April 28, 2021

So in this video, I want to talk about how you can budget to learn investing by trial and error, without a mentor.

I'm here to help you to create a plan for failure.

And you might be wondering, Oh, that's kind of a weird topic.

Like why the hell would anyone want to learn how to plan for failure?

And if you have been investing for a little while by yourself, and you realize that investing is kind of like gambling, you'll realize how risky investing is. 

That is really because you don't have an investing strategy yet.

So if you decide to proceed to investing without a mentor, then this video is perfect for you.

90% correct transcript

So Jim Collins said in his book, great by choice fire bullets and then fire cannonballs. So what does that mean? It means that when you are trying to achieve growth, initial growth can be achieved maybe perhaps by copying others. But after that, you can only achieve growth through experimentation and scaling. So in this video, I want to talk about how you can budget to learn investing by trial and error, without a mentor. I'm here to help you to create a plan for failure. And you might be wondering, Oh, that's kind of a weird topic. Like why the hell would anyone want to learn how to plan for failure? And if you have been investing for a little while by yourself, and you realize that investing is kind of like gambling, you'll realize how risky investing is. That is really because you don't have an investing strategy yet.

Right now, you're still in the exploration phase. So if you're watching this video, because I recommended you to go here right now, you are in the exploration phase and I want to help you budget for failure. And it's important because if you think investing is a walk in the park at the moment you go out and you register for an account and you'll make money immediately then, Oh, you're going to be in it for a ride. And it's so important to learn how to budget for a failure. So then you can get through this phase as quickly as you possibly can, because the longer you stay in this phase to more money, you will lose and the less profitable you are. And what you're really trying to achieve here is an extra ordinary result. You're trying to get a gain that is higher than the market.

So you can't do that by doing something normal, you need to do something abnormal to get abnormal results. I'm trying to help you prepare for this process, because you're about to go on this alone without a mentor, without a mentor, you will encounter basically every single problem you would encounter. So you need to solve every single problem yourself. It is a difficult journey, but I know why some people would want to go down that path. And which is why I'm taking the time to make this video. It's not going to go viral, but that's not what it is about. So first let's start with why we need to do this. Shall we? So first let's talk about experimentation. And when you think about experimentation, it's kind of weird in an investing context. So it is easily best understood. If you look at great companies. Now, one of the great companies is space X, which is run by Elon Musk.

As of the time I'm recording this video, he's actually testing star ship, a new type of rockets that can basically fly and then land with people in it. This has never been done before. So Elon Musk needs to prepare for failure. So as of the time I'm recording this video, Starship has already blown up nine times. So that means the rocket flew. It came back down, and then it blew up nine times already. And in the 10th time, it actually successfully landed without blowing. And that is really planning for failure because once you're able to land that Starship successfully without blowing up, then guess what? You can land it over and over and over again. And that's actually how the previous thrusters in space X works. Once you have a working model, you're in a good shape, but you need to plan for failure to get to that point.

And that's where you are in that. Now the next example is Amazon and Ashley searched us statistics online because great companies run experiments all the time. And the more experiments you run, the better you become. So for Amazon, they run an average of 2000 experiments a year. So to me, this number is actually a little bit low, if that is what the number is then that's great. And when you think about it, there are 365 days in a year, there are 200 working days or so in a year. And that means they are running 10 experiments per day on average. And if they're able to double or even triple that number, then they'll grow a lot faster. The next one is Google and Google is very famous for it. The concept of AB testing, which I'll explain in a bit, and they are running 7,000 experiments a year.

So as you can imagine, the data they're collecting, trying to optimize the algorithm and their product and service offerings will feed back into a better system, a better business, so that they're more and more profitable. The next one is Procter and gamble. It is really a consumer brand. You probably know what it is, and they run 7,000 to 10,000 experiments per year. So when you think about that, wow, that's actually a lot of experiments they're running because they're a consumer brand. So they're able to do that. And they're basically in presence in a lot of countries that is really just a glimpse of the scale of experiments that they corporations are running. And if you're looking to invest, if you're looking to grow, if you're looking to achieve extraordinary results and you should be running experiments as well, you might not run a thousand experiments, but you should at least budget for a hundred or a couple of hundred.

