I did this interview back in June of 2012.
U.S. Investing Champion Mark Minervini who was featured in Jack Schwager’s book Stock Market Wizards was generous enough to grant me this interview. Let’s listen and learn from the man who has returned consistent triple digit returns in the stock market.
Jack Schwager wrote in the book Stock Market Wizards; Interviews with America’s Top Stock Traders “Minervini’s performance has been nothing short of astounding. His average annual compounded return has been a towering 220 percent. Most traders and money managers would be delighted to have Minervini’s worst year – a 128 percent gain – as their best.”
First Mr. Minervini I would like to thank you for taking the time to answer these questions today, my readers appreciate your time.
It’s my pleasure, thank you for having me here today.
So what was that first spark that got you interested in trading the markets?
At a very young age I was fascinated with probabilities. I enjoyed quantifying things. I always felt a sense of comfort if I could stack the odds in my favor. When I was 8 years old an elderly man taught me how to play poker. I later played blackjack and learned how to count cards. Speculation seemed challenging and potentially very rewarding. I guess what got me first interested in stocks where the success stories of others such as Nick Darvas and Jesse Livermore; I read every book I could get my hands on and they really inspired me. I looked at the stock market as my golden opportunity for financial freedom. I figured if they did it, then so could I.
How long did it take you after you started trading to become consistently successful and profitable? What was the biggest key to your success?
It took me quite a while; about six or seven years. However, back then there was little access to mentorship. You basically had to figure it out for yourself. Now you have all sorts of information available; most of which is not worth much, but there are some good traders out there that share sound principles. I guess I would have to say the biggest key to my success was losing. I learned that anything can happen in the market so you must protect your account from devastation. I also realized that I hate losing and I have no stomach for holding big losers. Learning how to build losing into my trading was a key to my success. That is to say, losing small.
If you could start back at the beginning of your trading career and do any one thing differently what would it be?
Not much. I have made many mistakes along the way; however, I regard them as valuable teachers. Without them I wouldn’t be who I am today.
Would you give us an example of what your inner dialog sounds like after a losing trade? What do you think to yourself?
I first check to make sure I carried out my plan. I immediately ask myself “Did I do the right thing and take a good loss, or did I make a mistake and take an unnecessary loss.” I always go in with a pre-determined plan. The key is to stick with your plan and then after you’re out of the trade, re-evaluate and tweak the plan as necessary. You have to be very careful about calling an audible during the trade because you get emotional during the trade and you could start rationalizing. What’s the sense of having a plan if you’re not going to stick with it?
What triggers you to sell a losing trade? How do you know you were wrong and when to get out?
The stock goes down. The more it goes down, the more I’m wrong. At some point the stock will hit my pre-determined stop loss and I’m out. The best trades are generally the easiest. If the stock doesn’t do what I expected it to do, that’s reason enough to sell. Sometimes I will sell if the stock does nothing or maybe I see a better opportunity somewhere else.
Are there any market conditions that will get you to all cash and then to just go fishing?
Yes, if I get stopped out repeatedly. I know I have a sound approach, so if trades aren’t working, it’s likely the general market is not right. Also, if our risk model flashes a sell it’s generally not a good time to be long. Historically, little market progress is made while our risk model is negative.
What were the most influential trading books that you read that really showed you how to make money in the markets?
The Stock Market Wizards books, Richard Love’s Superperformance Stocks and How to Trade in Stocks by Jesse Livermore are some of my favorites.
Where do you like to get your market information from? Any specific websites, charting services, periodicals, or social media that you really like?
I try to tune out the media. Whether traditional media or social, I’m not too interested in knowing what others are saying or doing except to look for sentiment as maybe a contrary indication. I like to keep my research vacuum packed. People are usually surprised to hear that I don’t have CNBC running all day in my office. The news I look at pertains to earnings reports mainly.
What advice would you give to new traders that dream of becoming rich traders one day?
Find a strategy that you believe in; one that fits your personality, and then learn all you can about it. Be a specialist. Understand that no matter what strategy you employ, you will have losses, and how you deal with them will directly reflect how well you do in the market.
How can traders learn more about you and how you trade the markets?
We hold an annual Master Trader Program (MTP) which spans over two full days and details everything about my methodology. Also, we have a daily service called Minervini Private Access that allows traders to trade side-by-side with me in real-time. For information go to Minervini Master Trader Workshop.
I really appreciate your time and thanks for sharing your experience and winning principles with my blog readers. I wish you much continued success in the markets.