3SOF

I know a man who turned a $15,000 trading account into $4.8 Million. It was an amazing stroke of luck. He even admits this.

"I am no fool. I know I was just plain lucky. I don't have magical system. I am not privy to insider information. I merely gambled BIG on the right stocks at the right time. It was no different than winning the lottery. I seriously doubt I could ever repeat it."

Obviously my first question was:

"How did you manage this? What stocks did you trade and why?"

Here's what floored me. But it shouldn't have done so. His massive wealth creating principles are exactly what the big stock traders throughout history have been preaching for years.

Here's how he did it:

1) In 1999 in the final leg of the run-away bull market "bubble" he opened a trading account with just over $15,000. Simply because all his co-workers/friends/family/neighbors kept telling him how much easy money was being made in the stock market. He had never read any books or bought any systems. Never attended a seminars. So he was lucky in that his head was not filled with the B*S* most spill out.

2) He attended a few stock market chat boards and everyone seemed to be excited about a stock called. Microstrategy. It was trading at about $10 and he made his mind up that if it rose to $14 he would buy.  "Made sense to buy a rising stock" he told me. The stock hit $14 in no time so he bought 1,000 shares at $14.50. He took a deep breath and held on.

3) The stock kept going up 15%,25%+ in  a week hardly ever stopping. It made me laugh how much easy money I was making. People kept telling me to get out as the stock rose but I figured if it fell by XX% I would exit then. As the stock kept rising and rising way beyond what anyone ever thought possible I made a decision that if the stock made it to $290 I would exit. No question asked. A few weeks later it did and I sold out. I now had an account size of $290,000 from a starting capital of $15,000.

4) "I thought this was too easy" Boy was I right. I then made another 5 trades and lost on everyone. Qcom, YHOO, AMZN were some of the stocks people kept telling me were going to go up big. but I lost thousands of dollars on each one of them. My $290,000 account was whittled down to $245,000. I decided to withdraw$45,000 and leave the rest in until the general conditions improved. I took a long vacation to Hawaii with my profits. How sweet.   

5) I never traded for over 2 1/2 years.... I only wanted another exciting stock like Microstrategy. Going for small 15%- 20% profits seemed like a waste of time to me. I wanted a big, huge, winner or nothing. then in July 2003 as tock called TASR seemed to fit this bill. There was a lot of excitement. The stock was flying up. People were buying in and the market conditions seemed much more positive.  I decided if the stock rose to $12 I was going to buy with all my account. I was only playing with "house money now" and I was prepared to risk it big to win big. I bought 16,600 TASR at $12....boy was a nervous wreck for a few days as the stock "gyrated". THEN it took off. Just like Microstrategy did. It seemed everyone wanted in and it was the talk of the stock market over the next 8 months.. Can you imagine how I felt when the price rose to $60? I was a paper millionaire. I decided not to be too greedy and took some of my profits off the table..... I sold 6,600 at $60 ($396,000) so I still had 10,000 in TASR and the pressure was off. It now became a game. How high could TASR go? Could it defy gravity? 

6) I simply trailed my exit behind the closing price. Giving it enough leeway to avoid being exited through natural gyrations. In April 2004 I was exited at $290. I sold 10,000 shares at $290 for $2.9 MILLION. Coupled with my 6,600 I sold for $396,000 it meant my account was now at: $3,296,000 Million  And that's how I did it.

It's an amazing story. But here are the points you can really take home in the hope of achieving something similar one day:

1) He went for the truly big moves with big capital. there was no "diversification" here.

2) Luckily, he got into the truly biggest movers of that market cycle.

3) He held on for big profits. Most people make a quick 20% (+/-) profit and exit...  Imagine missing out on these huge gains because you took a small, quick profit?

4) He made his money during bull markets. Lost it during bear markets. But at least he kept away from the worst of the bear markets.

5) He traded without fear. Scared money can't make big money in the stock market.

6) Absolutely no fancy computer driven trading system that costs thousands of dollars needed.   

7) His exit strategy was simply driven by PRICE...No-one opinion was followed.

It's better to be lucky than smart.


What he actually did was exactly what Jesse Livermore/Darvas etc.. have preached for many years.

Nice. Ah...., where the hell you been? I miss ya man.


P.s. Ya might want to point out, for historical purposes, Livermore died bankrupt and from a self-inflicted gunshot wound to the head. But still, a allround great guy, I'm sure.

