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Dentists Who Invest

Podcast Episode

Dr James: 0:41
Fans of the Dennis who Invest podcast. If you feel like there was one particular episode in the back catalog in the anthology of Dennis who Invest podcast episodes that really, really, really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome to the Dennis who Invest podcast.

Dr Zaid: 1:23
Hi guys, just creating a short intro to start this episode off, as we have no introduction. This is the second half of Zaid and I’s conversation, which follows on from the previous episode that has just been released. Without further ado, we’re just going to jump straight in and pick up where we left off.

Speaker 4: 1:42
Yes, and then my next one really was going to. So when I got into all this I started to invest in research, different funds and stuff, and then I’ve got into more actual doing some trading. I did a bit of spring trading in the stock market. When you’re reading a lot of these books and stuff about these things, a lot of the times the same kind of things get repeated over and over again. A couple of things I wanted to show which I think is quite interesting, because to me, the stock market before I looked about this is just something I’d always lose money on. I mentioned earlier that someone put a tip on and it’s like that thing that they say if your cab driver tells you something, it’s time to sell Exactly. I was one of the persons listening to that cab driver initially and go. I have put out a great millions For me. What I did? I just developed my own trading strategy. The interesting thing about the trading strategy it almost doesn’t matter what kind of trading strategy you have. It’s managing your risks. I looked at a couple of things once. One of the things I looked at was double bottoms or double tops. You look at support and resistant lines and stuff like that there are people who are trading on that top support line looking for breakouts. Hang on, if someone’s making money from looking at breakouts which goes past that resistance line, how does then someone also make money from when they guess that resistance line banking is going to go back down? I think one of the books I read which mentioned that was how I Lost a Million Dollars. I don’t know if you’ve read that.

Dr James: 3:17
It’s definitely worth the read I haven’t actually I haven’t.

Speaker 4: 3:22
So he tells the story of how he lost the money. He then went on and interviewed all these top traders to try and find out how they trade. Then every single one of them contradicted what the other person was saying. One of the people was saying I never buy low, because who bottom fish is that I always buy low and the stock goes up. Then another important thing when it comes down to that and what’s really important is your risk management is how you set up the trade, because essentially again, from a psychological point of view, the stock market is the best odds you’re ever going to get. It’s 50-50. It’s either going to go up or it’s going to go down, but it’s certainly better than 50-50 because you’ve done a little bit of research, you think it’s going to do this. But what makes it even better? When you get it right, you can potentially say, for example, you’ve got a trade and if this goes my way, I’m going to make two, three hundred pounds, but you set a tight stop loss on it. So if you get it wrong, you’ve only lost 50 quid. So if you lose 50 quid half the time but make 200, 300 pounds, the other half the time you’re going to keep making money. So it almost doesn’t matter what trading strategy you use. What is really important now I think you and Jasmine monster it really well is that you forget what other people say. You’ve got to have conviction in your own trading strategy, because if someone else says, buy this, as you were saying, if you buy this and it doesn’t work, if I tell you, oh, you use this trading strategy because that’s why I do it, and when it doesn’t work for a few trades, you think, oh, I’m not doing this anymore, it’s rubbish. You don’t have that own conviction in it. So I think that’s definitely really that kind of opened my eyes to it, thinking actually, yeah, they’re right. All these books, all these different books that I read, they all had different trading strategies, different techniques of what to do. Yeah, these guys are still making money and still doing it that way. And it all really came down to managing managing risk. And we’ve all done it in the past. You know we’ve put good money after bad. When something goes down, you well, you’ll just buy more because it’s worth less. So you constantly think, oh, it’s going to go back up, it’s going to go back up. But you know, if something goes down by 50%. It has to go by 100% just to break even again. And when you can’t start looking at this, you’re thinking, yeah, actually you kind of get that, so you’ve almost just got to. When you lose, you lose, get out, move on, move on to another trade, keep your money going.

Dr James: 5:38
Can I just chuck something on top of that, one of the best things I’ve learned? Or one of the mistakes I’ve seen most recently? People go into trading and they think if I learn absolutely everything about this one company and I learned about how great it is, quiet moves, etc. Etc. Then I can invest and I can be totally infallible and my money will always increase because I know everything I can. It’s not possible to do that. That’s the same as saying I have a crystal ball and I can predict exactly what’s going to happen tomorrow. Businesses are set in the real world. There are these unforeseen consequences. How many businesses look really good? And then coronavirus happened? I don’t know, Certainly the airlines did. You know what I mean? Yeah, yeah. Coming back to what you’re saying about position sizing, if you go into each trade and you have an idea of how much you’re going to put in beforehand, there’s a rule called the rule of 2%. So if you risk 2% on each trade, that is, you can invest as much as you like, but you can’t risk 2% of your total equity. And apparently if you do that, you can be wrong 50 times and you’ll still have. I can’t remember off the top of my head, but you’ll still have like 50% of your money. You know what I mean 50% of your initial capital, and you’re going to have to be really bad before you’re wrong 50 times. Do you know what I mean?