So then you get to that point where you're earning the return. You're looking for, I want to take a minute to talk about the Apple development process. And I think this is actually quite important because Apple doesn't launch a lot of products. So how can they run experiments? And if you read a lot of books about Apple, like insanely simple and whatnot, and you'll realize that they do a lot of experiments in-house before ever launching a product. So for every phone that they create, they will have four to five different versions that are really good prototypes. So then they can select the best one for every phone case foam shape that develop it'll have five to 10 different variations. So then the design team can choose the best one and it keep doing that process. So then they get to the best phone possible. In my opinion, that's why an Apple phone is so expensive because they took the time to optimize the entire system.

So though the production costs of an Apple phone might only be one-third or 20% of the phone costs and design thinking process and the iterations they have gone through mixed the user experience a lot better. So when you think about investing during the exploration phase, when I was discovering what strategy works best for me, I placed around 3000 trade live trades in total, and I also tested a lot of different strategies using the computer. I think I tested over 300 strategies, including auto parameters. That is what enabled me to achieve 30% a year. So that is really my vision for myself. And my portfolio goal is to make 30% a year. So if you're interested in learning more about investing and investing accelerator, which is the coaching program I offer, then you can go down to the link below and register for the free case study.

And then after you watched the four hour webinar, then you can schedule a call with me and I'll see if you're a good fit for the program. If you are, then you can be part of the community. And this month I'm looking to help 20 full-time professionals without a financial background to master investing. The stretch goal is 30 people. So if you want to get the free training, then just go down below to where the description is, click show more. And then below that you'll find one of the first links is the free webinar, how to get 30% from the stock market in the next 12 months. So click on this link, and then afterwards you can read through what you will get in the webinar, and then you can write down your name and your email address and click watch. Now, then you will be brought to the webinar.

So then you can start watching it in investing as elevator. We have some new case studies as an Ash made 48% from CAE in 42 days and 72% from chef in six months, Adrian made 38% from AXP in one week and Haywan made 33% from our tricks in eight days. So all of these are very amazing successful case studies and congratulations to you three. So after going through this iterative process, I'm able to come up with a strategy I put in investing a celebrator. This is where I want to introduce you to the concept of AB testing. So AB testing is really common if you're working in front end as a programmer or web development, you're just in the general programming space, you probably have heard of this term. And basically what you would do is you would take a very small part of the process.

Let's say the front page of your website, and you would make a variation of it. And if you have a hundred people going through your website, 50 of them will see the first version. And another 50 of them will see the second version. So that is AB testing. And then you'll test it against a goal, like the number of visitors that click to the next page, the number of visitors that give you the email address. So then you see which one performed better, and then you would keep that one. And then you would run another AB test and you would test the first version against a second version again, and then select a winner and created another AB test select a winner, created another test, select a winner. So over time, your front page or whatever you're testing will become better and better and better.

And this is actually a very powerful process. And when you think about evolution and how nature produce more and more sophisticated animals, it is actually the same process. So you have a population of animals and some of them are stronger. Some of them are weaker. Naturally the week one dies out and a stronger one will become more and more populated until a new trait gets developed. Let's say for giraffe, the neck is longer so that they can eat the leaves above the trees. Over time, longer and longer, neck giraffes will be able to survive better. So it ended up population of longer neck drafts will grow. And that's why giraffes have such long necks. That is really the process of AB testing. And it is basically the process of evolution. When you think about extraordinary growth, when you're thinking about achieving more than what the market return, if it is 10% and you want to achieve 20, and you need to go through this process, especially if you don't have a mentor.

So let's talk about how you can do that in an investing context. So first of all, you need the tool. So you need a testing software. Technically you can pull this off with just a chart alone and without any programming skills. But if you learn programming, you'll make her life so much easier. So if you are an engineer watching this video, then the job, because you already have a headstart and you can just buy to data by the testing software. So then you can start testing. But if you don't have a programming background, it just want to do with the grassroot rate, just scroll the chart back maybe a couple of years, and then from candle to candle, start going from there. And at least you can still collect data. You can do it manually, but it will still be a lot faster than live paper trading.

