we are almost at the end of the year we

have got only three more days left to

the trading year and so far the S&P 500

is up 23% so I'm sure that some of you

have got positive gains in your

portfolio some of you could even be

beating the S&P by a wide margin but

some of you may have missed out on those

gains and some of you may have stayed in

cash and have gotten much lower returns

some of you may have shortened the

market and got a negative returns but

the most important thing is not how much

you made this year although yeah that's

important but I think the most important

thing is what did you learn what did you

learn about the market what you what did

you learn about yourself because that's

that's even more important because that

will determine your returns for future

years remember that success comes from

having good judgment but good judgment

comes from having experience and

experience comes from having previous

bad judgments that you learn from but if

you have got bad judgments in the past

that you don't learn from and you don't

take ownership of those bad judgments

and you blame everyone one you blame

your luck you blame God you blame the

market you blame the broker you blame

the guru then you don't learn anything

but if you take responsibility and ask

yourself this question what can I learn

from it how can this make me a better

investor and better Trader then that

leads to experience and experience will

lead to Future Good judgments in the

years to come and that will lead to even

greater success in the in the years

ahead all right so I like I'm here to

share what are my main takeaways for

2023 but I do hope that you will share

what are your lessons as well in the

comment section below I love to hear

what you have to say as well but before

we go into that you know a lot of people

they they think that wow up 23% is a

pretty uh unusual year for the S&P 500

but if you take a look at history

actually it is not uh a 20 plus% return

in the S&P 500 is actually one of the

most common outcomes of the US market

especially after a previous uh down down

year if you take a look at this chart

over here you can see this is a

distribution of returns across all the

years over the last 96 years and you can

see that out of the last 96 years

23% of those years of which this year is

one of them okay the market gained 20 to

30% so Market getting 20 to 30% in one

year is actually the most common outcome

of all the possible outcomes and of

course a lot of people were calling for

crash this year some were saying the

market is going to crash 20

30% could it happen of course it could

happen but what's the probability of

that happening it is actually very rare

you can see that the chance of the

market dropping 20 to 30% in a year it

only happened three times in 96 years

it's only a

3.2% probability so if you're shorting

the market betting on the the crash your

chance of being right is is only 3% okay

and even if you are betting on a decline

of say 10 to

20% again your chance of being right is

only like 4% but if you bet that the

market would

gain uh you know 10 20 30% this year

then your odds of being right are

actually

23% plus

18.9% plus

18.9% this is a probability that the

market will gain you know anywhere from

10 to 20 or 30% if you add these three

percentages together that is about um

it's about more than 50% probability

right so something to think about okay

so with that let's uh let let me go on

to I think some of the important lessons

to take away for this year lesson number

one I'm sure you you guys would have

seen this coming I've said this many

many times times but I have to reinforce

it again because such an important

lesson lesson number one is don't ever

listen to the predictions of

economists and Market so-called analyst

and

experts at the B at the end of last year

and the beginning of this year the

majority of

economists called for a recession this

year the majority of Market experts

called for another crash or they just

said it's a bare Market rally right so

I'm sure you've seen this end of last

year the

economist uh reputable magazine said why

a global recession is inevitable in

2023 in fact if I'm not wrong Bloomberg

they also had an article that said that

a recession was 100% probability in 2023

not 90% but 100% okay and then you've

got all these uh Market analysts and and

gurus uh Jeremy Grandam said that the

market is going to plunge 50% this year

um Deutsche Bank said that the market is

going to plunge 25% this year and this

other person Chris veran said that stock

markets are going to crash 37% this year

and it's a suckers rally that's going to

end some of you may be thinking Adam if

I don't listen to these experts these

Economist these analyst then who do I

listen to the answer is no one don't

listen to any one instead follow your

investment plan if you are an investor

and if you're a short-term Trader follow

your trading plan so for example as an

investor you got to have a plan like my

plan as an investor is to only buy

fundamentally great companies that meet

my seven step criteria companies that

have consistent growth in Revenue

profits and free cash flow companies

that have got high return on Capital

companies that have got got conservative

debt companies that have got a

sustainable competitive Advantage so I

identify these companies every single

year and once I calculate the intrinsic

value I know what the shares are worth

and once the price is below that

intrinsic value and at a support level I

just add shares and that's all I do so

my decision to buy shares of a good

company have got nothing to do with any

