A Realistic Expectation | Podcast Episode #301

0:07
Hey, I’m Ryan Mallory and this is my swing trading the stock market podcast. I’m here to teach you how to trade in a complex ever-changing, world of Finance, learn what it means to trade, profitably and consistently managing risk, avoiding the pitfalls of trading. And most importantly, to let those winners run wild, you can succeed at the stock market and I’m ready to show you how, hey, everybody, this is Ryan Mallory with swing trading the stock market coming at you with the heck.

0:35
Heck of a head cold right now, but nonetheless can’t make excuses and the show goes on. So it’s exactly what I’m doing here. We’re going to do a podcast episode on setting some realistic expectations from what you can really get from the market on a month-to-month basis.

0:50
We’re going to address a couple other questions as well, and today’s email comes from a guy. He lives out in Barcelona now in the United States, we say Barcelona, but I guess and maybe Barcelona, they say something like barthelona, I don’t even know if I’m saying.

1:09
And up correctly, but I think I saw it on 50 First Dates or some movie with Adam Sandler. And one of the characters kept saying barthelona, I don’t know if I’m getting that right or not, but nonetheless, this guy wants to be called by his original name, which I can’t blame him for that. He’s not opting for the Florida redneck name. I guess is what I’m trying to say. His name is Jordi and Jordi writes, hi Ryan.

1:25
My name is Jordi. You can call me by my real name and I write you from Barcelona Spain. I’ve been learning trading for about eight months and listening to you for the past three months. Months and it has helped me out a lot. I have a couple of questions first, is it doubt about the misconception of the benefit and percentage?

1:42
Now I’m not quite sure what he means by that but let’s keep reading. He says, let’s say I have a thousand dollars and I begin to invest on January 1st but I buy five stock. So, I spent about $200 in shares per stock since its swing trading. After several days, I sell some of the stocks and I by others. So at the end of the month, I bought 20 different stocks and now my capital is 1050 dollars.

2:02
This is a 5% return for the month, right? But I actually invested that $200 20 different times for a total of 4,000 dollars of capital B and used given me $50. So that’s a really a one point two five percent return Isn’t it?

2:19
I think there are two different ways to calculate the benefit, or the return for the same results. He keeps using benefit in this email, but I think he really means return. I guess, maybe a buffalo NE maybe benefit in return, percentage, return, or return. On investment is the same thing. I don’t know. I’ve never been to Over the other side of the ocean before.

2:36
So my cultural understanding is next to nothing when it comes to these kinds of things. So anyways, Jordy continues to write when everyone talks about benefit. I’m assuming it’s over the capital so that five percent would be based off of the amount that I have in my account. Not how many times?

2:52
I deploy that Capital. The second question is this, I know you don’t like the plan. The benefits / returns in an Excel spreadsheet because it puts you in. This pressure situation to make trades when maybe that is not the best thing to be doing. In the last several months, I have had an overall loss of point four percent which being in a bear market and with my lack of experience, I’m quite happy about it.

3:11
You should that’s not bad. A lot of people are blowing up their accounts with far more experience so good deal. I mean look at FTX right? Is it being realistic to have a average profit or average return of three to four percent and the next couple of years, having more knowledge and experience and probably in a bull market?

3:28
Again, I don’t want to take it as my Target but I just needed some motivation knowing that it is possible to reach it. Thank you so much. Jordi, Okay, so some stuff to unpack there for one, the first question, you know, about the return on your Capital. There’s a couple things I want to say about that. And then the second one just having realistic expectations about a return in the stock market.

3:47
So we’re going to get to all that. But first, what am I drinking? I am drinking Town Branch. It’s 45% alcohol, 90 Proof. It’s a Kentucky, Straight Bourbon whiskey. Never had this before. It’s been aged for four years to the nose. Definitely, pick up some whips of brown sugar. There’s no ethanol smell, which is really nice for a change.

4:04
And it definitely has like, Is ice cream, vanilla flavor that you also pick up on your spell on it. I got to tell you I’m kind of shocked by The Taste it’s impressively solid. I wouldn’t say it’s like great but it is very solid. There’s nothing that stands out that says oh this isn’t good.

4:21
Oh this is this is bad. It reminds me of a lot of Buffalo Trace because Buffalo Trace is very similar to that in the sense that it doesn’t overwhelm you with like the flavors or gives you this excitement when you’re drinking it but it’s a solid bourbon very much. Like Town Branch.