Speaker 4: 6:55
Exactly. Yeah, I completely agree with you.

Dr James: 6:58
The point is, you’re going into it and you’re already acknowledging that this might look like a sure thing. This horse looks like it’s going to win the race, but you don’t know for sure and you’re always hedging your bets either way, and that’s one of the most common mistakes I see in crypto, just in general trading, everything like that. It’s all about measuring your risk, because as soon as you let go of the fact that you don’t have to be right all the time, you become so much better. It takes your ego out of the game as well.

Speaker 4: 7:28
Completely. And you know, with the stock market side of things it’s not about getting rich quick. When you’re going to lose the money, you’re expecting to go in and double, triple, quadruple your money. The examples I showed earlier about compounding. You only need to make 10% a year to get those gains. And this is what those big hedge funds are doing, and these guys can’t go in and out of trades like we can. We can close one trade with them and click up a button and it’ll take them six months to get out of some trades. So imagine what we can do. Most swing traders aim to get really about 20% a year. So if you’re managing and again, 20% a year, it’s not 20% a month, it’s not 20% every few days. That average is out over a year. So it’s minor, small gains. Managing your losses. You can easily make more than that, but it’s not going for that risky stock and trying to get a 10-bagger but potentially lose everything. It’s kind of the slow and steady managing your. I think the classic example is James James. It means you were going to play a game, right, heads or tails. If you’re right, you, you get three times your money back. If you’re wrong and you lose that money, okay, if you have 500 quid, then it’s 10 pounds ago. Are you gonna put 500 pounds in straight away? You’re not. Why not? Because you want to keep playing the game. So you’re gonna want to manage your money. You want to put 10 pounds at a time because actually, if I, if I win, I get two times that and that’s what you’ve got to think About and that’s all that comes down to mindset is, it’s actually quite a good game to play. You want to keep in the game. You can only keep in the game if you’ve got the money and the key thing is is managing your losses.

Dr James: 9:23
Uses that exact story he had. They had a computer program and the computer. Every time they won it was 50, 50. Every time they won they got three times back and every time they lost they lost, you know, a certain percentage. And the computer program beat most people over time only because it was programmed to only bet so much of its total equity each and every time, and human beings just couldn’t do this. They had, they had maybe like 10% of people that had more money at the end and it just, it just displays how much of it, how much of trading, we’re at the whims of our own psychology and how much completely totally undermines us and Strangely, it shows, just you know, how people can’t, how many people can’t do this because of these concepts or what’s going on inside their head. It’s, it’s a bit. It’s interesting, it really is interesting.

Speaker 4: 10:14
And it’s another thing. If you can’t do it, then that’s completely no one’s expecting you to it. There was those funds that you can, you know, let them do the job for you and a lot of funds make you know, get you good returns over the years. But it’s much better than just leaving the cash in the bank.

Dr James: 10:25
Yeah, totally. It’s not for everyone, absolutely. I think just the really interesting part is that it’s been demonstrated to just he. Van Fop argues in his book that is 100%. Psychology is trading 100%, having a system and being able to objectively take a loss without getting flustered, or, conversely, being able to have a big win and not thinking you’re God’s gift and going all in the next time.

Speaker 4: 10:50
Yeah, no, exactly. And and I think you know, if you go down that route and having tight stop losses in place when you go into a trade and accept that If you’re out of that, you’re out of that and that’s something that we can do is dentists, we’re busy treating clinics and if you, I do my trades in the evening, I have them set up, go to the next and I have my tight stop loss and I kind of chat, I don’t Leave them without a stop loss of place, because if the coronavirus happened again the next day, then at least I’ve been stopped out Everything but I’ve got money to go back in and buy again. Yeah, as opposed to having money in the stocks thinking, oh, it’s gone down 80%, it’s gonna go back up, but then I can’t invest in anything else going back up. So I think that is.

