I'm as good as you. He gets up in the guy's face. And he's like, show me your hands. The guy's like, what? He shows him his hands. He's like, no, you don't. If you want to be good as me, you'd have calenances on your hand. You wake up in the morning, you'd swing the golf club until your hands would bleed.

And the guy obviously in the crowd didn't expect that, didn't know that. But then that's, you know, doing the work, right? Disciplined. Discipline is a superpower. So being in a performance base, you know, you know, business, like this business, you know, having the discipline to show up and do the work and having the structure in place is superpower. And it's one of the things that separates the very successful people in this business from everybody else. Look at Gary. He's got the discipline to show

up every day and do this radio show. Every day and look at the market. Every day invest in the market. That is a superpower. It's not a motivational question. It's discipline. So again, think of two people. One has a discipline, Michael Jordan, and wake up and do the training and do what's necessary to improve and learn and study and da-da-da-da. The other person just goes to the gym whenever they feel like it and they hope they're going to become a superstar. Just based on odds, who do you think would be more successful? The person that has a discipline shows up and does the work, especially when they don't want to or the person who relies on just winging it and doing it. you know, whenever they feel like it.

I don't know about you, but my money's on the guy, the gal, who's got the discipline and has the structure to show up, even when they don't want to. And that's also a superpower. So having a structure in the market, let's talk about that. Well, okay, Adam, I get it. We want to have structure. What does that look like? Well, it all starts with how we process information.

The world is a very noisy place. Wall Street is a very noisy place. It's full of distractions. It's so easy to get, like my friend Andy says, lost in the sauce. Oh, this happened, that happened. This guy said that. That guy said this. Most of that information absolutely relevant.

Well, what's relevant? Two things. Risk and reward. What do you mean, Adam? Here you go. Creating structure, the beauty here, is you're free to do it any way you want. I started before I spoke about the book, psychological analysis, saying in the book, there's an infinite number of ways to make money in the market. Your job is to find one that works for you.

That's one of my sayings in the book. And how I started this whole speech about sharing with you what I've learned about some of these timeless lessons and having structure. So if there's so many ways to make money in the market, okay, great. Your job's fine one that works for you. That's the beauty of it. to come up with whatever structure you want, how long or how short, that you're up, it's your, you know, you're free to do whatever works for you to figure out a process that's repeatable that works over the decades, not just weeks or months. This isn't ever, it's a never-ending

game. It's an infinite game. And make sure you can have the endurance to show up and win and continuing doing that work. So that's the structure. That's a discipline. The risk reward. Let's talk about that. I have a podcast called Smart Money Circle. I interview the Smart Money. I separate that to big money managers and CEOs of publicly traded companies for timeless advice. It's free. You can click on Smart Money Circle.

com or go to search it on YouTube or Spotify. Series XM just picked up the show. So it's available anywhere. And the whole idea is to get timeless advice from the smart money. But what I do? I just passed a trillion dollars in AUM on the show. All right. So I've interviewed lots of people.

Hundreds and hundreds of episodes. And what's become very, very clear is that winners win, and it's not an accident. It's by design. It's by consistency. It's what they do day in, day out, day out. It's like going to the gym. What's better? The guy who's going to go to the gym and just hit it really hard for one day or the person

who's going to go there four or five times a week every week for the rest of the live and do moderate workout or a light workout. Consistency is huge. That's a winning formula, stacking the odds of success in your favor. So, what do we mean by all this? When you look at markets, how do you interpret all of the incoming data? So one of the guests on my show told me, he goes, Adam, you're not buying and selling a stock. I go, what do you mean?

He goes, you're buying and selling risk. And I thought that was absolutely brilliant. I mean, brilliant. And he's right. He's absolutely right. We're not buying and selling a stock. A face value you are, but go deeper. You're buying and selling risk.

You're risking your money for the anticipation of a potential reward at some point in the future, which is unknown. Unknown if you can have a reward to begin with, the sides of the reward, so on and so forth. So, okay, if we don't know the reward side of it, what can we control? The risk side of it. Another common theme that I've noticed with successful traders and investors, is they are very disciplined with keeping their losses small or cutting their losses. Very disciplined. Why?

It's just math. I've spoke about this before. If you've heard this before, I'll go quickly. If you're down 10% on anything, you buy something, it goes down 10% in value. You need an 11% gain to get back to even. If it goes down 25%, you need a 33% gain to get back to even. If it goes down 50%, you need 100% gain to get back to even. Math on the way down, it's not linear on a percent basis, meaning I'm down 50%.