Okay? So make sure you don't ever go down to live paper trading routes. It's just a waste of time. Step two, keep a very simple exit strategy to start, because if you have to choose between optimizing your entry or exit, you need to optimize your entry first, just because you have a good entry, doesn't mean you'll be profitable because if your exit is, you'll still lose money. Keep a very simple exit strategy. First, maybe you want to set a goal of 20%, 30%, or maybe if a certain candlestick pattern happens, then you exit, but keep it very simple and focus on your entry. First, this will make her life easier because if you change both variables at the same time, it's going to be hard to keep track of what makes us successful. And we'll come back to exits at a later step. So now you're down to the entry mechanism and out of all the parameters that you can optimize for the easiest one is technical analysis.

Now, when you're going through this phase, you need to understand that technical analysis is not complete. I have tested many strategies. The max you can get with technical analysis is like 60% win rate with a given exit strategy. If you are able to get to a 60% win rate more than 50. And I think you're already doing a pretty good job with technical and move on to the next step. And when you're looking at technical analysis, you want to first start with one indicator. So you want to first start with one indicator and figure out what is true about that indicator. Do you buy when the EMA crosses over to each other, do you buy, when the price crosses over to Yemen, do you buy when the NACD is doing a specific thing, like a crossover or the momentum is changing or is increasing consecutively for three candles, you need to define that condition and then test that.

And you need to start with one indicator and achieve some level of success. And it doesn't need to be a hundred percent win rates because you're not going to get there with one indicator alone. And then afterwards, once you get comfortable with that one indicator and you know, what works and what doesn't, and you add onto your second indicator. And again, you run through the process and here Ashley wrote down, test your parameters for your first and second indicator. And what that really means is that you should test different scale of your indicator. So let's say you're using an EMA, which stands for exponential moving average. And in this case, you can choose between a 10 day or 10 week or 10 minutes, exponential moving average, and then 2050, a hundred, 200, 500 a thousand. So you would want to test through all of them and test different entry criteria and see how the profitability changes.

So once you have tested that, and you probably know what the optimized parameters are, which allows you to move onto the next stage. So now you have gotten technical analysis down and you want to combine that with fundamentals now for fundamentals. It is a little bit tricky because it is very easy to fall into the hindsight analysis because right now you'll get access to all of the fundamentals. So if you scroll back three years, you actually know what the free year's financials are, but today you don't know what the financials three years from now are. So in a sense, yes, you can use fundamentals, but as a little bit more tricky, but you basically follow the same process, go for fundamental analysis. So then you figure out what works and what does it. And I find that a lot of people who struggle with this process, because you don't have an accounting background or you don't know finance, but it is extremely crucial that you go through this process.

Because if you skip the fundamental analysis, then what you end up with are fundamentally bad companies, which are not profitable. They don't have a product. The company might go bankrupt and you wouldn't be able to pick it up with technical analysis. So that is really where the problem is. So make sure you include fundamental analysis. Now, once you have that down, the next step is really trying out different risk management strategy. Now, there are many risk management strategies on the intranet. I'm quite sure you can search that out. Many will find a ton of them. This can range from using stop-losses different kinds of stop-losses like trailing stop, just a regular stop. When you should move your stop-loss higher. Should you use options? How do you use options to manage risk? And that is such a complicated topic. It wouldn't be covered here, but you definitely need to explore it from risk management strategies.

And I can tell you what you will find. So then you know what you look for and whether you're heading in the right direction. Now, sometimes when you're using risk management strategies, it will actually make or break your strategy. So if you set a very tight risk management strategy, it can actually end up making your strategy unprofitable. So that's when you got to test out and, and each stock has their own kind of comfort zone in terms of risk. For certain stocks, you might be able to set a very tight risk management, but for some other stock, you might need to be more relaxing. So you've got to take that into account as well when you're testing your first two indicators. So as you can see, it is a little bit of work, ultimately, that will allow you to achieve level of success that is much greater than whatever the market is giving you, which is a 10% per year.

Now the next step is really to combine that with different profit taking strategy. Now, in this case, I'm really talking about the exit strategies in step two. Now, previously, you might have set a simple one, like maybe 20, 30% or 50%, then you take profits. And now you're really changing that parameter because you got your entry, you got your risk management, you got your fundamental analysis. So now you're changing your profits. And when you're testing, you're not really giving yourself a lot of flexibility in terms of exits, because in step two, it was a very rigid, simple target exits, but as you become more sophisticated and you study more exit strategy, then you can give yourself more flexibility. So based on my experience, you would want to have a couple of techniques combined together with a target. And just because the stock reaches a target, it doesn't mean you need to exit everything at once or just exits.

