Now Stocks continue to do well the stock

market continues to go up my portfolio

year to date for the first two months is

up

8.98% and for the last 12 months of the

year it's up 39.5 4% and Over The Last 5

Years From January 2019 to the end of

February this year 2024 the portfolio is

up 166% this is after going through the

recession bare market crash of 2020 and

another crash bare Market in 2022 too

now some people will look at this and

say this is no big deal if you had all

into smcr you'd be up 200% in two months

or if you had gone 100% into crypto you

could be up 200% in a week or maybe even

a day so why don't I get a lot more

aggressive and go for much higher

returns by going all in into you know

High momentum stocks or using leverage

or even going to crypto well it's

because after being in the markets for

so many years now over 30 years I

realized that the most important thing

is not about getting the highest returns

in the short term or during only good

times but is being able to stay in the

game and to survive during the

inevitable bad times the reason I'm am

so conservative today is because in my

career I have seen so many people who

are so brilliant in investing so

brilliant in trading and they made so

much money huge returns when things went

their way when the market was in their

favor but in inevitably when the market

went the other way they lost everything

fortunes were wiped out and some of

these people I know personally I still

remember this experience I had in 2009

and you know all of us have certain

significant emotional experiences that

kind of like impact us that change the

way we see the world that change our

personalities that you know influence

our destiny and this was one of those

moments and I remember what happened was

back in 2009 I was conducting my uh my

physical preview about my investing

class and during this preview this

gentleman came up to me he was probably

in his late 70s early ' 80s L pretty old

and he came up to me and he started

crying in front of me he was literally

sobbing away and and and he shared with

me he said you know Adam you are still

young please learn from me and and and I

said what and he said I was worth over

$20 million 6 months ago and today I've

lost everything I'm I'm totally bankrupt

and this guy was a very successful

business owner he owned lots of real

estate in Singapore and he had a huge

investment trading portfolio but

everything got wiped out he lost

everything in six months during the

financial crisis because he

overleveraged his

Investments and and that experience is

what shaped my personality for years to

come and that's why to this day I

remember that old man and that's why to

today I'm so conservative because I said

to myself I don't want to be that that

that guy who's in his 60s or 70s and I

made everything I and I lost everything

because of one crisis because of one

event all right and you know one thing I

think I'm really lucky about is that I

really learn from other people's

experiences I always say that it's it's

great to learn from your experiences

it's great to learn from your mistakes

but even more important to learn from

other people's experiences and over the

years I have read stories of again

brilliant investors brilliant Traders

but because they did not manage their

investments in a conservative way it was

one event that wiped them wiped them out

I'd like to share some of these stories

that really shaped me over the years

and uh Define the conservative approach

that I use today and at the end of my

sharing like to share you my rules for

staying safe for staying in the game

even when the worst of times come which

they will come eventually inevitably so

the first lesson is from Bill hang Bill

hang was one of the top hitch fund

managers and a fantastic Trader and he

actually started his own family office

to manage his own money and it was

called ao's Capital Management he

started in 2013 with over $200 million

that he made from his previous hitch

fund where he worked and he's a great

Trader but the problem again was he was

too aggressive wanting to get very high

returns and he leveraged his account up

to fivefold so what does that mean that

means for every $1 million that he had

he bought 5 million worth of stock now

if the stock goes up your returns

increased by five times more but the

problem is that once they come down your

losses increase by five times as well

now so initially of course uh when the

market went up he did very well in fact

his $200 million he turned it into $35

billion at at the peak in8 years but

again what's the problem the problem was

that it is not

sustainable when you are overleveraging

when you are over focusing your

Investments and he didn't really

diversify he went all in into just a few

stocks and in 2021 when those few stocks

he bought

collapsed and you know he couldn't pay

um can you imagine his entire fortune

that he made for years he lost

everything in 2 days you was all gone so

cautionary tail is not how much you make

in the short term it's not how high the

returns you are but it's about staying

in the game staying alive when the bad

times come another live lesson is from

Jesse Livermore and Jesse Livermore as

many of you would have heard he's known

as one of the greatest traders that ever

lived now now he lived long time ago and

he again was a great Trader you can have

the best trading skills the best

technical skills but again if you are

not conservative if you're over

aggressive everything you make will

eventually be gone the market will

always take it back from you if you

don't protect what you have earned now

Jesse Livermore was amazing he's you

know he started trading at 14 years old

but his first big win was at the age of

24 this was back in 1901 many many years