kind of Market or economic predictions

it's got to do with is it a good company

is it undervalued has it retraced to a

technical support level if it is I just

add shares because I know that if I do

that over time the the shares of the

company will be a lot higher over time

as a Trader I trade options as you guys

know and I trade purely based on the

price action so for example if I'm going

to go long using options I want to

ensure that it's a clear

uptrend I want to see higher highs and

higher lows I want to see the price

retracing to a strong level of support

then I I go long on my option strategy

or if it's a reversal strategy I want to

see that the stock has dropped to a

strong level of support where the

stochastics are oversold Ballinger beds

are oversold I see a double bottom

pattern once I see those entry signals I

enter with a long trade and of course in

trading you can't win all the time you

got winning trades you have losing

trades that's trading but you win a lot

more when you win and you lose a lot

that's when you lose that's all about

risk to reward ratios and by following

the trading plan I generate consistent

profits in my trades by following my

investment plan I build my wealth

consistently over time it's got nothing

to do with predictions so remember

follow your investment plan follow your

trading plan your predetermined entry

rules exit rules um risk management

rules and do not follow any kind of

predictions no matter who gives those

predictions even me if I give you a

prediction ignore me follow your

investment and trading plan cuz I can

tell you that even when I make

predictions I don't follow my own

predictions I just follow my investment

and trading plan I just make predictions

for entertainment purposes only all

right so that's lesson number one lesson

number two don't argue with the market

follow the price action of the market

follow the trend so whether you are an

investor or Trader same thing especially

if you are a Trader if you're Trader

when do you want to go long when is on

an uptrend on an uptrend you want to go

long you don't want to fight the trend

you want to want to go against the win

all right if it's on a downtrend then

you go short you always follow the trend

now as an investor of course the trends

are not as important but important as

well so for example as an investor if

you find a great

company and it's undervalue but it's

still on a downtrend you may want to

wait before adding shares wait for the

downtrend to show signs of a reversal

like a double bottom pattern or over so

pattern right or wait for the downtrend

to consolidate and then you buy during

the consolidation process at the support

levels before the uptrend resumes or you

could wait for the downtrend to confirm

into an uptrend before you enter so

again whether you're an investor or

Trader you got to use the the trends and

the reversals to make smart decisions

and what amazes me is that there were

people I saw on social media shorten the

market all the way till the last few

weeks are they freaking insane how can

you short and go against an uptrend

that's effing stupid okay now what's the

definition of an uptrend an uptrend

definition is higher highs and higher

lows that's a textbook definition now

you can see for example now this was

obviously a downtrend right because you

can see lower highs and lower lows sure

at that time if you want to short the

market go ahead right but once the

market makes higher highs and higher

lows right can see higher highs higher

highs higher highs higher highs right

higher lows higher lows this

confirmed the uptrend based on the

higher highs higher lows so the moment

you know it's an uptrend

you don't want to short right but your

people who are shorting all the way are

freaking insane right you want to either

not short or follow the trend and go

long now if you find it hard to read

these higher highs and higher lows look

at the moving averages now those of you

have been following my technical

analysis lessons I've shared them freely

on YouTube as well and in my courses I

shared with you simply look at the

moving averages the

50 and 150 moving average by the way

thisch technique was not invented by me

I'm not that smart okay I learned it

from this guy called Victor

spendo uh who wrote a book many many

years ago I think this was like 25 years

ago and it was from his book that I

learned this technique the the name of

the book is called Methods of a Wall

Street master and this one simple

technique that I learned from Victor

spendo was life changing right it it

really made a big difference in the way

I traded and invested so so again I I

don't take any credit this comes from

Victor spendo okay who is one of the top

Wall Street Masters and what I learned

from Victor spendo is that when the 50

moving average which is the blue line

all right and this on daily candles by

the way when the 50 moving average is

below the 150 and is sloping down it's a

downtrend okay when the 50 moving

average crosses above the 150 moving

average which means the Blue Line

crosses above the green line line and

the two moving averages start flattening

and sloping up it's going to be

confirmed by the slope right if they

slope down it is not an uptrend they

have to be be uh flat or sloping up a

crossover that confirms the boo market

so if you guys remember I I released a

video in March of this year saying that

the boom Market began right now why did

I say that because of the moving average

crossover signal you can see over there

when the 50 cross is above the 150 and

the blue is sloping up green is sloping

up that confirms the bull market right