Dr James: 11:26
So I thought you were finished. There were you, zed yeah yeah, yeah. All I was going to say is is well, in crypto a lot of the charts that I trade I’ve got a group, I’ve made some telegram groups with my friends and things, and we talk about crypto and trading and the charts I put on there and I say, guys, look at who would trade this chart. And they’re all like, yeah, james, I wouldn’t trade it unless I’m shorting it. But I’m like, no, can’t you see that it’s already as low as it can ever possibly go? If we look at history, yeah, so I can buy here, I can sell this far away, and I know that I’m wrong.

Speaker 4: 12:00
Exactly Because it’s never went that low down and do you know?

Dr James: 12:03
what if I’m wrong, I’ve lost maybe like 0.2 of my equity. You know what I mean. Yeah, and I can be wrong literally 1000 times and right once, and I’ll still make money. Now I’d like to think I’m right a little bit more than that. You know what I mean Exactly yeah, worst scenario. This is why those are my favorite trades, and when I drop the there’s, there’ll come a time very soon when I’m bringing this crypto course that I’ve been speaking about on the group live and a little bit of it. Well, all that stuff will kind of be in there as well. There’s going to be a trading day on that, and the day I read I think I read a lot of books before I got to the point that I kind of got my head around how to do this. And it’s not about catching the. You can do it this way too. It’s not about catching the runners that are already running. You can trade those if you want, but they’re never as lucrative as the things that look like they’ve bottomed out and no one’s interested in them, cause those are the quick dos that do 10 times, 20 times, silly things. You know what I mean, and like I said you only get to be right once and you’re profitable.

Speaker 4: 13:02
And that’s it. And that’s the trading. You know, when I’m trading swing trading in stocks, I’m looking for it’s kind of a two to two or three to one risk ratio, and then I wouldn’t risk more than 2%. You’ve got the option. You’re going to go for more of a 100 to one or a, you know a 50 to one risk ratio, but your risk is much lower. And then and then you’ve got that, so you need one to get it right. Every, every. You know every 30, 40, and you’ve and you’ve made your money. And there’s different ways of doing it, but it’s having your own strategy in place and having conviction in your own strategy. I think it’s key. And, yeah, and it’s not about, as we said earlier, it’s not about your trading strategy, cause you said half your friends wouldn’t do that and you’d go and do it, and then you and then you would, but you’re still making money. You’re both making money. So, um, some of you will get hung up on this. You know this, this next best thing of trading and how to do it, and actually it’s not like it’s just managing your losses. I think it’s much more important than anything else.

Dr James: 13:52
Do you know, I’ll tell you something else. Just to draw Maybe. I think you were probably going to move on to something else, Sarah, or I thought you were anyway.

Speaker 4: 13:58
No, I think we’re going to have a good yeah.

Dr James: 13:59
All I was going to say is just one more thing to draw a line under the trading thing in the market, 80% of people who go into trading don’t have a system. Okay, yeah, the top 50%. 50% of people lose, 50% of people win. Okay, maybe it’s slightly more skewed than that. Maybe there are some big winners and some big losers. I don’t know, it’s not that interesting, but it’s 50-50. If you’re a person that has a system, you’re already in the top 20%. Do you know what I mean? You already have the edge over so many people, and that’s just because you went into it with a plan, and a plan can be as simple as I’m going to use this much of my money. I’m going to buy at this price, I’m going to sell at this price and I’m going to. I’m also going to sell at this price if it goes against me. That’s the four components of having a trade, and you’re already in the top 20%. How insane is that? Yeah?

Speaker 4: 14:51
You can set up the night before before the markets open. I’m going to trade the American markets and open at half two. I’m treating patients at half two. I can’t do that, but in the evening I’m going to set it up. It’s set when it opens what I wanted to buy it at. It will set what we’ll sell at and it will set. Then sometimes I’ll finish a clinic on check and go okay, I’ll be stopped at 200 without even doing anything. It’s all set up for the week and ready to go. That’s the kind of thing that I, as most dentists, can do. It’s a straightforward approach, but it’s just having that system in place to allow you to do that. The psychology of it, I think, is much more important than anything else. It’s fascinating.

Dr James: 15:24
The psychology is fascinating. Really great book. Everybody I’ve mentioned it a few times. On the really great book I’ve mentioned a few times on the group it’s Trading in the Zone by Mark Douglas Sorry, I’m just looking at it over here, I’m just trying to get the title right. But he basically breaks down fear into its four different types. I’ll not spoil the book too much for everybody, but when he explains it the way he does, you can see yourself in his words so many times. You’re so much more able just to step back and look at previous things that you’ve done objectively and recognize these things. Amazing book. I learned so much.

