Successful Trading Is the Antithesis of Human Nature

Episode #346 | January 29, 2024

Episode #346 | January 29, 2024

Successful Trading Is the Antithesis of Human Nature

In This Episode

On this week's Stansberry Investor Hour, Dan and Corey welcome contrarian trader Jason Shapiro to the show. Jason is the founder of digital publishing company Crowded Market Report. He joins the podcast to share some tips and basic strategies that all traders should know to help maximize their chances of profiting.

Dan and Corey begin the show by discussing evidence that we're still in a bear market. They bring up equal-weight indexes fizzling out since December, the now "Magnificent Six" tech stocks still dominating, and the possibility of a decadelong sideways market.

After, Jason joins the conversation and gives an overview of his trading style, his financial journey, and how his strategy differs from many other traders'. While others are looking to ride the trend, Jason explains that he's looking to "fade" it and find when the trend will turn. When speaking specifically about putting the risk-reward ratio in his favor over time, he says...

I don't base picking turns on price. A lot of people think that they're being contrarian by thinking, "Hey, this thing has gone up a lot, therefore I'm going to short it." And that's not how I do it. That'll get you run over, over time, pretty badly. I look at it more from a participation perspective... It's more like "Everybody in the world is long this thing, therefore I'm going to short it"... I think the discounting mechanism in the market is not price – it's participation.

This segues into a discussion about how Jason's process works. He gives advice to individual investors who are just starting out, including warning of the dangers of following trends and "copy trading." He also details how trading goes against human nature...

You have to be able to put away everything you've been taught to believe – your ego, your defense mechanisms, all your behavioral biases that you have not only come to develop over the course of your life but were probably developed via human DNA way before you were ever born. All of these things have to be overcome.

Then, Jason discusses automation in his field of work – when he uses it and when he ignores its advice – and provides some examples of his strategy in action. He emphasizes...

Market confirmation first, OK? You might think Nvidia is overvalued, and you might be 100% right. But wait for the market to confirm it first.

Lastly, Jason explains why he's so adamant about sharing his approaches and techniques with everyday investors that they can't find in traditional financial media. And you won't want to miss Jason's answer to the final question... He shares what he believes is the real secret behind making money in the markets.