4:36
This is probably the closest thing I can equate it to and maybe it’s because I got a huge head cold, and I’m only smelling with one nostril and maybe my pallets messed up, who knows? Maybe I got covid for all, I know, hope not because I do, maybe my tastes are off on this burden, but there’s no one flavor that really stands out to, I mean, I see a little bit of corn.

4:55
I taste a little bit of that brown sugar, that I also got a whiff of, and there’s like a consistent spice route. There’s not like a strong finish. There is not a kick there at the end, it’s just solid throughout again. This is a thirty seven dollar bottle of bourbon which is a pretty decent price this day and age for a bottle every day.

5:10
Sipper. Absolutely. I would probably use it more on the weekday and of things. I’ve probably save the good stuff for the weekends like I usually do but this is definitely a everyday super, it’s not bad. I think I had a sample of this. I think I’ll go out and buy a bottle of it because I think it is pretty solid especially at the price of about 36 dollars.

5:26
Thirty seven dollars score from 0 to 10. I’m going to give it a 77 really a solid solid bourbon so Town Branch Aki straight bourbon whiskey 7.7. Now back to the podcast here, when it comes to you returns, you’re not basing your return on how many times.

5:43
Like if you have a thousand dollars in your account and you put a thousand dollars and again I’ve tried to make the math simple for the podcast. But let’s say you take that thousand dollars in. You invest it twice over right and each time you made a thousand dollars so you got a hundred percent each time. You return it right again, I’m using simple math here. Not saying this is the right approach going all-in on your trades. But you’d be up to 100% but in this guy’s case he’s like, well because I used a thousand dollars on two separate occasions without I only be up 100%. No, because all you’re trying to do is get a return on your Capital, the money that you’re putting into it, you’re wanting a return.

6:17
You’re starting off with a thousand dollars, you wind up with two thousand dollars at the end of the day in profits, you just made two hundred percent, your account, goes from 1,000 to 3,000, that’s a 200% increase, no matter how many times it took you to get to that, it’s still the same kind of return, so don’t base it on.

6:33
Of how many times you invest in money? Base it off of. What did you start with? What did you end the year with? What did you end the month? With whatever time frame, you’re basing. It off of, you got to look at your Capital, kind of like how Amazon looks at. Its inventory. Right. What is Amazon? Or any store for that matter?

6:49
Want to dude, like take a grocery store. For instance, is it content and knowing that the whole I love chips as long as it gets sold by the end of the year that they’re happy with. That know, they want to move that inventory out as fast as they can, so they can bring in more inventory. And sell that inventory. That’s your Three turnover, very much like trading.

7:06
You want to be able to turn over that Capital as much as possible. That’s why I don’t like getting stuck and a losing trade for a long time. The worst thing, I feel like you can get stuck in is a losing trade for a long period of time because that’s money, that’s not being deployed. Elsewhere, it’s like these places that go out and buy like this 15 thousand dollar golf cart and they put it in the middle of their store.

7:24
Taking up all of this Prime real estate that they could be putting some other kind of product on that would sell a lot faster and probably more of that would exceed the amount that Could make in terms of profits off of a golf cart. They’ll plop a big old golf cart. Sure. It looks nice and looks fancy and everything but they don’t move it.

7:41
And it’s the same thing with trading. Really the worst thing we can do is just get stuck in a losing trade. That’s why I want to lose quick because I want to turn over that Capital into something else. Now, granted in a year, like what we’re having right now? I’m not turning over my Capital as much, but I, sure as heck don’t want it to be stuck in a losing trade, I want that Capital be able to be deployed somewhere else because it’s still even if I’m not putting all of my Capital to work, if I’m only willing to get 30% Long or 30% short on the market right now.

8:06
Well, if I’m stuck in a losing trade, that just won’t stop out or it just won’t do anything because I have to stop loss too wide. And that’s why I always caution people against to widest, stop losses. Because you can get stuck in it, losing trade, for months, at a time. And so, if you’re only willing to get 30% long and that’s represents 10% of your portfolio, then 1/3 of your Capital that you would have allotted is being tied up in a losing trade.

8:30
So that’s no good. So it is a lot about inventory, turnover. When it comes to your trading, every dollar in your account is like merchandise, right? You’re trying to move it, you want to return as many times over on that Capital as possible as much as the market is willing to afford it. Now, don’t take from this.

8:46
That I think you should always be 100% long because you want to turn over your Capital as much as possible. Know what I’m trying to say is, you don’t want to be stuck in losing trades for long periods of time because that’s money, that could have been deployed elsewhere. Instead, when you’re trying to manage the risk in your portfolio, you have to take into account that losing position that you Just can’t seem to get out of here.