I think it also needs to depend on the situation and you need to analyze the other variables as well. And again, testing this parts alone will change the profitability of your strategy greatly because if you set a target that is too aggressive, let's say I want 50%, but it takes forever for the stock to get there. Your turnover, which is the time in which you invest. And then you take, the profits will be too long. You will be stuck waiting forever and ever, and ever. And you never take a profit. If you set a target that is too conservative and you're leaving a lot of money on a table. So basically what you're trying to achieve here is a balance between taking profits and holding onto the company that is great for a long period of time. So number nine is really different kinds of profits, multiplication strategy.

This one is very advanced and I suspect most people are probably gonna skip this step. But if you want to achieve an extraordinary results by 30% per year, then you probably need you to dive into this and spend a little bit of time on how different scenarios will play out. It is so important for you to test this part because as you become more aggressive, when you're investing and you're becoming more confident, certain bad events can actually impact your portfolio significantly. And that's why you need to go through this phase to make sure your portfolio doesn't blow up. Wow. Kind of stepping on a gas pedal to go faster. And that's what really profit multiplication is all about. Now, there are many different ways to do this. Some people use options, which is what I do. Some people use margin. Some people use futures swaps or whatever you call it, but there are different ways to basically multiply your profits and all these are advanced concepts.

And when it comes to using margin, it is quite dangerous as well. I'm sure you will find a lot of horror stories on the internet saying how people lost millions or billions of dollars using these events strategies. And this usually comes down to not truly understanding how it works, not truly understanding the downside risk or what a margin call is, and not being prepared to protect yourself from these remote, but likely possibilities. So that's why you need to test it because you need to test how far you can take your strategy. Let's say with margin, with options and the strategy will stay in tack and not break because if it breaks, you better find out when you're testing, instead of finding out in real life, because it is so easy to lose five, 10, 20, 30,000 in the stock. Market's just like that. So I think that people that have lost 50 K I've met people that have lost 200 K I have met people to have lost 400 K.

So that means you need to know what you're doing before you start doing it. And that's kind of a paradox. And the only way to know that is through testing without real money. If you are going down to routes without a mentor, because of course a mentor will solve all of those problems for you. If he's a good one, the 10th step is really to adjust for dash versification. There are two schools of thought in the markets. One is you should be very, very, very, very, very diversified. And that will basically lead you to investing in S and P 500, because you will end up believing in the dogma of investing in S and P 500 is to safest because you're protecting from all risk, except when SMP 500 is going down. That is really on one end of the extreme. So you can think of this like a political spectrum.

So the other side is really, you don't diversify at all, and you go all in and you usually encounter disk kind of people. They don't have a lot of capital. They couldn't really diversify and they have to go all in and they have so much confidence that this is the stock that will bring them 2 million. So they will go all in on that stock and end up burning themselves. Because even when you're looking at some of the best world-class investing strategies, their win rate is only 80, 90, perhaps 95%. And when you think about that, how is it someone can go all in on something that is not a hundred percent win? Well, that is poor risk management. So you want to achieve sufficient buy for certification. And there's actually a mathematical formula to that and not doing a lot of work, because obviously if you invest in 10 companies versus a hundred, versus a thousand investing in a thousand company requires a lot of work.

But if you invest only like 10 companies, then Hey, that's actually not a lot of work. So when you think about what I do, I invest in 10, most of the time, less than 10 companies, but I've seen people investing in 50, a hundred and each of them, they would do research. And if they're a research process, it's not efficient, it's taking them a day to pick a company that is a hundred days. And when you think about a hundred days, you're pretty much doing this full time or half full time, which means it just doesn't make sense from a time to reward perspective when it comes to investing, because you want your money to work for you, not you working for your money. So that is really the key difference, especially if you are a full-time professional. So the next step, the 11 step is really to streamline your process and you want to automate as much as possible.

