Character | From 50,000 to 6.8 million in two years! How to seize the opportunity with strong stocks?

This article is compiled from Qilehui.

Introduction:

Today, we are going to share with you a legendary figure who has never worked on Wall Street, never given financial speeches, and doesn't even have a blog.

Jesse Stain is different from everyone else. His motto is: "What everyone knows is not worth listening to; what everyone can do is not worth doing."

In his book "100x Super Stocks - How I Made 6.8 Million from the Stock Market in 28 Months with 48,000", he describes the process and methods he used to achieve astonishing returns by breaking traditional investment rules. The trading volume of the stocks involved reached as high as 2.5 billion US dollars.

Almost every case in the book comes from his own trading history, and many of the charts are based on his actual holdings over the 28-month period. Many readers have praised Jesse Stain for writing a highly readable book based on his personal experiences.

01

In the early years of Jesse's career, like most investors, he paid several tuitions to the market. His capital account experienced shrinkages of 61%, 64%, 65%, 100%, and 106% at different times.

But after each setback, he didn't retreat to a safe and steady office doing nothing. Instead, he returned to the market with a strong desire for revenge, eventually leading to a comprehensive breakthrough in his investment performance.

At different times, his short-term (less than one year) investment portfolio achieved record-high profit rates of 111%, 117%, 156%, 264%, 273%, 275%, 300%, 371%, 1,010%, 1,026%, and 1,244%. There are very few people who can achieve the same rate of return as Jesse in such a short period of time. It is precisely because of his outstanding performance that Jesse is regarded as the "number one individual investor after the bursting of the Internet bubble".

Jesse Stain's motto is: "What everyone knows is not worth listening to; what everyone can do is not worth doing."

In this book, he summarizes his lifelong investment experience, combines the market performance of various countries around the world, and studies every big winner in the market's history, so that readers can gain as much profit as possible from his research results. Of course, he hopes that everyone can learn more from his failures.

02 "100x Super Stocks"

The English name of "100x Super Stocks" is "Insider Buy Superstocks". The original intention is to focus on insiders buying super stocks. However, the Chinese version of the name may be more eye-catching.

As a supporter of the semi-strong efficient market theory, Stain believes that insiders, those who have access to non-public information, can consistently make high profits from the stock market.

Therefore, in Stain's stock selection principles, he pays attention to the role of insiders' buying behavior in driving super stocks, but it can only become a reliable indicator of future explosive stock price when combined with other important fundamental indicators.

Stain emphasizes the importance of going against the mainstream in investment. **News that everyone knows is worthless. In investment, one must learn the ability to make independent judgments, making the trading system as unique as a fingerprint. As Stain admires Livermore's quality of patient waiting, he disagrees with the pyramid-style adding positions. He acknowledges the significance of O'Neil's "How to Make Money in Stocks" but does not agree with all of his rules, such as the 8% stop-loss level, buying stocks at 52-week highs, and the cup and handle pattern. He emphasizes the importance of Douglas' mass psychology and Buffett's simplified investment approach but scoffs at Peter Lynch's approach of investing in companies you are familiar with.

In addition, Stain proposes two interesting formulas worth paying attention to:

Successful investment = 1% stock selection inspiration + 99% psychological control;

Super bull stock = over 100% potential + heavily skewed risk-return ratio.

03 Master of Emotions

Just as American investor Dennis Gartman said, "Understanding mass psychology is more important than understanding economics because the market is driven by humans who can make mistakes and think," Stain believes that successful investment = 1% stock selection inspiration + 99% psychological control.

Once you have chosen the right stocks, please patiently wait for the low-risk entry points and pre-plan a set of strategies. After that, you can relax, rest well, and learn from Zen masters to become a calm trader. When you can control your emotions, you will find that you dare to buy stocks when others are pessimistic or fearful and sell stocks when others are optimistic. However, few investors can do this.

Stain advises us that once we have mastered the basic skills of trading, we should quickly shift our focus to learning how to control our own emotions and develop the ability to predict the emotions and psychological reactions of others.

Because the stock market is just a global psychological battlefield, and stock prices are a manifestation of human emotions, in order to effectively participate in the competition, we must learn to control our emotions.

04 Discipline

Successful traders must establish a continuous and strict set of standards to determine which stocks to buy, when to add positions, and when to reduce positions. Most importantly, how to act when the stock price reverses.

A disciplined investor will not react randomly to fluctuations in their investment portfolio. If we have anticipated the possible consequences in advance, we will not have excessive emotional reactions when they become a reality.