Reminds me of the story of the great financier, Baron Rothchild:

A reporter asked the Baron how he amassed his forturne.  One of the greatest ever.  And he recanted this story:

When I was a young boy, my grandfather gave me a nickle.  I bought an apple on my way to school and sold it in school for a dime.  The next day, I took that dime, bought TWO apples, brought them to school and sold them EACH for a dime........I did this over and over, day after day. throughout the school year.  Never once altering my strategy-
Then my grandfather died and left me 50 million dollars.

I believe Home Depot stock fits this story.

For now, I have 100% of my Roth IRA account (tax free on growth and withdrawl at 59 for US) in Hansen Natural Soda (HANS).  It went from $2 to $100 in 2 years and split 2:1 and dipped to $40, only to jump back up to $70 (so, $2 to $140!!!)!

Great story !
Thanks for sharing with us ! (applaud)


Most of the «Multi-Million Dollar's» fortunes made on the stock market have already started with a Multi-Million Dollar stake, usually a conservative managing and strategy, etc ... So, when it comes to this kind of divine achievements with a regular $15k stake, is really something to keep in mind! Something like the holy grail of the regular speculators like us

From your story, I keep that the only way to achieve such a crazy 31,900% performance is to have the perfect combination of:
- Timing
- Guts to take the risk of an undiversified risky investment
- To know how to let the profits run
- No fear / need of the money invested
- No rush to take a profit when a 300% performance is showing already a «pornographic» bunch of (new and unfamiliar) money.
- And off course a lot of luck

I know a lot of traders with some of these characteristics... And some even with all of them... But you need them all at the same time, and some Livermore inspiration or some wind from the Gods to get it there... The good thing is that is 100% possible, and much more likely than to win the Lotto.

Quote from: tommyt on November 17, 2005, 11:05:25 AM
P.s. Ya might want to point out, for historical purposes, Livermore died bankrupt and from a gunshot wound to the head. But still, a allround great guy, I'm sure.

Hi tommyt !

The problem with Livermore was just one: Money Management
Well... probably another one: Emotional Control
But the thing is that without these 2 «weaknesses», I'm almost sure that he would be a regular unknown guy, and never reached his multi-million fortunes (multi-billion on today's money). 

Jesse Livermore was a Genius.... AussieTrader's friend did this prophesy once... Jesse Livermore made it 3 or 4 times in his live, and not «only»  30,000% (pust some '0's more)... Probably he didn't do it again because he put an end to his own life...  Sometimes I think about it, and I kind of understand him... he made it severall times, from zero to the TOP of the world... from the TOP of the world to zero (negative)... and again to the TOP... he have been there, and there was almost nothing else to achieve on his life.
He committed suicide when he was broke and may have left a bad impression for conclusions, and a good argument that his strategy was no good. (personally, he's my personal hero, and I have a picture of him on my desk hehehe)

Best regards !

A lot of Enron investors tell a similar story to the $15k to $4.8M man's. Their story does not have such a happy ending though

Most of my stock trading profits have been made on a few big winners. The way I see, you grind it out with the small wins and losses and periodically hit a big winner that makes it all worthwhile.

Many holders of LU and CSCO are still waiting for the recovery.  It takes big, brass one's to hold thru dips (look at some GOOG took).

What i found my problem is, it is not hard to find a good stock, but when to sell it. 3-400% profit to a negative in a day...

I think that one is a made up story by Mr. Crisp just for his book but there have been some who got lucky of course. Here is the link.

http://www.sap-basis-abap.com/shares/the-man-who-turned-a-15000-trading-account-into-3-3-million-and-the-lessons-i-learned-from-it.htm

For long term though I do know a real story. Dr. Stryker lived next door and my mother was his nurse. He was very clever and creative and made very unusual inventions and in the middle of one operation on a man's seriously broken arm Dr. Stryker left the operating room and went to the hardware store and bought some screws and a piece of metal and came back and attached them to the broken bone. The company he later started is now one of the leading implant companies for hips and knees etc. The Company has his name Stryker SYK.

For the last several years the stock has not done too much - but for 15-years only 4,500% from $1 to 45 but my mother bought some on the IPO and still had it when she died and it had gone up 45,000% after numerous spits.

For over 20 years the most consistent stocks on the NYSE were SYK and SYY  -- the second one is named Sysco...