I buy something at 100. It goes to 50. I just lost 50%. Well, all right, to get back up to 100, it's now at 50, it's got to go up 50 bucks, which is 100% of 50. But I only lost 50%. Just the way math works. Don't take my word for it. Google it, chat sheet, pete it,

have fun with it. But it's so powerful because it's exponential on the downside. So if you're down 70, 80, 90%, you don't need 80, 90% to get back to even. You need hundreds of percentage points to get back to even, if not thousands, depending on how far down you go.

And that's why keeping your loss as small becomes a superpower when you can really peel back the onion and focus on what really moves a needle. Risk, reward. Every single decision, in my mind, eye is an element of risk, element of reward. Should I cross the street? Should I do this? Should I do that? So on and so forth. And once you look at things that way from that perspective and

filter out the noise, all of a sudden you get freedom, you get clarity. You get the ability to see things that really matter and filter out the noise. Up next, got a lot more to cover. I'm Adam Sarhan. This is the one and only Investor's Edge. Hello, hello. I'm Malcolm Gladwell. host of Smart Talks with IBM. I recently spoke with IBM's new director of research, Jake Embatta. We discussed his vision for the future of quantum computing. At IBM Research, what we always do is answer what is the future of computing, whether it's coming up with new algorithms, coming up with better AI,

coming up with quantum, or coming up with just how do different accelerators go together. It's our DNA to answer the question of what is the future. Isn't it a perfect problem for IBM because you kind of need to have a legacy of building stuff? Yes. Building actual physical machines. Yeah, it's why I came to IBM. I wanted the experience, the culture of building hard things that others have not done before. Where do you imagine we are in the timeline of this technology?

There will come a point when it will mature. Right? Yeah. My cell phone is a mature technology at this point. How far are we from that point with quantum? By 2029, we'll build the first fault-tolerant quantum computer. That is one that can run a very, very large, large problem. To learn how IBM is building the future of computing, visit IBM.com slash quantum.

Success starts with your drive, and American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs, APU helps you gain the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop. You bring the fire, APU will fuel the journey. Learn more at APU.apus.edu. Hey, it's Ryan Seacrest for Albertsons and Safeway. It's stockup savings time now through March 31st. Spring in for store-wide deals and earn four times of points.

Look for in-store tags to earn on eligible items from Celsius, Body Armor, ORAIDA, Silk, Capri-San, Bavarian Meats, and Charmin. Then clip the offer in the app for automatic event-long savings. Stack up those rewards to save even more. Enjoy savings on top of savings when you shop in-store or online for easy drive-up and go pick up or deliver. Restrictions apply. See website for full terms and conditions. your leisure anytime you want gary k.com all for free and you can subscribe to gary's morning notes you can follow gary on x formerly known as twitter email gary about his money maddenance services and do a lot more all available at garyk.com all right spoke about structure spoke about risk

reward spoke about discipline how it beats motivation just about every single time now i want to speak about price and volume okay let's go i get it out of it makes sense, let's have structure. So my structure, I like to look at markets when markets are closed, especially on the weekend. That to me is a superpower. Markets are closed, Friday afternoon, Friday evening, great. I'll do my weekend work and I'll be free all weekend. Some people wait until Sunday to do it, whenever you want to do it. Some people do it every day. Before the open, after the open, I like to see what's happening, especially when the markets are closed. So I write a pre-market report. After the close, I want to see what stocks are up the most on volume. I want to see what stocks are leading,

what stocks are lagging, what sectors are leading, what sectors are lagging. I'm a big performance guy. How I determine, make sense of the information and filter out the noise? It's price. It's primary in my world. Price is king. Everything else follows. Why?

Because what's the one thing that shows up on all of our statements? Price. The one single variable that determines whether or not you make money is a difference between your entry price and where the market price is. That's it. Everything else. including earnings and including news and headlines and economic data and this data and then blah-da-da-da-da-da-da. Spackseat.

Even volume, even earnings, even sales, even PE ratios, and all this other stuff. Price is the only thing that shows up on my statement that directly determines my performance. All right, I'm going to focus on price. That was a huge liberating factor for me. Volume two, but price is primary. Okay, great. So when price goes down, is that necessarily a bad thing? Well, not really.

It's all relative. If the market just had a huge move up, let's say it goes up to 10, 20, 30 percent or whatever, and then it pulls back 4 or 5 percent. That's not a bad thing. It's normal. It's healthy. It's the way the market behaves. Once I understood that, it took the fear.

Notice what I'm about to go into now. It's going to be the emotions. The two biggest emotions that impact almost all of our decisions, consciously or unconsciously or fear and greed. Right? You've heard this before from other folks. It's just the two biggest variables from an emotional standpoint that impact our decisions.