And if you have been following the previous 10 steps, I have laid out for you, then you should be at a pretty good shape. You would have either programmed your entry. You have either it's some sort of stock screening to narrow down the list very quickly. So then you have the great opportunities, you know exactly what the target exit is. And you should be able to automate a lot of that. If you are able to achieve somewhere of around one hour to two hours a week, when it comes to long-term investing, then I would consider that to be pretty amazing. Now for myself, I spent around one to two hours a week on investing. And on average, I just spent around five minutes to 10 minutes a day, just to take a look at the market, to see what it is doing for me. It is more like a passion.

I also educate and help a lot of students, which is why I spend more time than that's basically answering their questions and looking at other stocks that I'm not investing in. But if you are just managing your own portfolio, trying to get to financial freedom. And I think one to two hours per week is more than enough. So once you streamline your process, that is the time you're aiming for, if you are spending 20 to 30 hours a week and you are long-term investing, then you're doing something wrong. Because for day trading, they only spend around 20, 40 hours a week. That's kind of the range. So you're basically spending as much time as someone who is day trading. So you need to evaluate that. And finally, once you have profitability probability and the right expectation, and you can use real money to invest. So, wow.

Look at this process. Look at steps that I told you to go through. It's a heck load of work. Isn't it? You need to trust me, like you need to go through this process. Because when I was a kid, a lot of people think I'm young. I skipped this entire process and I ended up losing thousands of dollars. So there is a reason why seasoned investor tells you to test your strategy areas of reason why you need to go through all the steps. And if you go for all these steps, then you actually left no stone unturned. And that is very important because when you're looking at your own strategy, you're going without a mentor. You need to leave no stone unturned. Is it time consuming? Yes. Is it excessive? Yes. Is it troublesome? Yes. Should you go without a mentor? Well, you're watching this video, so I suppose that's what you're doing.

Do you want to risk your money without a solid strategy? No. So when you think about that, it is so important to test out the whole thing, because the last thing you want is after investing for three, six, nine months, and one day, all your gains just got blight doubt because you didn't plan for, let's say step number seven, risk management. Let's say you haven't been investing for three, six, nine months. And one day there's a technology correction and wiped out half your portfolio because you didn't learn fundamental analysis. So you can think of investing. You know, most of the time it works until the time bomb loads up. When you're looking at your investing strategy, you need to know where the hole is. And basically you have a bucket and you're trying to pour some water into that bucket and you need to know where it is leaking.

And you best find that out before you start losing real money. If you decide to go down the path of Tron air, which is difficult path, it is possible. I have done it before. I have seen other people. Who've done it before. I think the probability of success is one to a thousand, but don't worry about that. Just keep going, because if you're watching this video and I recommended you to watch it, and I do believe you can do it. So while you're still here, I want to share two more stories with you, which is about my personal experience. When I was doing Forex X, which is foreign currency. And that was many years ago, I was investing a very small sum of money. Nevertheless, it was still real money because I was a little bit arrogant. I didn't think I have to go through any of these steps.

I laid out here and I went ahead and I start playing with $500. Now, of course, when you think of a $500, Hey, that's not a lot of money, no big deal. If I lose, I'll start over again. And that's exactly the wrong mentality, but nevertheless, that's what I did for some odd reason. The strategies I was using that time just work. And within three to five days, right? Double my accounts. I went from 500 to a thousand. I was like, Holy cow, it worked. I hit the jackpot. So then within the next day or two, I put it in another thousand dollars. I use my strategy. Do you trade for another one to two weeks? And boom, I'm at $4,000. And then afterwards, I was like, Oh my God, I'm going to put in more money. So I get to like six to 7,000 or whatnot.

And then I, my accounts jumped at 10,000 and I was like, wow, Oh my God, this is working. And then it jumped to 20,000 at one point and I was Holy cow. I might be able to take it to $100,000. And I was just so excited. And I think during that time, I wasn't even looking at news. So I don't know why what's happening in the market, but I was just making money. So I didn't care at that point, my account suddenly start going against me and I start losing money. And during that time, there was a lot of volatility in the markets. I think there was some weird thing going on. It might not be Brexit, but something similar to Brexit was happening and the currency market was moving a lot. So I was trading and I was actually staying up all night until two, 3:00 AM just looking at the markets.