ago and he turned $10,000 of his

investments into $500,000 now back in

1901 that was a lot of money right but

he's very famous because of some very

big bets that he made the first big bet

was in

1907 he shorted the stock

market and there was what we call the

Panic of 1907 and during that one event

he made a million dollars in one day now

a million in 1907 is equivalent to a

$100 million today so again very

aggressive huge returns but then in 1908

the next year one year after he made the

$100 million he lost everything and he

went bankrupt because he listened to

someone who told him he should buy

cotton and he went into something that

he didn't really understand which was

trading cotton that breaks one of the

rules I'll talk about later on which is

to only invest and trade within your

circle of competence to only do what you

understand so the trouble was he went to

something he didn't understand because

he was influenced he listened to a

friend of his and in one year he went

bankrupt but he didn't give up right he

started trading again and built up his

fortunate again and then 1915 he went

bankrupt again the second time didn't

learn his lesson right and then he still

didn't give up he again went into the

stock market he borrowed money and stuff

like that pawned his wife jewelry and

1924 to 1925 he made $10 million trading

wheat and corn which he got to know very

very well and then he had another big

win in 1929 during the Great Depression

he shorted the market again he made a

$100 million which in today's money

would be $4 billion so you would think

wow this guy's an amazing guy right but

guess what in

1934 he lost his entire Fortune again

and fought for bankruptcy the third time

and then in

1940 he committed suicide by shooting

himself once again this reinforced the

lesson in me that if you go for huge

returns in the short term and you're

very aggressive yes you can make a lot

of money but eventually again you're

going to lose everything you will always

lose everything eventually if you are

aggressive and then third case this is

not one man this was a group of people

people who were the smartest brains in

finance back in the late

1990s so this H fund called long-term

Capital Management was founded by this

guy over here uh John Merryweather and

he was one of the top born Traders at

Solomon Brothers and he teamed up with

uh two no Nobel prize winning economists

who again the best brains in finance

myON shows and Robert Merton who were

famous because they developed the black

shows option pricing model so these guys

were very smart they're smarter than you

they're smarter than me and they thought

we can make a lot of money because we

understand options we understand Forex

we understand bonds so they started this

company and again what was the mistake

they were very aggressive they went for

huge returns they used a lot of Leverage

and initially they did very well right

of course you would do well at first

right so when they started in 199 uh4

right in 1995 their first reporting year

they made 40% return in that year by

trading bonds and how do you get 40% by

trading bonds by using very high

leverage 199 uh6 the next year they made

40% 1997 177% in their fifth year 1998

you can see what happened they went bust

because of one event called the Russian

financial crisis and again they were too

overleveraged and it and the entire

thing just collapsed and all their

investors and themselves they lost

everything uh one final lesson is from

uh James cordier now James

cordier he was a very know a well-known

options Trader and options teacher he

wrote many books on

options and he uh started a fund where

his investors put in money and he helped

them to make money by trading options

but the trouble was that he was too

aggressive and he did something which I

tell my students never ever to do which

is never sell options naked never sell

call options naked never sell put

options naked now I make a lot of money

selling options as well I sell options

almost every day but I never sell them

naked I always sell options when they

are hitched against either covered calls

or cash secur puts or credit spreads or

debit spreads but this guy because he

was very greedy he wanted to make a lot

of money he thought I'm very smart I

don't need to hit he traded options

shorted options naked and sure initially

he made a lot of money right but it just

took one time one time and it was all

over so there was one time he went to

short natural gas call options thinking

that natural gas won't go up that much

but natural gas went to the moon and in

one day he lost $150 million of all his

client's money now that's not the worst

thing not only did his clients lose all

their money which is $150 million but

the fund if I'm not wrong actually lost

like over 200 million so not only did

the clients lose everything but now they

were being sued by the broker for

another 50 million so again that's what

happens when you don't respect risk

that's what happens when you over

leverage that's what happens when you

break the rules when people ask me Adam

why are you so conservative why you such

a chicken it's because I've seen

what has happened to all these people

they lost everything eventually when

they were too aggressive when they did

not manage their risk and that's why my

philosophy in investing and trading is

not to get the highest returns in the

short term but is to get the most

sustainable returns over the long run so

before I invest in something the first

thing I think about is not how much I

can make no I never think about how much

I can make the first thing I think about

is how much can I lose right and if

there's a chance I can lose I'm not

interested I'm not interested if I know

that there's a chance I can lose it so I

rather not make money if there's a