And the market is fear and greed. Okay, green. What does that mean? I'm fearful that the market's going to go down. I'm going to lose money. And then when it goes up, I get greedy. that's just how life works for most humans right all right so price when i understand that variable if price goes straight down below my entry price and below and just go and break support and does it

on volume then obviously that's not a quote-unquote good thing but if it's a huge move up and then it pulls back a little bit yeah that's healthy it's normal it happens so again understanding the context is super important. So when I analyze things, I want to sort by percent change on a given day, on a given week, a month, quarter, year. I like to look at year-to-date percent changes. That just works for me the best. But during the day, I'll look at a percent change on a daily basis. And then I want to make sure I understand the risk and reward. Now start connecting the dots. Everything we spoke about, right? Connect those dots. So during the day, I want to find those leaders. What stocks are up the most, price first, ideally on heavy volume, volume second, and sort of by price percent change.

And then just because the stock's up, just like it's because it's down, doesn't mean it's a good thing or a bad thing. No, what's the context? Is the stock moving sideways for six months building a base between, let's say, 50 and 60? Every time it gets near 60, it goes down, then it gets to 50 and it rallies. That's a base. 60 would be resistance. Think of like a ceiling. And 50 would be a floor. Support is the word. So support and resistance. Other concepts I'm introducing. Again, if this is simple for you, bear with me because it's building blocks. So just because the stock goes up, well, where is it with relationship to support and resistance? Now, if you go on sideways for six months between 50 and 60 and all of a sudden one day, it starts tightening up. volatility contracts, stock goes really tight, 58, 59, 58, 59, then I say 59 for a few weeks, and then all of a sudden one day, and there's a catalyst, it goes above 60 and does it on heavy volume?

Like Gary says, that's not Aunt Mary, Uncle Bob doing the buying. That's the big institutions. Well, all of a sudden, that's called a breakout. And that folks becomes very powerful. Now, not all breakouts work. Doesn't mean the stock's done double or triple, but if the stock goes to 100, it has to get above 60. It has to break out in order for it to double or triple or quadruple, especially if you can identify that a stock is basing. So after it breaks out at 60, it's binary. Either the breakout fails and it rolls back over or the breakout works and the stock continues to rally. Now, you could say there's a third one where it just kind of goes sideways for a little bit right near 60, but I'm going to talk about up or down, right? You want to throw

sideways and then throw it in there, no problem. If it goes up big, now all of a sudden has a big run, it's up 10% or 20%, it's now extended. What should happen there is either build a new base or it pulls back. It's the only way for it to consolidate after a big move up. It goes sideways, builds a new base, or it pulls back a little bit into support. Now, if the breakout fails, let's say it goes to 60, heavy volume goes to 61, the next day it's back to 58 or 57 or 55. Guess what? Breakout fails.

Lots of workouts. fail. Again, having stops in place, keeping that risk really small is a superpower. Because we're going to be wrong as active traders more than we're right. And that's okay, as long as the risk is small when you're wrong. And when you're right, the wins are bigger than the losses. Over time, that becomes a winning formula. Let the winners run and cut those losses small. How you do it, does an infinite number of ways to do it? You've got to find one that works for you. Or what's your timeframe, what's your risk for, you know, there's all these different variables. But the principles, the concepts are evergreen. These things just last all the time because this is how the markets work.

And if it rallies a lot and then it goes down a little bit, it's just pulling back. All right, look at support. There's a 10-day moving average, a 21-day moving average, a 50-day moving average. Look at prior resistance. You want to see it stay above that ideally. So it stays above 60. Let's say it goes to 75 and goes there for a few weeks and then pulls back a little bit to 68, 67. All that's fine. You don't want to really see it undercut 60. Sometimes it does. It goes to 62, 63, then it'll roll over a little bit to 58, 59 and then break out again.

Those are messy. They happen. I wish it was clean, but that's just how markets work. Asking yourself, how am I going to interact with all of that and writing down those principles, those rules for you or guidelines, is a another way of creating structure. Finding those breakouts, very powerful. There's a good website, Breakouts and Setups.com, which tells people find breakouts and setups.

I just recently launched it. What happens? The idea there, stocks are breaking out, I want to see them. Does most of the work for you? Not all the stocks are perfect breakouts? No, you find the ones that you like. Leave the other ones. And it gives you setups, gives you actionable ideas.

Because to me, I was spending so much. many hours drowning in these charts and looking at this, looking at that, couldn't, you know, finding breakouts. You look, okay, there's got to be a way to automate. There's a simple list of stocks and boom, take the ones I like and leave the rest every day, right, in real time. So, or you can find it yourself. Look at stocks moving up on volume and sort those.