And then afterwards my account went from 20,000 to 10,000 and I was like, okay, okay, okay. Let's, let's try to see if we get it back to 20,000 because I've done it before. My strategy must be working and I start getting emotional and boom, my account went to 5,000 and I start getting more emotional when I was like, ah, screw it. I'm just going to keep trading like in the next two, three hours, I'm just going to keep going at it, using my techniques or whatever. I know how, and then 5,000 went down to 4,000 to 3000, 2,001,000. And I think at the end of the day, I got so emotional trading, my account was negative $200. And you might be wondering, how do you get $200? And that was because I think throughout the process, I got margin called a few times. It's a bit more complicated, but basically I was able to lose a little bit more money than what I had.

And the broker actually had to sell my position at a loss. So I owed a broker $200 in debt in the span of two months, approximately I was able to take my accounts from 500 to 20,000 all the way back down to negative 200. And that was because a, I was day trading. Of course I w I wasn't getting a lot of sleep because initially I was getting really hyped for making a lot of money. And I was getting really hyped for losing a lot of money. I don't have any testing whatsoever. I have no risk management strategy, which is expecting from a young kid. I have a mess in terms of profit taking strategy. And Ashley don't think my strategy even worked. I don't even think I had a proper strategy. When you think about it. My profit multiplication strategy was a mess. I was just using margin as much as possible until my account blows up and guess what it blow up.

So that was a very painful lesson. Even though I just started with 500, it was a very memorable learning experience because back then 500 was a to me. And you need to remember that is not my first 500. That was like my 10th or 15th 500. And because I've been doing this many times, I didn't follow the steps. I have laid out here for you initially after using demo trading for my mother. And I thought, Oh my God, this is so boring. I might as much as portfolio money. And so I just started testing with real money, which turns out to be a complete disaster. So when you think about that and the process I go through and the pain I had to go through, I'm trying to help you visualize it before it happens to you. So then you can avoid the loss because the last thing I want is for you to come to me and say, Hey, Eric has been losing thousands of dollars.

Can you help me fix it? Which to a certain degree I can. But the best way to prevent you from losing money is to have the right knowledge to start. And if you don't have the right knowledge, then you need to get it through trial and error. And the best way to do trial and error is through testing because it doesn't cost you that much money and you get to figure it out. Whether what you believe to be true is true very quickly. And that is really what the big corporations do. That's what I do. And so far from reading a ton of books to joining courses, to testing myself, I think I find the most growth testing myself without a mentor, because having a mentor will actually solve all of these problems for you. Because as you can imagine, if you start off with a different entry mechanism that actually influences all the steps you have behind it.

And if you have a very good entry mechanism, if you enter a certain way, and if you develop your philosophy a certain way and your exits profit multiplication, fundamental analysis, they all change and all need to work with together. So that's why I structured the steps this way to basically help you fail faster, help you fail better and help you fail in the least costly method possible. And let me tell you another story. So I promise you two stories. So does this a second one. So when you're looking at my investing journey, I haven't been investing for over 12, 13 years now. And Ashley took a large chunk of my time to become profitable. The time it took me to figure out a strategy was actually more than the time. It took me to become a say, quote, unquote, wealthy. I don't actually think that is the right word to grow my account.

That's probably more accurate at work. Within 12 years, I use eight years for testing, and this seems very excessive. And that is really because I didn't have a very efficient process until later. Like I didn't figure it out. All these 12 steps. Initially I had to figure it out myself and then go through these steps and then become profitable. So that took me eight years. So now, you know, this probably took you two, three, four years, maybe half the time because you're smart and you're smarter than me. So after testing eight years, I have been investing and using this strategy for a little bit over five years now. So far, our return on average is approximately 50% per year. And this is actually exceeding my targets because in the beginning of the video, I said that my average return is around 30% return a year, and I'm getting a 50% per year.

So that is great. And when you think about it, my strategy for the last five years actually did not change at all because once you figure out what works and you have a complete understanding on why the strategy works, when it doesn't work exactly in which situation you need to apply it. And how do you deal with all the little special situations in the stock markets? Because there are always special situations. You just keep doing the same thing over and over and over again until you reach a very high return. So I'm just taking a look at my account here as of today and my

Total return over

Five years. And let's say a half it's around 900%. And what is surprising to me, or a lot of people in this case is that's. During this 13 years, I spent eight years testing. So it is so important to figure out what that strategy it is for you. And if you have come to this video, it means you have decided to go down this path with trial and error, and I can confidently tell you that you can make it. I have seen to a trial and error and achieve upgrade, return, achieve a great strategy and an afterwards for the next five years, once you have figured out your strategy, it's just doing the same thing over and over again. Um, I think for the last five years, regardless if there's an oil price crash, regardless if there was a trade war, regardless, if there is COVID regardless, if there's a tech correction, my strategy actually works out pretty well.