chance of losing that money now because

of that have I missed out on some stocks

that went up a lot of course but it's

okay like again smci which I actually

did a deep dive research and I said that

smci is something that I'm not

comfortable investing in because of all

these reasons and I didn't dare to put

my money in but it still went up now do

I feel bad I don't feel bad because it

could have gone the other way so same

thing with whether is it crypto or Tesla

or C or PayPal or GameStop you know I

didn't dare go in because to me I didn't

think about what if it went up I thought

what if it went down right so I rather

invest in stuff which I know I'm

comfortable with I know that it's safe

and if I get less returns that's fine

because I know that they are sustainable

over the long run and is this

conservative approach that has kept me

alive and kept me in the game through

all the past crisis and that's why today

I'm still here despite going through the

crash the dot crash back in 2001 and

going through the crash in 2008 2009 the

financial crisis that wiped a lot of

people out I know people who lost

everything at a time and I didn't lose

everything in fact I made even more when

the markets rebounded although my

portfolio did drop temp temporarily

during that time but because I was

conservative I didn't over

leverage I Diversified I stayed in the

game the key is always to be able to

stay in the game to survive the game

during those inevitable crashes then

crash in 2016 the crash in 2018 and of

course 2020 recently the pandemic crash

again I survived and after it rebounded

I made even more so I find that after

every crash my portfolio grows even

higher because that crash allowed me to

again build bigger positions in stocks

that were undervalue and of course most

recently 2022 we had a crash that also

wiped a lot of people out I survived

that and now again my portfolio is now

hitting new highs so what are the

lessons to be able to stay in this game

of investing and to really win over the

long run lesson number one is when you

are investing do your best to avoid

leverage in other words don't invest

with borrowed money whether you're

borrowing from the broker or B borrowing

from the credit card or borrowing from

the bank no only invest with money that

you have and not only that only invest

with money that you don't need to use in

the short term if you need the money in

the short term do not invest it keep it

in cash because if you feel that I need

the money and you invest that and the

market goes down you get very emotional

and you may be forced to sell at the

worst price but if you invest money that

you don't need in the short term you

have got no emotional attachment because

you don't need the money and even if it

goes down in the short term and you're

holding great companies you have the

emotional resilience to hold

it and in fact maybe at more shares and

then benefit from the huge rebound so

avoid uh leverage as much as possible

now if you say Adam what if I I really

want to leverage okay so if you really

want to leverage don't leverage too much

all right in investing I would say at

the very most leverage you know um 50%

above what you have and only leverage

after the market has dropped at least

25% that means after the market drop 25%

when it's somewhere near the bottom sure

you could leverage a bit but for example

now with the market is new near all-time

highs you never want to leverage in this

market it is suicide for example if you

take a look at my two US dollar accounts

you can see for example in my first

account over here right I've got about

$3.8 million uh in the account in terms

of net liquidation value but my buying

power is $20 million so what does that

mean that means the broker is allowing

me to buy $20 million worth of stock

even though I've only got 3.8 million in

my account cu the broker is allowing me

to leverage five times and you can see I

refuse to use any of the leverage I only

buy based on the cash that I have in my

other account over here this is my first

account in my second account over here

you can see same thing I've got 3.9

million as well and the broker is

allowing me to buy up to $21 Million

worth of stock which is again allowing

me to leverage five times now of course

it's very tempting because if if I

wanted to I could buy 21 million plus 20

million I could buy $41 Million worth of

stock right now because the broker lets

me leverage and if I did that I would be

able to magnify my returns by five times

so instead of getting 9% in the first

two months of the year I could have

leveraged five times and got 45% right

instead of getting 45% return which I

did last year if I had leveraged I could

have gotten 45 time 20 sorry not not

time times 5 I could have gotten

220% return so why aren't I doing that

why am I not going for those huge

returns and get famous like a Jesse

liver because it's not worth it right

because I know that all it takes is for

one time the market drops and I'm toast

and again it's not worthy it so I rather

be be not be like the the toris in the

hair the hair running really fast and

losing the race I rather be the ttis

slow and steady and get 20 to 20 to 30%

returns a year consistently and I know

it's sustainable now how about when it

comes to trading so I do trading as well

as investing the main difference is

investing is for the longterm trading is

very shortterm and yes in trading you

can use leverage I use leverage in

trading as as well but I use leverage

responsibly which means you don't over

leverage you leverage within your

parameters and this is something which I

teach money management and position

sizing in my stock trading courses so

one of the important rules is in trading

stocks options Forex crypto whatever is