See which ones are extended. See which ones are trading near prior chart highs. Because what is a prior chart high? What is resistance? What is support? It was an area. where investors changed and said, you know what, I'm not going to be buying this anymore.

I'm going to start selling it at 60. And then by 50, hey, you know what? I'm going to start buying it again. And they get to 60. Now, we're going to sell it a little bit. And they do that for six months. Now all of a sudden you break above 60 in this hypothetical example. You want to stay above 60.

You want prior resistance to become support. Now all of a sudden it gets back towards 60, 61, 60. It's a range. It's not an exact to the penny. It's an area. You want to see bulls show up and defend support. that new support, which oftentimes could be prior chart highs, or any of the moving average that you mentioned or uptrend lines or whatever the case may be. Every situation is different.

But the idea is that, again, come up with structure that works for you. How are you going to handle those breakouts? Are you chasing stocks? Are you finding stocks too late? You know, risk reward. If I enter here, where am I going to exit if I'm wrong? Three questions I always ask. where do I enter, where do I exit, and how much do I risk when I'm wrong? Super, super, super simple and super powerful. Up next, we've got a lot more to cover. I'm Adam Sarhan. This is the one and only Investor's Edge.

I want to thank you very much for being in. Hello, hello. I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvin Krishna. And I asked him, how can companies use AI to its fullest potential? to create smarter business. My one advice to them. Pick areas you can scale.

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Enjoy savings on top of savings when you shop in-store or online for easy drive-up and go pick up or deliver. Restrictions apply. See website for full terms and conditions. You're listening to. What are we waiting for? Well, what are you waiting for? One, two, ready, go. Investors Edge with Gary Culpa. And welcome once again to Investor's Edge.

I'm Adam Sarhan, in for Gary Kay, who's out today. So always want to thank you very much for being here. All right, if you miss any part of the show, go to GaryK.com. rewind fast forward listen at your convenience or free on any device all right lots of things so one i speak fast i do it because there's a lot of content little time so feel free to rewind fast forward take notes when you're seated somewhere and uh oftentimes when i listen and someone's going in the zone or in the flow or getting that state of flow i just i want to you know jump right down the things that jump out of me so that definitely recommend people do that second let's talk about let's

finish going here because we have a few more minutes left then we're going to wrap up or I run out of time again. So we spoke about structure, spoke about discipline, spoke about risk and reward, spoke about price, spoke about understanding bases, how markets perform.

Basis come in all different shapes and sizes. Some are small, some are long, some are different patterns. There's bullish patterns. There's bearish patterns. But I'm just simplifying it to bases, right? And there's breakouts from those bases.

Some breakouts work, some fail, and some just sit there. So it's it. It goes up, down or sideways. So understand, where you are in that cycle

and understand things happen in cycles. There's bull markets, there's bear markets, zooming out, looking at the forest, not just the trees. All this is super, super powerful stuff. But have a way, folks, of creating structure so that works for you. So you can interpret the data that's happening in the market in real time

and figure out a way to find actionable ideas. in this business on traditional Wall Street, there's analysts and there's traders. At the big banks, they're two separate departments. There's literally different job descriptions for people that are analyzing the market and people who actually trade the market. For individual investors, we have to do both jobs ourselves. And nobody tells us to a two separate job. So there's, you know, Sigmund Freud had a, one of his protégés, this guy named Carl Young.

Carl Young had this theory of archetypes and humans. So he had to simplify it the four simple things, king warrior, lover, and magician. So the magician energy is the analyst. The warrior energy is the trader, right? So I'm not going to go into all those things. You can Google it if you want, but I just want to simplify it to be like, all right, we have analyst energy. We have trading energy. So the person that's executing.

the trades that actually has to pull the trigger, it's warrior energy. It's just good way for me and people get it. Like, okay, great, I understand that. Magician energy is the analyst. I need to analyze what's happening. I need to look at the market and just sit back, calm, cool, collected, not get too excited and notice my state. When I state changes, I need to just take some time away because time heals all wounds just about, especially with trading wounds that are following the principles I outlined for you tonight, to keep those losses small, that's when time can heal the wounds. If you have a 90% loss, it sometimes becomes very traumatized, even bigger 40%, 50%, you know, sometimes it gets very traumatized. Keep those losses, it helps with all that. But for the most part,

small losses, time heals those wounds. Okay, great. How am I going to engage with the market and separate the analyst hat from the trading hat? So what I do is I look at the markets when markets are closed. Also look at it when it's open. For the most part, my analyst's role, my big decisions are made in advance. And I learned this from Nicholas Darvis. He was a ballroom dancer decades ago in the 60s and 70s and even before then, right around that time frame. And he wrote a great book, how I made $2 million trading stocks or in the stock market. And in it, he talked about how he was overseas in Asia. He would send his broker's orders. and he called it Darvis boxes, flat bases.