9:05
Something that you won’t want to get out of swingtradingthestockmarket.com, that’s the patron website. That goes along with this podcast, you’re going to get all my stock market research each and every day delivered to you, man. I’m telling you, you’re getting my videos, multiple videos each day, you’re getting updates on the big thing, stocks, you overall Market, trade ideas, watch lists.

9:23
I mean the list goes on and on and on, it’s really, really good. Something I would encourage everybody to check out and join and in the process you’re supporting this podcast and man that Town Branch That’s our bourbon. I got the more, I keep sipping it during this podcast the more I’m impressed with it.

9:39
All right. Now, to Jordi second question about expecting a three to four percent return in the market every month is it unrealistic to expect the three to four percent return. No, it’s not unrealistic, is it possible every month? No, some months are just really horrible, but I can tell you this three to four percent is much more attainable than a lot of the folks out there that are, like, I gotta try and double my account every month or even make tea.

10:03
Percent a month that’s very difficult to do. If not downright impossible, because every day, every week, every month, every year is different. In the stock market, nothing’s exactly alike. You take fantasy football for instance, right? And I play with some college buddies, I’ve been playing football with them.

10:21
Our league is called the NFL water boys, shout out to them. We’ve been playing since we’re in college, and this year, I’ve yet to win in this league. But this year, I have hands down the best team breaking all sorts of Crazy records for most points scored in the game. Dude, I got like Lamar Jackson, which really just got hurt last week and I got Stefon Diggs.

10:41
Travis Kelce. I just got a slew of running backs but despite me putting up these great numbers pretty much every week. Last week, I had one of the worst performances that you could possibly imagine, I my team regularly puts up 130 points, this past week, it put up 60, 60, I got creamed.

10:57
It was a blowout of the week and the reason why I bring that up is because the stock market is similar in that you You can’t predict exactly how the markets going to go. You can have a great lineup, you can have great trade setups. And they simply don’t produce, I have future Hall of Famers on my team and fantasy football, and they did not produce and they all did not produce every one of them.

11:17
Stunk, the thing is, is that even I would, it comes to Fantasy Football. I’m expecting 130 points every week out of my roster, but I didn’t get it that week now. Should I judge my whole season based off of that week as a success or a failure? Or should I even just say, hey you know what?

11:33
My team stinks now? No. But oftentimes We set these expectations, even if it’s just three or four percent, or even one, or two percent a month, we set ourselves up for disappointment. And when we get to that point to where it’s towards the end of the month and we’re behind on our goals, what do we start doing? We start pushing trades. We start pressing trades that are not there.

11:48
I used to do this all the time as a trade. I just realized that this point it does me no good from a training standpoint to set monetary goals, why? And you guys are probably saying this right now as I’m talking about it, because the market doesn’t care. The market doesn’t care about your goals and So the market doesn’t care about it.

12:04
Why are we trying to enforce that it gives us? It doesn’t know about our goals, right? You’ve heard me say that too. So, why are we trying to impose our will, our desire in our goals on the market? So, even like the smaller goals, I’m not a fan of setting them. I’ll take what the market gives me. And I’ll take as much of it as I possibly can, but I had to trade this past week and Invidia last Wednesday.

12:25
In fact, the market went Bonkers when Jay Powell spoke at the Brookings Institute, I got in at 161. I sold a little bit of that position. One third of it. In fact, the following day at 170 09 for a 5.1 percent profit thinking to myself, man.

12:41
I don’t really want to sell it. They’re like I’m, you know, missing out on some really good future gains. But I did it anyways, because I’m all about being disciplined in my trading and taking profits along the way. The next day, it pulls back a little bit, guess what? I’m taking another third off for a 2.2 percent profit, then you get the weekend and everything else and then a couple days later taking that final third closing out the position for a A one percent profit made about 2.8 percent along the way.

13:07
Now, what I was thinking when that thing originally started rallying and it was at 170, I got in at 160 180. I was pretty excited. I was like man this thing’s going at 180 were 190. That was the hopeful part of me. That was wanting that right? But my trading couldn’t be dictated by my desires or whatever Target or goal or belief that I thought it could attain.

13:29
Instead the market sold off every day after that and ultimately I would have taken a loss. On that trade had, I not taken profits along the way. Had I held on to my belief that it’s going to keep going higher? All because of that, one day of trading that saw the stock just rally and in a massive way.

13:44
Now, The Human Side of Me, well, in my and, of course, I’m all human, but the human side of things were not considering what the market did was. I disappointed that only walked away with a total of three percent on the trade. Yeah, but did I actually manage it wrong? Not at all. I didn’t manage. I think one bit wrong actually managed, it really good.