And that's how I get to 900%, which is approximately 50% per year. So when you think about that, there is light at the end of the tunnel per se, and you are able to get there. Once you arrive at something that works, what's important, then you can think of your journey like a dip. If you need to go for the dip and figure out everything that works and everything that does not work and cut everything data, it doesn't work out. Now. It sounds very simple, but it's actually a lot of hard work because how do you figure out if something works or not? And you can only do it by testing it. And you need to do just really fast, because if you are planning to be a long-term investor, like myself, investing long-term can mean you're holding onto the stock one year. So you have one idea and you use real life testing.

You need to wait one year to find out whether something works or not, and that's simply not feasible because you only live for a hundred years. So that means he only run a hundred experiments, but as you can see, I ran and tested 300 different strategies. I placed 3000 trades. So how do you get that kind of volume when long-term investing requires low volume? So I think that is really one of the paradox when it comes to investing in business and life as well. And with the help of computers, you can do a lot of testing very quickly using historical data. And I think that is probably the best way to achieve profitability without a mentor. So then now you are ready to budget for it. I think at this point, what's important is really for you to take a step back and have a thing, what you can do to budget for failure, because you decide to go down the trial and error path.

You decide to go down the path of discovering investing yourself, whether it is because you don't want to pay for education, whether it is because you haven't found a right mentor yet, which is fine. But either way, if you decide to invest in herself, because you know, maybe you're unemployed or you got some inheritance money, or for some odd reason, you sold a house and you have some money and you want to put it into share markets. You want to minimize the loss of trial in there until you have a very solid strategy. Now, of course, if you're able to find a trustworthy mentor, if you're able to have this person to ask questions and basically help you solve a lot of roadblocks ahead of time, before you even clicked the buy button, it will actually give you a fantastic chance to succeed. Because even with a great mentor, it doesn't mean you'll succeed a hundred percent of the time, but it will greatly tilt the odds in your favor.

One great example is really Michael Jordan. Michael Jordan is a great basketball player, but do you think he has a coach? And he answers, of course he does. And everyone knows he does have coach. But the question is, if Michael Jordan is such a great player, why does he need a coach? And the answer is, well, you need discipline. You need that third party view, and you need someone to do a lot of the administrative work and thinking and planning for you. So then you can become that great player. So you can achieve that results you're looking for. And even for professionals like Michael Jordan playing basketball or Michael Jordan's team, when Michael Jordan is a coach, they all help. And that's really the power of a mentor and a coach. And I think eventually in some part of your life, you will run into a mentor that is right for you.

You'll run into a mentor that is the right fit for you because everyone has a different philosophy when it comes to investing. And everyone has a different view on what it means to be investing in a market. And if you want to achieve extraordinary results, you need some sort of catalyst. And a catalyst can either be due to testing herself, which a lot of people get that thrill from figuring it out yourself, which I kind of do, or you get a coach and it helps you celebrate that process, which I also very enjoy because I think the times where I got coaching, it just helps me understand the way the world works much better. I guess this is another important video. And if I recommended you to this video, then I must think you need to listen to what I had to say here. So best of luck I look forward to, to see you at the next video.

And in this video, I'm actually going to dive into another tax topic, which is how capital gains from Canadian corporations are taxed. And this is actually a followup video to my previous video about capital gains tax in us and Canada on a personal level. Because when you're looking to invest in evitable early, you will come across the concept of investing, using a corporation. Because once you achieve a certain level of wealth, you will be thinking, is there a more tax efficient method to invest in the markets and basically not get taxed. We'll dive into this topic in the next video. So I'll see you in the next one.

About the author 

Eric Seto

Eric Seto is an investor with over 10 years of experience. He travelled around the world to help with auditing, accounting, purchase and sale of companies.

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