And when it breaks out above the base, he's buying with a stop in case the breakout doesn't work. And he did really, really well. He made $2 million back in the 1960s or 70s whenever he was around, 50s, somewhere in that time frame. And he came back. Yeah, the name of the book is how I made $2 million in the stock market by Nicholas Darvis.

He came back, it was in New York, he was trading with the other brokers, lost it all. I just had awful performance because he got caught up in the noise. People's opinions. He didn't have his structure. He wasn't doing what worked for him before. He left, went to Paris, took some time away. He got, his returns came back.

And he realized, oh, hold on a second. This is what works for me. And he did the work in advance. If the stock goes above 60 in that hypothetical example, I'm going to buy with a stop at 58 or whatever the case is, right? Okay, great. The trader role, the trader energy, the warrior energy needs to come out and say, okay, here the analysts gave me these instructions.

It doesn't have to be done in advance. I'm just telling you what I do because that works for me. And I need to execute those traits. Now, you can automate them. You could put orders in with a buy stop or a buy limit, you know, whatever they want. You know, stop loss. If this happens, contingency orders, talk to your broker. I've got nothing to do with that stuff.

But the trading aspect of it, lots of time people, again, fear greed. That fear cripples their ability to actually pull the trader. Warren Buffett has a great line with fear and greed. He goes, you want to be greedy when others are fearful and fearful when others are greedy. Meaning if you buy a stock at 10 and it goes to 9, lots of people, get greedy and say, oh, I'm going to sell it when he gets back to 10. He says, no, be fearful because it can go to five or go to zero. And the opposite is also true.

You bite at 10, it goes to 11. I'm going to sell it because I'm fearful. I'm going to lose my profits. Now that's when you want to be greedying. Let it run. So it's not just Buffett. That comes its collective wisdom. Be fearful when others are greedy.

And agree with those are fearful. Again, just taking yourself out of the equation. Something called a personal blind spot bias. We can't see ourselves objectively, right? It's real easy to see. see other people flaws in them or strengths in them, but seeing ourselves, not so much. But it's a superpower. Think of 100 newlyweds and night of their weddings. How many you can get divorced? No one's going to raise their hand. But we know statistically half of them

are getting divorced. That's an example of the personal blind spot bias, right? Being able to take yourself out of the equation and realize like Ray Dalio says, it's another one of those. Ray Dalio is one of the biggest head from managers ever. And he wrote a book. It's called principles. In it, he says, hey, look at things objectively. It's another one of those. This event has occurred. before. You might not have experienced it, but it's happened before. Study it. Study history so you don't repeat it. Again, having the structure in place, the discipline in place to think in advance about how you can handle risk and reward, where you enter, where you exit, how much you risk when you're wrong, all of these things really, really give you a big edge, opposed to the person

who just wings it. Maybe you want to look at the market at 10 o'clock to 11 o'clock every day, or 3 to 4 or 5 to 6 or eight to nine, whatever works for you. But figure out a way to get out of your head, get your thoughts on, and I like to write it down, but whatever works, and then separate the analyst role from the trader rule and being able to pull the trigger when the time is right, when the criteria, you don't have to buy breakouts, you can buy any way you want. It's the other beauty of this thing. There's no rules.

As long as it's legal and ethical, that's works for me. Find out what works for you. And then be able to do it, pull the trigger when it actually comes time and that criteria lines up. Hope this is helpful. These are some of the principles that I live by and I share with other people. There's some more that I'll cover later in the week and at other points in time on the show. But as always, I want to thank you very much for being here.

It's really a pleasure to share this with you. This is the one and only Investors Edge. This has been Investors 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. Success starts with your drive, and American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs, APU helps you gain the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop.

You bring the fire, APU will fuel the journey. Learn more at APU.APUS.edu. Hey, it's Ryan Seacrest for Albertsons and Safeway. It's stock up savings time now through March 31st. Spring in for store-wide deals and earn four times of points. Look for in-store tags to earn on eligible items from Celsius, Body Armor, Aida, Silk, Capri-Sung, Bavarian Meets, and Charmin. Then clip the offer in the app for automatic event-long savings.

Stack up those rewards to save even more. Enjoy savings on top of savings when you shop in-store or online for easy drive-up and go pick up or delivery. Restrictions apply. See website for full terms and conditions.