Speaker 4: 16:02
No, I’ve not read that one. Actually, I’m looking to that, but they all follow the same concepts. I think the other thing is if he’s new to trading and doing all the other important thing is ignore the noise, ignore the people on social media that say I’ve gained, I’ve made this amount. Ignore the get rich quick schemes and even, I don’t know, say anything about your group, james, but even something beyond that. I’ve made this much on that. Let them do that. Don’t let that affect your strategy and your and I think that’s really important because I’ve done it a couple of times. You’ve got someone’s mentioned this and I’ve already bought it on a high and then it kind of corrects and then goes down and I wish I hadn’t not done that. So I think that’s really important as well, and so much of it is like some mice in the psychology.

Dr James: 16:49
Totally no. I love people posting their wins on the group. It’s absolutely great, but I just wouldn’t want people other people to be led astray by them, because quite often I mean. When people were posting about Dogecoin, however long ago, I posted that video about two months before it and I kind of made the point that this price physically cannot go any lower. It has never went lower than this price in its whole lifetime and we know the whole narrative that yeah, it’s a Dogecoin, people just pump it for lots of money. So if you’re buying something that people are probably going to pump and you’re getting it for lower than it’s ever been in the whole history, those are the absolute prime trades that you want to be in and by the time it maybe gets on social media, it’s already hit that. Yeah your four year point, where maybe you can still make some money, but the risk return is way off, you know no, exactly. Yeah, maybe it’ll 2x, but because it’s going to hit the zenith of its price and it almost, you know just the sheer strength of gravity is going to bring it down so intensely afterwards, it’s a risky game to play. That’s all I’m saying. That’s all I’m saying. Yeah, One, one to be wary off. One to be wary off.

Speaker 4: 18:41
Definitely Perfect. Yeah, I think that’s covered everything I was just talking about.

Dr James: 18:47
Really, I thought you might have something more to chuck into about trading now?

Speaker 4: 18:52
Yeah, I think this was good.

Dr James: 18:54
It kind of it’s maybe went on a little bit of a meander and path.

Speaker 4: 18:57
A bit tangent, yeah, but it’s good though.

Dr James: 18:59
No, all that was solid. You know really good stuff and I can speak so much more on trading than I can on NHS pensions because I just know so much more about trading, to be honest with you, and maybe that’s why we sort of went off piece there a little bit, but I hope everybody understood that we find a lot of value for that. We said as well, there was a few things that we’ve talked about in psychology already, and mindset is so important. Yeah, and I know that you said to me that you’d like to elaborate on a few things about investing in trading mindset, which I think might be of use to the group. Real quick guys. I put together a special report for Dentist entitled the Seven Costs and Potentially Disasters Mistakes the Dentist may whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realize that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdenisoonvestcom forward slash podcast report or alternatively, you can download it using the link in the description. This report details the seven most common issues. However, most importantly, it also shows you how to fix them Really looking forward to hearing your thoughts. Yeah, yes, definitely.

Speaker 4: 20:23
So we’ve touched upon them, some already. So one of them is like, obviously, what I was saying earlier ignore the noise, you know, don’t, don’t listen to those people that are on there. Kind of be convinced in your own investment views and I need likes of you, and Jasmine should perfectly on your podcast. As point is me saying to you right, James, you definitely buy gold because as soon as gold dips down the touch, that’s it. I was going down this and the work I’m going to sell. So it’s really important to have your own investment in your own investments. Essentially, saying earlier, save 10% of your earnings. It’s easy to think, spend 90% of my earnings. I think it’s a much easier way of doing again. Is that your mindset regarding that? While saying earlier, trading psychology and managing losses is much more important than your actual trading strategy. You look at all these trading strategies that people have made money on. They’re all opposite of each other. So how does one make one money the other way and not vice versa? So it really is having a stop losses in play, finding a system that works for you. If you want to do a trading trade in a demo account, try your system or you can even go back. What I’d like to do is look back at previous charts and think, ok, what would I have done at this point? I could have bought oh yeah, it went up, or no, I would have lost. And just to get a bit of confidence really regarding that. And the other thing I was saying earlier again we touched upon it is winning in the market. It’s better than 50-50 odds. The best odds you’re going to get when you go to the casino is 50-50. You go to a left table and you go black or red, but with the market you’ve done a bit of research, so you’ve got a slight edge already on what you think is going to happen. So it is slightly better than 50-50. But it doesn’t matter. You go to the casino. You’re either going to double your money or lose your money. There is no room between and that is where the stop losses and the stock market. You have that edge as well regarding that. And the other thing is I think if you’re wrong, get out. You might have the best company in the world that you’re saying earlier, but it could just be the wrong time to put it in so you don’t stay in a losing trade. I’ll never average down a losing trade. So by averaging down means if you bought it at $10 and it drops to $5, you think, well, I’ll buy more of it now because actually your average is $7.5. So unless you’re absolutely confident that’s going to go back up, if you go down to $10, to be honest with you, for me it will never get down to $5. My stop loss would have been $9.5. So I would have only lost 50 cents, while some people would have lost the money and just waited for it to go back up. And it may never end up going back up and that money is tied in that trade and that money could be so much better invested elsewhere. And for a trade I was saying earlier, for a trade to, if it goes down by 50%, it has to double just for it to get back to break even. So how many trades have we done that we’ve doubled? Not really, especially not the ones that have lost money on.