now again is it 100% when that happens

to the boom Market no it's not 100% but

if you back test this technique back

test it 20 30 50 years it's got over

90% accuracy that when you see this

crossover 90% of the time we are in a

new boom Market we in a new uptrend all

right so that's another way you can tell

by the way what's the definition of of a

boom Market I also find it insane that

till today you still have people who are

saying it's not a boom Market it's a

bare

Market I mean are they everything

stupid what's the definition of a boo

Market go read it up okay the definition

of a boom market is when stock prices

close

20% above the low that's a boo market

definition so that was the low last year

year October 2022 when did the market

close 20% above that it happened about

there right so this here was the

official boom market definition but of

course I didn't wait for that to happen

my 5150 signal gave me the boom Market

signal a lot earlier now some of you may

say but Adam isn't this a downtrend

signal where the 50 moving average

crossed below the 150 moving average no

because the 150 moving average is still

sloping upwards as you can see right on

an uptrend when both moving averages as

long as one of them is still sloping

upwards it is not a downtrend yet all

right so although the 50 cross below the

1 15 the 50 was sorry the yeah the 150

the green line contined to slope up so

this was not a downtrend signal all

right now remember that in in a boom

market and on an uptrend prices don't go

every day every week or even every month

you do have pullbacks and Corrections

along that boo market and this was what

we call a pullback that's a pullback

that's a correction let me what's the

difference okay uh pullback is usually

less than 10% drop a correction is

usually more than 10% but less than 20%

okay because more than 20% ooh new bare

market right okay so right now we've got

this strong wave up going into the end

of the year and are we still in a boom

Market of course we're in a boom market

right but of course we are a bit over

extended right wave up wave down wave up

wave down wave up wave down wave up wave

down wave up okay so don't be

surprised that especially at the start

of next year we may not we may we will

probably have a wave down right we go a

bit higher and then we will wave down

right there'll be a great opportunity

for me to go and buy more and then wave

up again okay until the bull market ends

which I don't think is going to end very

soon because we just started a boom

market and next year is the second year

of the boom Market on average boom

markets last at least 5 years but in my

opinion I think that this boo Market is

going to last a lot longer but again

that's a prediction don't listen to

predictions follow the trend follow your

investment and trading plan okay so

again people who who now still say that

it's a bare Market are freaking

delusional it's like people who are

saying the Earth is flat come on okay

the

definition it's a boom Market is 20%

above the loss it's like that it's kind

of like the definition of a spider is an

insect with eight legs so you know

people who say still a bare Market it's

like looking at a spider and say it's

not a spider it's it's an

end right I mean it's freaking stupid

all right so don't be freaking stupid

follow the definition follow the trend

okay now again take a look at this you

can see

that as we were in this uptrend pattern

so such a clear see in retrospect is

really clear right you go wave up wave

down wave up wave down wave up wave down

wave up is a very textbook up Trend but

again look at all these bearish

predictions and all these people telling

you to short the market or to get off

the market you need to ignore all these

things and just follow the trend follow

follow the price action I remember that

in 2020 and 2021 as a stock market kept

going up people are saying the only

reason the market is going up is because

the Federal Reserve is printing money

printing money printing money doing

quantitative easy and then when the

Federal Reserve started to do

quantitative tightening that means they

no longer printed money in fact they

were doing quantitative tightening which

means they were reducing the money

supply a lot of BS were saying there's

no way the stock market can go up this

year because the money supply is

dropping but what happened the money

supply has been falling off a cliff but

the stock market still going up so B

that's wrong right so lesson number

three remember that ultimately what

drives stock prices higher is not just

money supply in fact money supply is

just one of the many factors and it's

not not the most important factor the

most important thing that drivve stock

prices

higher would be earnings growth now

ultimately remember what are stocks

stocks are pieces of businesses what's a

business a business is a money-making

machine McDonald's is a money-making

machine Apple's a money-making machine

Visa is a money-making machine the more

money they make the more profits they

generate the more they are worth it's as

simple as that so as long as profits are

growing over over time businesses will

businesses will get more and more

valuable and share prices will go up

even if money supply doesn't go up it's

all about earnings growth so that's the

reason why in the long run the stock

market will always go up because

corporate earnings will always grow over

the long run in fact historically

corporate earnings grow at about 8% a

year but why is it the S&P 500 grows

more than 8% a year because besides

earnings growth the stock prices are

also driven up by share BuyBacks and of