13:59
I was willing to take what the market was willing to give me when it decided that it was not going to allow any further. And I have been taking profits along the way to be able to maximize, you know, a good solid chunk of that stocks move. Now, if I had a goal where I’m like, hey I got to get this three to four percent, I’m only, you know, up 1% on the month, I’m going to let this one ride market doesn’t care about that market.

14:18
Doesn’t know that I’d be sitting at a loss right now on that trade and then I would be looking at that 2.8 percent gain or whatever it was that I made and say, hey I wish I could have had that 2.8 percent. That’s starting to look really good right now, considering that I’m sitting at a loss. You see what I’m trying to say? It doesn’t seem unrealistic to set a three to four percent profit every month.

14:37
I mean, it’s a really good return that you’re talking about like being up 50% on your right. Personally, I think, you know, one to two percent is pretty realistic as well. And probably, if you’re determined to set a goal, set it for a bare minimum, so you’re at least less disappointed and overly excited and thrilled when you exceed that goal.

14:54
But yes, I think we’ll be in a bull market again, if we don’t were not in a bull market, one day, we’ve got bigger problems on our hands but don’t try to anticipate when that boy, The markets going to happen, this could carry on for another couple of years. I mean, we saw it in 2000 with a.com bubble, geez, that thing, you know, really didn’t start getting to work and move again for another three years and it took about 14 or 15 years before the NASDAQ broke its all-time highs again.

15:19
And here’s the other thing about goal, setting and always find this one. Interesting. I kind of rail on some of these groups that I follow on Facebook app by really do it, because it gives me a lot of content for this show, but I see these things where people like, I made my money for the day and it’s literally like in the first 30 minutes of trading Day trading. And I got I made my money on the day.

15:36
I’m done. I’m not trading anymore, really? Because there’s gonna be days where you don’t make your money. If you’re trading in such a way where the market is responding very well to your strategy, I’d trade the crap out of that. Heck. Yeah, because there’s going to be other days where you don’t meet your goal. So you’re just settling for the fact that you met your goal.

15:53
That’s another reason why I don’t like goals because it almost puts a ceiling on what we’re willing to make. There’s going to be times with the market. Does far beyond anything that you could imagine there’s trades some of the least. Likely trades are some of my best ones. I don’t have high expectations for them but they do phenomenally well.

16:10
And so if you’re setting goals for your trading and you get to that three or four percent Mark that you want at the end of the month, you’re going to be more like, man. I remember this guy. I’ve been doing a lot of illustrations that you guys today but there’s this guy that coach the Dolphins back in 2000. Couldn’t stand them. Dave wannstedt. Okay, every time it seemed like they got a lead.

16:27
I’m telling you like a seven point lead. In the first quarter, he was content to punt the ball the rest of the game. And it drove me absolutely Bonkers because then they’re just play not to lose which ultimately results in them really losing almost every one of their games. That’s what it was like watching the Dolphins.

16:44
Back when Dave wants that was their coach. I think the same thing happened when Tony sparano was the coach Joe Philbin. I think I don’t even know if I’m saying their names right. But coach after coach Brian Flores he stunk to but it always felt like when they got into the lead. They got into this ultra-conservative mode and it was kind of like that with trading where you see a lot of people do meet their They’ll get ahead and they’re like, I’m done training.

17:05
I’ve met my goals for the day. I don’t want to risk it. But trainings about consistently applying your strategy, and your wanting to turn over that Capital as much as the market allows for you to turn it over. But when you’re just, like, throwing your hands up in the air and say, hey, I met my goals, I’m done for the day, you’re really selling yourself short.

17:21
So with all that being said, if you enjoyed this podcast, I encourage you to leave a five star review and keep sending your questions, ryan@shareplanner.com. They mean the world to me I really do read them all and try to put almost Of these things on air, if I’ve missed yours, hang tight because I might still get them and don’t forget to sign up for swing trading.

17:38
The stock market.com. Thank you guys, and God bless. Thanks for listening to my podcast. Swing trading the stock market, I like to encourage you to join me in the SharePlanner Trading Block, where I navigate the stock market. Each day with Traders from around the world with your membership, you will get a 7-Day trial and access to my trading room including alerts via text email and WhatsApp.

18:00
So go ahead sign up by going to shareplanner.com trading block, that’s www.shareplanner.com/trading-block. And follow me on SharePlanners, Twitter, Instagram, and Facebook, where I provide unique market and trading information. Every day you have any questions, please feel free to email me at ryan@shareplanner.com all the best to you and I look forward to chatting with you soon.