Dr James: 23:22
Really interesting thing. Just I’ll just throw in there as well. There can only be three results from any every trade that you ever take. One of the results is a big win, the other one is a little win, the other one is a small loss, big loss. Big loss is not a possibility because you’ve got to stop loss, okay, but because you’ve went into the trade and you have an idea of when you’re going to get out before you go in, rather than just leaving it to the whims of your emotion. Because at that point when you’re making a decision on that basis, you’re that much more irrational. So it just adds to what you’re saying. And another thing I know that you always want to say there it’s all wonderful information. I just wanted to tack something onto when you were talking about it being an odd scheme earlier, not to throw quotes at you once more, but from that I feel like I’ve quoted a lot from that book tonight, but I actually read it a while ago, but it just seems to be a lot of it, isn’t it? With what we’re saying. The guy makes the point that when you’re buying and selling and you’re trading, you want to go into the trade being the hoist, not being the punter, all right. So you go to the casino. The hoist is the casino, the odds are in its favor. Yeah, the hoist knows that if you play 50 games of Blackjack and you bet the same each time, the hoist is going to win 30 times. It’s going to make money. You know what I mean. So if you go but the point is about Blackjack is there’s rules. So if you have rules and you know the odds are in your favor, all you have to do is execute the rules every time and you’re going to be profitable. Yeah, and that’s why it’s important to back test your system, whatever that might be. Keep a trade in diary. That was one of the best things that I ever started doing. Keep a trade in diary right there, when you’ve made the trade, how much you put in. Calculate that it’s not any more than 2% of your total equity. Of course, make that your stock price. If it’s less, it can be less plenty of times. Yeah, that’s it, I’ve had one year there, maybe even 0.1, because I know that it’s so tight and I know very well that it’s invalidated if it goes below that price. And if you have that, and then also for the love of God, please take some profits, please take some money when the market gives it to you. Because that is how so many people go wrong. They just they ride something to infinity. Let’s say you’re trading crypto. Let’s say you’ve made a 10x on a coin. What is more likely that you’re gonna? If you take that money out and you put it into another coin, it’s more likely that that other coin will do another 10x. You can have. You can 10x 10 times and then 10 times again, yeah, and all of a sudden you have a lot of money. It’s far more likely that that’s gonna happen rather than that other coin is gonna continue and do another 10x at that point. So again, you’re just playing the odds. But to take profit, that is the hardest thing. Honestly, psychologically, that is so tough because greed kicks in, and this is why it’s so helpful to have these preset levels at which you’re going to take out some money. And it doesn’t even have to be a complex system, it just has to be a system and you’re already. You’ve already got the edge. If I could tell, I don’t even use indicators, I don’t use anything fancy like that. You can do that if you want. That’s a style of trading. If you wish. It’s as simple as I’m gonna buy this really low. My risk is practically negligible and the upside is massive. And also, I think, where the skill comes into it is just knowing a little bit about the coins and what they do, and maybe, if they fit in well with the overarching narrative, and also if you know what Bitcoin’s doing, you’ll know so much more about what to expect next. If you know how Bitcoin reacts at each part of its market cycle, whether it’s gonna go up, whether it’s gonna go down, then you’ll have so much more of an idea of what to expect and it gives you the resolve to see through your trades more steadfastly. So all interests and stuff, all things are learned with time. All things are learned with time.