course to a extent money supply as well

right but ultimately it is earnings

growth and one of the reasons why I'm

pretty optimistic that the market will

continue going higher next year is

because I expect earnings to continue to

grow next year we had an earnings

recession early this year and late last

year so quarter 4 20 22 quarter 1

quarter 2

2023 we had an earnings recession

earnings turn negative growth then in

quarter Tre of this year earnings

started growing again so we have already

Boughton and now earnings are beginning

to grow into the next year so that

should drive stock prices higher Even If

the Fed doesn't cut rates Even If the

Fed doesn't increase the money supply

all right now I'm sure you've heard that

that this year's boom Market was only

driven by a few stocks the Magnificent 7

your Amazon your meta your alphabet your

Tesla your Nvidia your Microsoft your

Google these Magnificent Seven stocks

are up

71% as of uh November whereas the rest

of the stocks of the S&P 500 so 500

minus 7 would be 493 stocks the rest of

the remaining stocks are only up 6% so

The Bu of the the gains of the S&P 500

are driven by these seven companies now

this is not something that is entirely

rare it has happened many times in the

past where a few companies Drive the

overall returns in the market in fact on

an average year is the top 25% of stocks

in the market that account for 100% of

all the gains and 75% of the stocks in

the market actually had no gains or made

loss loses so why are these seven stocks

outperforming all the other companies

for a very simple reason because these

are the highest quality companies that

are immune to higher interest rates no

matter how high interest rates go these

companies are immune to it because

they've got solid balance sheets they

got conservatively very low debt and

they've got very predictable Revenue

profits and free cash flow so they

deserve to keep going up whereas a lot

of the other companies they are not as

predictable they are harmed by high

interest rates they affected by fears of

recession so one of the reasons why my

portfolio managed to gain over 40% this

year is because I

own six out of seven of those

Magnificent Seven stocks as well as some

other great companies and investors who

underperformed the market this year or

made you know losses this year is

because they avoided many of these high

performing companies because to them

they thought oh it's so expensive the PE

Ratio is so high and they went to buy

all the stocks with those very very low

PE ratios so one of the lessons that I

want to bring across is that you know a

lot of investors make the mistake of

prioritizing buying cheap companies they

think that being a good value investor

means you buy very cheap companies with

low PE ratios no being a great value

investor means that the first priority

you must only buy high quality companies

that are very predictable

that are very resilient that are very

consistent that can grow their revenues

profits and free cash flow regardless of

the economic situation whether is it

high inflation low inflation High

interest rate low interest rate they can

keep growing these are the highest

quality companies and it's better to own

a very high quality company and pay a

fair price to it of course don't pay too

expensive you still want to buy it when

it's fairly priced rather than going for

all the cheap stocks that look so cheap

the low P ratios but are low Quality

Companies so always remember quality

over just buying something that is cheap

that's a very very important thing

because when the market gets into a

crisis you find that companies that are

not high quality they will just collapse

but the high quality companies will keep

going up even though they may not be

cheap

anymore lesson number five short things

seems glamorous but it doesn't pay the

bills when I go on social media I see so

many people especially new novice

traders who have lost so much money by

trying to short the market by trying to

bet against the market and I can

understand because I used to do this

last time in my younger years I used to

love short thing as well I used to love

to short stocks more than going long

stocks because for some reason short

things sounds very glamorous like you're

going against everyone else you know

something that's so special you're more

intelligent especially after watching

movies like the Great

like The Big Short right so sounds

really sexy your shorting but the reason

why I hardly ever short anymore in fact

I didn't short at all this year is

because I've learned over the years that

shorting is a losing game over the long

run it just doesn't pay the bills now if

you just take a look for example at The

Last 5 Years these are the

net gains and losses of short sellers

yes short sellers can make money when

the market goes down but the problem is

statistically the market doesn't go down

that often as compared to it going up

and you can see for example short

sellers yep they made they made money in

2018 when the market took a dive but

they lost it all and More in 2019 when

the market recovered and they lost a lot

in 2020 when the bare Market lasted only

one month it re rebounded and their

short profits got uh you know destroyed

2021 they lost money again and of course

2022 when the market plunged last year

they say oh yeah I was right you know

but guess what this year everything they

made they lost it

again or they lost almost everything so

net net if you take a look over a longer

term period over five period 5e period

or more you find that it's almost

impossible to make money shorting the