Discipline is strongly correlated with self-esteem and life satisfaction. In simple terms, if you can uphold a spirit of discipline throughout your journey in life, you will not only achieve great success in the market but also experience greater happiness and fulfillment in other aspects of life.

05 Accepting Losses Calmly

It is crucial to calmly view losses. When the situation is irretrievable, please close the position decisively and bravely bear the losses, considering them as inevitable costs in the trading process. Additionally, you must shift your focus and not overly fixate on the daily price fluctuations of your investment portfolio. I have noticed a phenomenon: the more frequently I check the market value of my account, the worse my investment performance becomes. Unless you have to pay tuition tomorrow, I suggest you reduce your focus on the stock market. When the value of your account keeps shrinking, excessive attention will undoubtedly lead you into a terrible state of "revenge trading"; revenge trading refers to the abnormal behavior of heavily increasing positions in a stock with an unclear trend in order to recover previous losses. Just ask any professional, and they will tell you that revenge trading only leads to one result: failure.

After experiencing losses, don't blame yourself or the "bears" or the market. Instead, let go of the grudge, accept reality calmly, and continue to pay attention to new opportunities that arise in the future. In this situation, it is important to maintain a positive mindset and learn to regulate your emotions. If you cannot control your emotions, the subconscious negative emotions will defeat you.

Benjamin Graham once said, "Investing is not about technique, but about psychology." Fortunately, most of your competitors have not started analyzing the psychological factors in the trading process. They do not control their thinking and simply follow their feelings, focusing on negative emotions and fear. Your competitors are doing everything possible to avoid making mistakes, so they will definitely miss out on great opportunities in the market.

The world's greatest athletes, businessmen, traders, and salespeople are not afraid of making mistakes. They embrace mistakes like a toddler taking their first steps.

Making mistakes in trading is normal. Recognizing this fact will greatly reduce the likelihood of making mistakes due to fear. Therefore, you must establish a fearless mindset in trading and accept the possibility of making mistakes.

06 Wonderful Book Excerpts

1. In a bear market, the majority of stocks are falling, including super strong stocks.

2. The biggest bull markets in history always come when we least expect them.

3. Luck is when you invest a lot of time studying and summarizing methods, you are creating luck for yourself.

1. Once you buy a stock, unless it gives a clear sell signal, don't bother with it. Enjoy your life until then.

2. Finding super strong stocks is just the starting point for successful trading. The more difficult part is finding the best entry and exit points and having the psychological qualities required for a big trade. "The more afraid of losing money, the less money you will make." In any case, if you want to live an average life and have average returns like everyone else, you will do anything to avoid risks.

3. The lifespan of most super big bull stocks in the market is less than a year.

4. The reason why most people underperform the market is that they spend a lot of time learning concepts and techniques that 99% of traders already know. The top 1% of people capture all the wealth in the market, and their approach is completely different from that of most investors. They only focus on one or two important variables that change the game.

5. 99% of stocks are not worth our time and energy. At the same time, the best traders have a killer instinct, which is a certain level of confidence and pride.

6. To break free from group thinking: don't watch financial programs, don't browse financial websites, and completely abandon news fast food that has been processed by the media.

7. It is no longer a novelty that the best traders manipulate the market to buy and sell at the most favorable prices. Market manipulation has always been an indispensable part of the global market and will continue to be so in the future.

8. Take losses calmly and close positions decisively when there is no way to recover. Don't focus too much on the daily fluctuations of stock prices. The more frequently you pay attention, the worse the performance.

9. Doubling stocks are usually those that are severely undervalued, unnoticed stocks with excellent themes and beautiful charts. Those charts that have a momentary sensational effect and a five-star rating cannot withstand historical scrutiny.

10. We should look for stocks that consolidate in a narrow vertical range for a long time. This can filter out emotional short-term traders and leave behind long-term investors who focus on fundamentals.

11. I will never buy stocks with a P/E ratio higher than 10 times.

12. Retail investors usually buy stocks at the point where the upward trend line reaches its peak, thinking that the stock price is about to skyrocket. However, this is dangerous.

13. Bottom fishers usually buy at the first low point, cry when the stock price hits a new low again. In reality, the best buying point is when the stock price reaches the third low point, that's when they die.

14. Even if you have no idea about buying, as long as you master the secret of selling, you can defeat 99% of other investors.

15. Don't believe in popular stocks, don't invest in stocks you don't understand.

16. The relationship between popular stocks and long-term capital gains is like ice and fire, they can never coexist.

17. The only way to achieve returns higher than the market is to wait, wait, and wait again until all technical, fundamental indicators, and market conditions indicate the need to sell.