I had another email this week (my inbox has been busy recently, probably because I’ve been posting more trades here since I restarted my blog). The gist of it was this: can I create a mailing list, exclusive to customers of my stock trading book, and send my watch list of stocks to all the subscribers before the market opens each day? My answer to this type of question is always no, and I wanted to explain why.
1. It’s All About The Fish
We’ve all heard the old expression “If you give a man a fish he will eat for a day, but if you teach a man to fish he will eat for a lifetime.” It’s absolutely true, and it’s the number one reason I don’t send out my stock picks and watch lists. As I discussed in my post on learning to day trade, I wrote my books in order that I could teach trading to as many people as possible. I wanted to help people discover the freedom that trading offers (hence the name of this website). That means teaching people how to do the job for themselves. The whole job. Part of which is selecting a watch list of stocks each day.
The moment I take on any part of the job of trading for someone else, I’m giving them fish. They cease to be a fully capable and autonomous trader. Doing any part of the job for other people instead of enabling them to trade independently is the antithesis of what I’m trying to achieve with my books.
2. It’s A Gateway Drug
If I were to send out my watch list of stocks, I guarantee the next question would be “Could you send out your trade entries, too?”. I know this because I’ve already had that question. It would in turn be followed by “Maybe you could alert us before you exit a trade?”
If I were to acquiesce to these demands, we’d be one step away from “If I give you some money, can you execute the trades for me? I’ll pay you a commission!” Again, I’ve already had that email many times over, and it would be even more common if I was already sending out my watch list. I would have stepped over a line that there’s no coming back from. More to the point, I would have completely failed in my efforts to trade teaching.
3. I’m Unreliable
I’ve written countless times that I took up trading not for the money (though it’s a nice bonus) but because of the freedom it offers. Freedom to travel. Freedom to work from almost anywhere in the world. Freedom to work whenever I want and to take time off whenever I want. Believe me, I use that freedom. There are many, many days when I don’t switch on the computer.
That’s great for me, but it would be a terrible experience for anyone who was relying on receiving my watch lists every day. It’s why I’ve never considered opening a virtual trading room (despite requests to do so).
When I tell people this reason, they usually say “Just send out your list on the days you trade, I don’t mind not getting it every day.” Bitter experience tells me that people will complain though. Even if I were to set up a mailing list and offer my lists entirely free, I would be inundated with abuse the the first time I ‘missed’ a day. I’ve seen it first hand, and it’s actually worse when giving stuff away for free. It’s a sad fact that people abuse you more when they are getting a service at no charge than when they’re paying for one. Madness, but true.
So the next argument is usually “I’ll pay! Charge me a subscription!” But then we’re back to me losing out on my freedom to trade when I want. No matter what the terms of a paid watch list service, I would be under some sort of financial obligation to deliver. There’s a word for that: j-o-b. Exactly what I took up trading to avoid.
4. It’s Your Money
You are trading your money, so you are responsible for what you do with it. Legally speaking (and I’m not a lawyer), it may well be fine for me to send out a list of what stocks I’m watching, I have no idea. The trouble is the moment I do that, people are going to see it as investment advice. If someone wants my list, it’s presumably because they think I’ve made good choices. That implies they trust those choices. What’s going to happen when someone trades stocks from my list and loses money? Will they blame me? Inevitably, some will.
Every trader should be responsible for their own trades from start to finish. One of the beautiful things about trading is that a trader is the master of their own destiny in a way almost no other profession I can think of can offer. They are not beholden to a boss, a manager, or a customer. Barring technical issues and broker screw-ups, everything about trading is within the control of the trader. No trader should abdicate the responsibility for part of their profession to someone else. If you’re going to do that, you might as well go the whole hog and deposit your funds into a managed account instead.
5. It’s Limiting
An argument that often accompanies a request to look at my stock picks is “I want to see if I’m picking the same stocks as you so that I know I’m doing it right”. Comparing your results to mine (or anyone else’s) is a very limiting way to learn though. Going through the process of picking stocks, seeing how they trade during the session, refining your picks the next day and repeating, will teach you much more about stock selection than you will ever get from trying to make your list match mine each day. Learning by doing will give you invaluable experience. Your newfound knowledge will be ‘stickier’ because the process of repetition and refinement will etch it into your brain.
6. You Don’t Need Them
Making a watch list is easy. The exact method I use is discussed in detail in my stocks book. Also in that book I talk about building a list of core stocks that don’t change day-to-day that can be used as a fall-back. There’s nothing complicated about the process, though as with most things it takes a little bit of practice.
So the thing is nobody who has read my book needs my watch lists anyway. If anyone thinks they do, I can only assume it’s because they are not making the kind of profits they think they should be. If that’s the case, the watch list is the least likely reason (see point 7 below).
If anyone who is reading this is having trouble building a list each day, my advice would be to work on putting together a good core list (refer to the instructions in the book for how to do that). Having a decent core list to draw from takes some of the pressure off, making it easier to take some time to become proficient at picking good stocks each day.
7. It’s Just Not That Important
As I hinted above, a poorly selected watch list of stocks is unlikely to be the reason for lack of profits in trading. And it’s almost never the reason for making losses. For sure, stock selection is one of my three corners of my trading triangle, but it’s possible to completely suck at it and still make money. Or at the very least to not lose money.
Quality daily picks will make it easier to make winning trades, just like quality paintbrushes and paints will make it easier to create a masterpiece. But a good artist can work with anything to produce a canvas that looks somewhat reasonable. A competent trader should, at the very least, know when to stay out of a stock that is not presenting a quality setup, therefore avoiding losses. And with some solid core stocks on a list, there will almost always be at least one or two decent trades to be had, providing a baseline of profits. You can be a reasonable trader without being great at picking stocks.
It’s All About Practice
I suspect that the desire to see someone else’s stock picks, or their trade entries and exits, comes down to either a lack of confidence in a trader’s own abilities, or (and perhaps I’m way off the mark with this), laziness. Naturally it’s always easier to get someone else to do the work for you. The only other reason to want to look at someone else’s picks is as a learning experience, but as I mentioned in point 5, that’s a limiting belief that can cause more harm than good.
Not everyone has the discipline to execute a trading strategy, but I firmly believe everyone can learn to pick stocks. It’s simply a matter of practising.