market and the very simple reason is

you're going against the odds you're go

it's like pissing against the win you

just get urine on your face right cuz

remember this chart I showed you that

that over 96 years if you look at

history 74 years were bullish that's 77%

of the time and 22 years were beage

that's 23% of the time so remember every

time you're shorting the market your

odds of being right are 23% and every

time you're long the market your odds of

being right are are

77% and I don't know about you but I

like I like the odds to be in my favor

and not to be going against the odds

lesson number six and to me this is one

of the most important lessons which is

diversification proper diversification

of your portfolio and portfolio

allocation makes a huge difference to

your returns at the end of the day

diversification is very underrated in

the markets but it's extremely important

like as many of you know I made some boo

boos this year as well I've got some of

the stocks in my portfolio that did not

perform really well like for example I

own Disney there was down a lot this

year I own Estee La that was down a lot

this year I also own Boston beer that

was down as well this year and not to

say all my China stocks that are all

down as well but my portfolio despite

all those stocks underperforming my

portfolio is still up as of now

43.75% the one in blue outperforming the

S&P 500 why because my allocation to all

those companies were very were small

allocations and those stocks that I own

like Amazon and meta and Nvidia and

Google they we out perform so their way

out

performance made up for the

underperformance of those stocks and I

still get a very healthy gain beating

the market now but I also know people

who also own Alibaba like they own uh

Disney like me they own estate la like

me but they are down for the year why

because they allocated too much to those

stocks and they didn't allocate enough

to those winning stocks so let me share

with you what are some of the rules that

I follow that keep me safe in the

markets so my first rule is this is to

divide your Capital

equally when your your buying all right

so for example if you intend to have 20

stocks in your portfolio then you divide

your Capital by 20 equally as far as

possible so which means each stock

should have a 5%

allocation okay so for example you you

buy 5% of Disney 5% of Nvidia 5% of meta

right 5% of each one CU at the end of

the day you don't know which is going to

be the big winner it's really hard to

predict until after it happens and which

ones are going to be the ones under you

don't know right so when you first buy

you want to buy in equal proportions and

for the ones that take off the ones that

really do well like Nvidia that's up

like few hundred% one of the things I

learned is that don't cut the flowers

let your winners run so initially you

put in 5% allocation but if it doubles

and doubles it be it becomes 10 15% of

your

portfolio and it's very tempting to sell

it to to take the cash to buy more of

the rest that went down don't do that

don't cut the flowers and water the

Wheats let your winners run so if you

look at my portfolio right now notice

that you'll notice that some of my

stocks like like meta like Microsoft

like Salesforce like Google they have

got very big positions in my

portfolio when I first bought them they

were a normal position but they

organically grew to huge positions that

as long as they are great companies as

long as they are not too overpriced as

long as they're growing I keep them in

my portfolio and they drive the gains in

my portfolio got it now on the other

hand I also allocate for example you

know um 5% to to Disney and 5% to Estee

La so and so forth but when they start

going

down right from 5% the share price drops

and it drops to 3% and and 2% for

example do I buy more to bring it back

to 5% I I don't I do not add more to

bring it back to 5% I Let It Drop

organically does this make sense so by

doing

that you by letting your winners run and

keeping your losers small and not

feeding more to your losers you find

that the gains will

outweigh uh the losing uh investments in

the short term and your portfolio will

compound over time this is what this is

not what a lot of fund managers do in

fact a lot of fund managers they do

portfolio rebalancing which I think is

not a very good idea portfolio

rebalancing means those stocks that did

very well that are now a big allocation

they sell it and they take the cash and

they buy those stocks that went down to

bring up the allocation to rebalance it

in theory it sounds good but in in in

reality it causes your portfolio to

underperform because again you're

cutting the flowers and watering the

weeds and causes underperformance right

so those are six lessons I thought I'll

share with you about what what we can

learn from the markets this year I'm

sure you've got a lot more of your own

lessons I do hope that you will share

them in your comment section and let's

have a constructive and active

discussion thank you for listening and

this is probably going to be my last

video for 2023 and I'll see you guys in

2024 on the other side where I'll be

sharing my uh my my thoughts for the new

year

and what I think would be uh where we

can focus on where we need to be

cautious about I'll be having a live uh

Market Outlook seminar in Singapore and

Marina Bay Sands on the 20th of January

so if you happen to be in Singapore you

can get tickets come down if you want to

fly from overseas to this live event

they'll be great but don't worry we'll

have an online event as well till then

take care and may the markets be with

you