For most of my thirty plus years of investing I followed what the preponderance of most investors utilize, that being fundamental and/or technical analysis. And like most investors I found that being a follower did not achieve the results that I needed and expected. Granted, I had some very good years following the normal conventions, but looking over a thirty year time frame, I found that I did not even measure up to the average six to seven percent annualized returns delivered by the benchmark S&P 500.
So after evaluating thirty years of mediocrity (I am a slow learner I guess) I had to ask myself why I kept doing the same thing and expecting different results. Didn’t Einstein proclaim that to be the definition of insanity?
Okay, so if following the flock or using a self-proclaimed “expert financial advisor” cannot achieve what I could simply do by investing in the S&P 500 ETF I needed to find a methodology that generated predictable results and results that at least met or exceeded the returns of the S&P.
I calculated that by using an “expert financial adviser” I was sharing about 40% of my annual returns. As excessive as those fees are, I could perhaps justify them if after the fees were deducted from my investment account, the balance I was left with was greater than what I could very simply do myself. Of course the net result after deducting these usurious fees paled in comparison to the annualized S&P compounded growth rate. I had to find a better way!
Every investor knows that reward is commensurate with risk. Don’t want to risk much, put your money in a certificate of deposit. Of course those returns for the last decade will barely buy you a Starbucks! On the other hand, if you are attracted by huge returns that you think are only for the mega wealthy, you will probably find you will lose your entire investment.
In 2011 I was introduced to “probability based trading”. I was attracted to this methodology because it was simple, quantifiable and most of all predictable. I could chose a return on my investment portfolio that was predictable and only limited by the amount of risk I was prepared to accept. To further find that I only needed to risk 5% to 10% of my total portfolio to achieve annualized returns of 12% to 20% was a “game-changer”. Normally when something sounds too good to be true, it is!
Let me get this straight? In the past my “self-proclaimed” expert invested 100% of my portfolio to achieve returns less than those I could get investing in the S&P. He risked my entire portfolio to average 5% or less over the long haul. I could use probabilities that are available to everyone to risk 5% to 10% of my portfolio, keeping 90% to 95% safe and easily outperform the expert and the indexes? I had to immerse myself in understanding probability based trading.
With relative ease I discovered that probability based trading is very easy to understand and more importantly easy to implement. What could be simpler than looking at a chart, select a probability of success and execute the trade. Naturally it takes a little time and practice to understand the methodology and the technology. But it is far easier than what you are lead to believe by self-serving “asset gathers” that it is way too challenging for you to understand and execute.
My passion is that every investor becomes a “self-directed investor”. I have written and will continue to write articles and books about this topic in an effort to encourage every single investor to become engaged in their investments. Don’t be misled into thinking this is way too complex for an uneducated neophyte. You can do this!
If you would like to get your questions answered regarding “probability based trading”, contact me (John Andres) @239.272.3424. I answer my own phone! Or email me at [email protected] to set up a free 30 minute consultation.