Liar, Liar, Pants On Fire

You must be a fundamentalist to be really successful in the market.

-Sir John Templeton

I'm taking a quick break from talking about the new trading systems I'm working on because something made me really angry yesterday.

And nothing is better during a time of family and gratitude than seething anger!

The thing that's making me angry? Liars.

Nothing makes me more incensed than people who swear by things that aren't true--except people who righteously spout lies that can potentially stop other people from going after their dreams.

For example, I've heard tennis pros say things like, "That girl's not tall enough to play big time collegiate tennis. You have to be at least six feet tall to play at the highest level in today's game."

A short time after hearing that my 5'2" student was playing #1 singles for one of the best schools in the country.


You don't have to be six feet tall. You don't HAVE to be any particular height at all. Women's tennis hasn't changed. And any statement to the contrary is ridiculous because it just ain't true.

You might be thinking, "What's the big deal? So what if a moronic tennis pro said some made-up stuff to try to impress whoever he was talking to?"

Well, it is a big deal. Here's why.

How many people has that tennis pro blabbered his blabber to? And how many young girls have heard that and decided that maybe tennis wasn't for them simply because they were short?

Or how many parents have heard these asinine comments and then shut down their daughter's career because they wanted to save her vertically-challenged body from inevitable disappointment?

In short, how many dreams were crushed because of his lies?

Which brings us to Sir John Templeton and his insightful quote at the top of this post.

Sir John Templeton was a billionaire. Sir John Templeton was a true pioneer of globally diversified mutual funds. Sir John Templeton was a man who deserved to be listened to.

And many, perhaps thousands, probably hold his wisdom in high regard.

So what does Sir John Templeton have to teach us? How can we model his greatness and follow in his footsteps? Let's find out...

Sir John Templeton? Sorry to hypothetically bother you, sir. I'm an aspiring trader, and I want to learn how to be successful and trade for a living. What's your advice?

You must be a fundamentalist to be really successful in the market.  

Got it! I want to be really successful, so I'll study the fundamentals!


Um, okay, I just have a few quick questions about what you mean when you say "be a fundamentalist". Does that mean I study the Balance Sheet or the Income Statement? How about the Price to Book ratio? Or the P/E ratio? You know, I could look at the Free Cash Flow. Wait, how about the PEG ratio?

And if I do study those, what do I focus on? The past year? The past five years? Ten years? Do I study just the company I want to trade? The entire sector? The Dow Jones? The S&P 500?

And how do I buy my stock? Should I buy when the fundamentals are good so I ride the wave of prosperity? Or buy when the fundamentals drop down because I believe my company's fortunes will bounce back? Actually, how do I know what's "good" and what's "bad" anyway?

Golly, Sir John Templeton, after looking at all that, I sure am confused. I want to follow your advice but I can't quite figure out how to use those super important fundamentals? How did you do it? How did you make your initial windfall? What fundamentals did you follow?

Well, young trader, here's how I made my first money. In 1939, I bought $100 worth of every stock trading below $1 on the NY and American stock exchanges, 104 companies in all. And, presto, four years later I sold them for $40,000, which is $675,785 in today's dollars!

Wow, that's amazing! How did you pick those companies? What fundamentals did you look at?

I just looked at the price of the stocks and bought the ones under $1. 

Wait, if you just bought and sold based on price, isn't that technical analysis--which you say you hate?

[No response]

Sir John? Anyway, here's the definition of technical analysis, in case you need it: "Technical analysis is a trading tool employed to evaluate securities and attempt to forecast their future movement by analyzing statistics gathered from trading activity, such as price movement and volume."

Isn't that what you did? Didn't you look at the price data to find stocks under $1 and then forecasted their future movement based on that price data? Sounds like technical analysis to me. And it worked, too, because you made $675,000! Can't wait to try something like that! That's much easier to follow than figuring out all those vague fundamentals. Heck, I can do something like you did tomorrow! Thanks, Sir John Templeton!

[No response]...

If you want to be a trader, you don't need Sir John Templeton or anyone else. Doing something extraordinary is hard enough without people telling you lies to make it even harder.

Do your research. Do what you like. And work on it constantly. That's how you go from nowhere to somewhere.

And never listen to liars.