every time you trade you got to put a

stop

loss and you have to ensure that when

your stop- loss is hit you got to get

out and when your stop loss is hit the

amount you lose your risk should only be

1% to 2% of your net liquidation value

not of your buying power but of your net

liquidation value so even if you get a

series of losing

trades it's very minimal loss in your

account and you can stay in the game

stay alive even in a losing streak

because in trading you will have losing

streak and winning streaks the important

thing is that when you go through a

losing streak you should not get wiped

out you must be able to stay in the game

long enough so when the winning streak

comes it more than makes up for the

losing streak and gives you a great

return on your trades number three the

third lesson is to always diversify

whether you are trading or investing

always diversify into several great

companies or several great trading

setups so that

some mistakes you make won't hurt you no

matter how great you are as an investor

or as a Trader you will make mistakes

you will screw up you will have bad

trades you will have bad Investments

like the last couple of years my China

stocks didn't work out well at least not

yet but my China stocks like Alibaba

like tensent like pingan Insurance

they're down

50% I also made some bad Investments

that have not worked out so far like in

uh Disney which I which I cut loss on

that one Estee order I'm still holding

and and and a few others right so but

despite all those mistakes I made I'm

still able to beat the market

consistently because I diversify so that

those mistakes don't damage my portfolio

that much and the winners like my Nvidia

my meta my Microsoft my service now my

Mado lib all the winners more than

offset the losers so so that I get a

gain

consistently the fourth thing is to stay

and this is something very difficult for

people to do because people tend to be

attracted and seduced by shiny objects

they think wow everyone's making money

in Cotton I go trade cotton everyone's

making money in crypto I go trade crypto

everyone's making money in whatever I

trade whatever right and you tend to and

and I find that the moment you start to

get out of what you understand that's

when you get in get into trouble all

right so we all have our different

Circles of competence now you guys know

that my circle of competence is in

investing in US Stocks as well as

selected Singapore stocks and trading

options and stocks that is my core

competence right as long as I stick to

that I know I'll do very well but if I

attempt to trade or do something which

I'm not familiar with even though others

make a lot of money then I will I know I

won't do well all right so again a

classic example why is it I can do very

well in

stocks because when I buy a stock I

really understand the business inside

out so I've got 100% confidence in the

business I'm buying and I know the

intrinsic value so for example meta

which owns Facebook and Instagram and

WhatsApp I know it very well because my

company we also advertise with Facebook

so I understand the business I've got

faith in the business

and I know the intrinsic value so in

2022 when Facebook meta dropped to $70

and everyone was panicking I didn't

Panic why because I knew the company I

knew the company was making money I knew

it was a short-term problem and I knew

that the intrinsic value that time was

$300 and he was selling the big discount

so I didn't panic and I had the

confidence to hold it and to buy more

and that's why today matter is one of

the biggest gain is my portfolio but if

I had bought a stock which I didn't

understand or if I bought crypto which I

don't know how to Value crypto and it

fell 50 60% I would I can't sleep at

night I'll be in my pants right

and when you can't sleep at night and

you in your pants that's when you

do stupid things right so only trade

invest in things that you understand

okay the fifth thing is to always follow

your investing and trading rules

strictly so I only buy a stock when it

meets all my investment criteria in my

trading I only trade when it meets a

technical setup when it hits the stop-

loss I get out no questions asked I

don't think what if I cut loss and it

goes back up what if I cut loss and you

know I just follow the rules so no

fear no greet no hope and no Revenge

that's right in in trading hope is for

the Hopeless you never trade based on

hope you trade based on rules the last

lesson that has kept me alive for now

over 30 years in the markets is to be

super paranoid that's right I can tell

you that I'm someone who's super

paranoid in a sense that I know that

there will be a day there will be a day

where the markets will drop 50

60% when I don't know when it could be

today it could be tomorrow it could be

in 20 years I don't know when but in my

mind I always expect it will happen one

day and because I think that way that's

why in my investments I am very

conservative I diversify I hold high

quality companies I don't leverage so

that if that day happens tomorrow and

the market drops 50 60% I'm not

panicking because when you're not

leverag you're not forced to sell if I

know I'm holding good company companies

I will hold it through the 70% drop and

when everyone is their pants I

will take more money and I'll buy cheap

from them and once the market rebounds

I'll get even

richer sorry okay so I hope you learned

something from this video and stay tuned

for even more and may the markets be

with you and by the way I am waiting for

the market to correct it's been a while

Market keeps going up it should come

down soon and let's hope it does so that

we can you know take advantage of it if

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online this is Adam cou and made the

markets be with you