Speaker 4: 27:22
Sorry, I bumped in there again. No, no, that’s what it’s all about, isn’t it? And for me, for taking profits from me, I just I don’t know something like that I think it helps with my psychology. I raise my stop loss. So if I bought something at, say, $70, my stop loss was at 68. I’m thinking it’s gonna go to sort of 80. So I’ve got a five, sort of a three to one risk ratio. I think. Okay, well, it’s at 75 now. Okay, I’m making money, but it still can go up a bit more. I bring my stop loss up to 72, 73. When it starts to go much higher, when it starts to get sort of 85, my stop loss then becomes 82. So then if I get stopped out, I’m in the money, and if I’m not in a fit, if not, it still keeps going up. And it just keeps raising it and raising it, and raising it. And then when you think, okay, it’s not gonna go any more than that, that’s your time to take your profit. Or at least, if you have an inkling, take half of it, tell half your position, tell half, leave the half in there, set your stop loss up and then just leave it in and then go and concentrate on something else. So I think again in one of the books I’m sure I read it somewhere that amateurs take profits too early but then let their losses ride a lot more. So we always leave our losses in that we hope to come back, but with our profits since we make a bit of money sometimes we can make it too quickly we leave it in there to the point where it kind of just ends up becoming a loser because we haven’t taken it out enough. So I think again, it just comes down to mindset, and if you have that plan at the start, you are not emotionally involved in that trade. So you’ve got to be very mechanical about it. It’s very easy to think well, I’ve made $10 a trade here, I’m just gonna, and the market’s always gonna be there for you. If you’ve missed on one, you’ve not all sent any money. If you don’t put any money in, don’t think I’ve got to go into this, there’ll be another opportunity that comes up. There’s always something that comes up. So I think that’s why it’s quite an exciting thing to be in really, for me anyway 100%.

Dr James: 29:22
The taking profit things helps you sleep as well, because you’re never going to bed at night thinking God, will I wake up tomorrow? Will that be done? You’ll know that you have so many in the bank and, okay, what we tend to do, what we tend to do as people, we tend to think in these very binary terms and we want to buy the bottom and sell the top. The trouble is, it’s really obvious where the top is. So for you to make that call is practical. People can’t do that. It’s practically impossible. So if you take money on the way up and move your stock loss up, just as you said, you’ve always guaranteed yourself some profit. And if you leave a little when you get, when you think it’s the top, if you leave about 10, 20% in and you catch a real runner, it happens you can make even more money and you know what. You’ve got a foot in the door. Either way, and remember again one of the best things that I ever learned the point is not to be perfect, the point is to make money, and being the pursuit of perfection is completely, you know, counterproductive to actually making money and trading sometimes, and as soon as you let go of that thesis, or that willingness or, you know, the want to be completely perfect. You just become so much more at ease with yourself psychologically and profitable, I think, personally.

Speaker 4: 30:39
Exactly, and I think with the. You know, if you look at sort of professional investors that work for big institutions, if they’re that good at investing, why they’re not doing it on their own. Yeah, yeah, because they’ve got the manager telling them those rules they want to go off and do it on their own break those rules of stop losses, break the rules of stuff up, because they’re a bit more gun-ho than the trader, I can do all this, but they’re not on them and they’re losing money because they don’t have that manager on the case saying actually you can’t do that trade because you break this rule and you know any of the rule violations. They get warnings about it. So it’s those rules that are almost more important than the actual trades themselves. So that’s really important. And the only thing I was really going to finish off with was saying to the people that just want to kind of do the long-term investments, especially if you’re quite new to it, if you put in £500 a month into a fund, for example, it’s very easy to look at it every now and again and go, oh, it’s gone down this month or it’s gone down again this month. Am I doing the right thing Over time? You know, and that’s why if you’re leaving for 20, 30 years, those dips and troughs are going to even themselves out and have a steady raise. And by putting sort of £500 in each time, just as an example, on a month that it’s down, that £500 is actually buying you more of it. So don’t think it’s gone down while I’m putting money into it and then change tax. I thought you know those long-term investments. It’s set and forget. Put your diary there but in, let it all turn into it and just forget about it. Get on with your life. That’s for the people that don’t want to trade, don’t let anything else matter and just don’t look. If it goes down a bit, it doesn’t matter. You’re not taking it out now, you’re taking it out in 20 years time where that loss will be a minor blip in how much it is altogether. So I think when people start out they kind of see the fun. They say the red figures that come up and they get, they panic and they think this is my safe, my pension, how am I going to cope? Don’t worry about it. They really all pretty much over time, more than even themselves out and get those gains.

