I thought this interview with Minervini, a largely self-taught trader who transitioned into trading after working as a musician, would make a nice follow up to our recent post on self-education and the school of hard knocks.
Here are some key points Mark makes in this interview:
"I wasn't always successful. In fact, for the first six years I didn't make any money at all."
Mark started trading in 1983. He began visiting the library and one day came across Richard Love's book, Superperformance Stocks. Mark spent "the next twenty-seven years" refining his approach.
Persistence can be more important than knowledge. Learning to trade the stock market can be difficult, and there is a long learning curve. Mark stayed with one approach and spent his time mastering it. "It's not going to happen right away".
"I don't believe in failures". Instead, Mark says he views outcomes in terms of results. There are desirable results and undesirable results. We try things, we learn, and we make some adjustments while trying again.
"I made my big mistakes when I had the least amount of money, when I was just starting out". You have to define yourself as an investor or an aspiring trader with a given style, and know that it will take a long time and a lot of work to become a professional trader. However, the work is justified by the rewards.
You have to review and analyze your results to help build your approach. Minervini did this after an early losing period, and soon gravitated towards a more sound approach to stock selection. Keep a journal and track your trading performance so you can make improvements.
Is there a certain personality type that makes a standout trader? Mark says he's learned not to judge a book by its cover. As Mark puts it, citing his own experience, "I was a musician, I had long hair, I dropped out of school in the 8th grade...I'm completely self-educated so you might not have bet on my results." Good traders aren't necessarily born, but they are developed over time.
This is just a sampling of what you'll find in the interview with Mark Minervini. To sum up one of the main themes of the discussion, get started learning a particular style or approach, then "define it and refine it".
For those who don't already know, Mark is something of a present-day all-star stock trader and, more recently, a stock trading educator. In 2000, Jack Schwager profiled Mark in his book, Stock Market Wizards, thanks to his largely self-taught skill and the trading record he had amassed up to that point.
Here's an excerpt from Stockbee's interview with Mark: [SB]: "You often say the individual investor/trader has a great advantage over the Professional manager. What gives the individual investor the edge?
[Mark Minervini]: The biggest advantage that the individual investor has is control. With today’s technology, most traders can have the same tools as a pro. However, the individual trader has a tremendous advantage over professionals like mutual fund managers, mainly because they have greater liquidity and speed.
This enables the individual to be more concentrated in a smaller list of well-selected names at lower risk because the individual can utilize stop-loss protection with little or no slippage. The individual, with a faster response time, can be more patient and strike at only the most opportune moments, which is the best advantage of all.."
After reading Stockbee's interview, be sure to check out Joe Fahmy's interview with Minervini for additional insights into Minervini's trading philosophy and what Fahmy learned from working with him. Excellent stuff.
Mark and Joe both maintain a presence on Twitter and StockTwits, so it's been rather interesting to get a closer look at some of their thoughts on markets and trading through their real-time updates.
In this interview, Joe talks with Mark Minervini about his trading philosophy and the importance of blocking out meaningless distractions when focusing on one's trading strategy. This is a great discussion, and it serves as a very good learning opportunity for stock traders.
Check it out, and when you're done, take advantage of some of the other archived posts and trading videos on Joe Fahmy's excellent site.