Dr James: 32:36
This is it? This is it. So certain assets are inherently biased to go up over a long enough period of time. The S&P 500, up 10% every year on average. Obviously, it hasn’t increased every single year, but on average it’s increased every year by 20% since 1957. That a lot of that is down to money printing, in my view, and banks pumping asset values to make people more credit worthy. That’s my theory, ultimately, no one really knows, but if we look at all data, then this seems to have held true for a long enough period of time. So yeah, again, investing absolutely great long term. Just make sure that it is an asset that’s got a lot of history and it is an asset that you believe is going to go up in value with time. So the S&P 500 is one gold, might be another. Another long term hold. If you’re in the capital preservation, maybe you want some bonds in your portfolio as well. Well, everyone should have some bonds, but depending on your goals and your priorities, maybe you might want to have more bonds than the next person If you’ve already made your millions, I don’t know. Et cetera, et cetera. So just things to think about. I think every single thing you buy just have an idea of whether you want it to be something that you trade short term, in which case have a plan, or if it’s a long term, set and forget. Just as what you were saying, zed, that’s fine too. Be prepared to ride out the noise in between and be conscious that it eventually will go up in value, exactly. Yeah, zed, you know what would be really nice. You’ve obviously been a student of all of this and you’ve read a lot of books on it, and everybody’s tired of hearing the same world books that I recommend. If you could pick one book that influenced you the most on your philosophy, on money trading, whatever, what would you pick If you had the narrow of going to one? Am I reading between the lines? And I think that you’ve read a few. Is that right?

Speaker 4: 34:28
Yeah, I’ve read a few. I think the one that really sort of hit home, which really kind of got me into it, is how to own the world. Oh, me too, yeah, I always recommend that one.

Dr James: 34:39
Okay, I’ll tell you what.

Speaker 4: 34:40
Everybody’s heard that one the second most.

Dr James: 34:42
The second most.

Speaker 4: 34:44
Second one is how I lost a million dollars. Cool, I think that’s the exact title. There’s something along those lines. It was a commodity trader back in the 70s. Actually it’s quite a funny story and you find out more about his life. On the way up, everything he did kind of turns to gold and then he lost in. I think he traded in soybean or something and it just dropped. He lost. It was losing $20,000, $30,000 a day, just was not selling, was not selling. In the end Manjaro came and liquidated him and I think he lost $1.6 million. But it’s what he learned about that and I think that is really key. And actually he even said himself if I stayed in that for another few months it would have gone back up and he would have doubled his money. But he’s actually glad. He was actually glad he was stopped out because he would just made a $6 million mistake. Three years later he learned his lesson. He learned how to manage his stop losses and that he was the one who went around and interviewed the different traders and had those different views and realized actually the stop’s moment. So definitely how I lost a million dollars. I think it is really good book to read.

Dr James: 35:53
That’s awesome. I’m just looking over at my bookshelf now and just trying to think of if there’s any that I haven’t ever I haven’t recommended just yet. How do I in the world is a great one, and I’ve mentioned it so many times tonight. I’m gonna go with Trading in the Zone by Mark Douglas Because it’s an easy read. It’s only over just over 200 pages. I don’t think that many people have heard of it and yeah, it’s just a real. It just hones in on psychology and why that’s so important. Yeah, definitely.

Speaker 4: 36:23
I think the other one that I got a lot of my trading ideas from is how to invest like a champion in the stock market. I think is Mike Miniverna. He’s kind of his price breakout Actually I’ve got it here to support my laptop Trade like a stock market wizard. That’s it, Mark Miniverna. He talks about sort of breakout stocks and how to look for them and those super performance stocks. So I kind of used that strategy in my trading, which I think it helps me. I spend an hour, two hours a week screening stocks that I’m gonna look at for that week, put my trades in, put my stock losses in. And actually one thing I kind of learned from doing that is I kind of look at those stocks I’ve got I might put maybe 20 in my watch list and over the week just look at your watch list and see actually how many are green and how many are red, and it doesn’t matter how far red they are because you’ve got a stock loss in. So it doesn’t matter if three of them are minus 10% and seven of them are plus 5%, Because actually those minus 10% will only really be minus half a percent or minus 1% in your portfolio. So it kind of gives you an idea of the ones you’re watching, which what would have happened, sort of thing regarding that. So I think that’s another good book that I enjoyed, and more for the actual trading as opposed to trading, ideas as opposed to actual sort of psychology.

Dr James: 37:48
So interestingly, in crypto I rarely use hard stock losses. I rarely use stock losses that if it hits a certain price I sell. I more often use a soft one. So what I mean by a soft one is I only sell if the price closes below a certain price Because, as we know, crypto is so crazy volatile. The wicks on the daily candles they go right through that thing and trigger it. Okay. So what is a more definitive trading signal is if the price closes on the daily below a certain level, then at that point I’ll sell. The only disadvantage to that is that you do get slippage, so you’ll sell. You’ll say I want to sell at this price, and then by the close of the day it’s actually down here. So, okay, you do lose a little bit, but the number of times it saved my bacon versus the number of times that I paid a little bit more, I think the trade off is worth it. Again, it’s one of those things. There’s very rarely any hard and fast rules. It’s just what works for me?

Speaker 4: 38:48
No, exactly. I mean even the stock market with stops. They’re not perfect. Something gaps down overnight and it’s pre-market crashes. There’s nothing you can do about that, but I mean that is a rarity as opposed to anything else. So you know there are inherent risks in everything you do, but that’s not going to happen on a that’ll happen once a year sort of thing. As opposed to you know it’ll be very unlucky for that to happen to you.

Dr James: 39:10
So that’s what your brain will try to focus on the one time that it’s.

Speaker 4: 39:14
Exactly. Yeah, that’s all the thing out. Yeah, yeah, yeah.

Dr James: 39:17
And that is another psychological pitfall, and I’ve been there. I still think about times that that happened to me about three months ago and I’m like James, let it go. There is one called a crypto, called Uni, and I got stopped out of it when it was $3.50. And now it’s I think it’s $35. And every time I see it I just think, for God’s sake, that’s stopped me out, you know, and I had looked back at it. I thought to myself do you know, realistically, would I have done that any differently, not knowing that at the time? And I honestly can’t pick a hole in it, I didn’t even. The stop loss wasn’t too tight, it obeyed all my rules, it was a close below the price. I just had to let it go, you know, and even though I know, that that’s a stupid way to think and I need to let it go. I still find myself thinking like that, but it’s-. But you didn’t lose money on it.

Speaker 4: 40:08
That’s the key thing.

Dr James: 40:09
That’s the thing I actually did make money.

Speaker 4: 40:10
That’s the thing, because I sold a little bit when it went up.

Dr James: 40:12
That’s the thing, Fine okay. You’re absolutely right. That’s another reason why you can pick a hole in that methodology of thinking. And yeah, like I say it’s. Someone explained it to me. Really. I read something really nice once that it’s basically a constant battle against your emotions and even no matter how good you get, they’re always still there and you just have to keep on top of them or keep reminding yourself about your principles and your rules. Another nice way of putting it Ze, thank you so much for taking some time out of your evening to talk to everybody and dentistry and vice-tenor. I’ve learned a lot. Hopefully everybody else who’s listening has as well. I hope you’ve enjoyed yourself.

Speaker 4: 40:53
No, I have mate. And actually it’s great having this forum, because then it’s quite nice what I’ve read and what I’ve taken from those books, someone else sort of confirming it. And I think as dentists, when we go through dentistry, you’ve got someone telling you that’s the right thing to do, or what have you when you’re going big by? Well, sometimes you just think, am I doing the right thing? And it’s quite nice to have that. I think hopefully a lot of the listeners will kind of get that as well and go, oh yeah, no, I get that as well. So I think it’s and that’s what we’re here for. We’re there to sort of support each other through it all and that’s what I think is a great job with the group and stuff.

Dr James: 41:23
And yeah, I kind of wish I had that group you know, when I graduated, and I just, I just, I just had a lot of fun with it. It was hard to believe there was no community like this in dentistry before but it’s an absolutely wonderful thing and I hope lots of people learn and I definitely learned things as well 100% and absolutely. It’s nice to just chuck stuff out there, maybe stuff that you’ve kind of formed as a concept in your own head, and have that positive feedback back from other people. That’s helpful. 100%, cool, right. I’m going to wrap up now. Zed Anything you’d like to say as a closing remark. No.

Speaker 4: 41:59
I think that’s everything. I’m on Facebook. I’m on, you know, anyone who can give me questions or contact me or whatever, and that’s fine. I’m more than happy to you know, discuss anything further and one of the threads, if need be. So yeah, just let me know. If that’s the case, and if I get a lot of people asking the same thing, I’ll put a thread on that to try and kind of show my views. But yeah, it was everything.

Dr James: 42:23
Wonderful, okay, cool. We’ll wrap up then. In that case, thank you so much for your time, zed. I hope we speak very soon. I hope we speak very soon.

Speaker 4: 42:29
Yeah, cheers mate, Thank you.

Speaker 2: 42:58
I’m improving their finances, well-being and investing knowledge. Looking forward to seeing you on there.