What is Your North Star in Trading?

“Everybody has a plan until they get punched in the mouth!”  Mike Tyson, Former Heavyweight Boxing Champion

One of the most productive things you can do during market meltdowns is to visit the economic forecasting websites of the largest financial institutions.  You will quickly discover they use a lot of “Ivory Tower” language but their analysis and recommendations are quite abysmal as to what they think will happen in the world.  Nonetheless, these are the same so-called experts which get paraded on all of the financial news programs promoting their “newest” perspective.

I highly recommend that you spend some time visiting the financial websites of these large institutional players so you can quickly discover the advantage you can have over them in the marketplace.  In fairness to them, they are advising foreign governments, large corporations and pension funds on all things related to macroeconomics. The problem they have in doing this is they create a very complicated process of cause and effect that will easily confuse and overwhelm even the most intelligent traders and they are very slow to abandon their opinions

More importantly, if you pin them down and force them to give you a very specific forecast, the majority of the time you will find they are horribly wrong. ☹

For example, here is the stock market forecast from Goldman Sachs Research Chief US Equity Analyst, David Kostin published January 6, 2020.

“I do not expect that we will have a 20 percent decline.  I expect the market will rise modestly at the beginning of the year to around 3,250.  And then bounce around for a good part of the year until the election, and expectation is it will rise towards 3,400 on the S&P 500.  And that’s a target at the end of 2020”. 

Ouch!  He was only off by 35% within two months after his expertise was shared with the world!

SPX-commentary

Here is another example, penned by Kathy Matsui The Vice-Chair of Goldman Sachs Japan for the Financial Times of London on February 12, 2020 about 9 days before the selloff in global equities began.

Global investors who are underweight Japan may face motazaru risk this year — the risk of not owning enough.”

Really!  She said this.   This is what happens when you value your opinion over the FACTS of the marketplace.

I tell Vantagepoint Power Traders this very regularly.

“Should” is the most harmful word in trading.  “SHOULD” is a word that will take hold of the imagination but it will never put money in the bank.

To make money you must move past opinions… and focus on FACTS.

In these examples, a well-researched opinion completely obstructed the reality of what was happening in the markets and the results were disastrous.

I tell you this because Vantagepoint Software was born from the carnage my father, Lou Mendelsohn witnessed during the October 1987 stock market meltdown.  On October 19, 1987 the Dow Jones Industrial Average sold off 22.6% in ONE day.  Nothing we have experienced in the past month has come close to the volatility and madness that hit the markets in 1987.  Today circuit breakers kick in if the market sells off 7% in one day. The S&P500 Futures contract sold off 29% on Black Monday.  More importantly, all 23 world stock market indexes experienced similar crashes.  Stock markets in Malaysia, Mexico and New Zealand sold off up to 39%!

While all of this occurred in 1987 it was foundational for the artificial intelligence, neural networks and machine learning which is Vantagepoint Software.

What the market meltdown of October 1987 proved was that we all live in a global marketplace.  Everything is interconnected and as technology improved the speed with which we received information and communication,  the charting methods of the 1960’s and 1970’s just didn’t hold up any longer.

 

The foundational premise of technical analysis is that what everyone knows is reflected in the current price of an asset.  That is all well and good, but traditional technical analysis was looking backwards at a charts history to try and forecast the future.  What Black Monday proved beyond a shadow of a doubt was that markets are interconnected and that asset correlations all over the world are primary drivers of price.

Let me explain.

Consider how a company like TESLA, a cutting edge American Car manufacturer will use parts from other countries. They assemble in the United States, with the parts coming from all over the world.  They are building another plant in China as I write these words.

If you pull up a chart of TESLA, you are looking at it in complete ISOLATION. You are not taking into account any of the suppliers or:

  • any of TESLA’s competitors, Porsche, Lexus, Mercedes, etc.
  • or the volatility of the Chinese Yuan currency,
  • or Crude Oil Prices
  • or the NASDAQ,
  • the value of the US Dollar,
  • Interest Rates,

All of those factors are key drivers to the price movement of TESLA.

This is because markets are globally interconnected.

Once you know what the key drivers of an asset are, the artificial intelligence can very accurately forecast the price 1 to 3 days in advance with up to 87.4% accuracy.

The beauty of artificial intelligence is that it looks at these global correlations for each asset statistically to uncover the best opportunities and trends.

The tools most traders are using rely on single market analysis, which puts them at a horrible disadvantage.  This creates timing problems, bad trade selection and lack luster results.

Here is why this is so powerful…..

Here is a plain chart of the S&P 500.  Any investor/trader can find a chart like this on any of the free numerous charting services online.

 

Now compare what Vantagepoint Power Traders saw during this exact same time frame.

SP cross commentary

 

Same chart – but with the Vantagepoint Artificial Intelligence applied to it you can quickly see how powerful its forecasts are!

How are you supposed to know what the road ahead of you is doing when you are looking at past price history?

It makes you reactive instead of proactive.  You end up getting whipsawed so badly you lose confidence quickly.

It’s the most expensive way to trade and a painful lesson to learn.  As former Heavyweight Boxing Champion Mike Tyson said, “everybody has a plan until they get punched in the mouth!”

What every trader needs is an effective trend forecasting method.

Our artificial intelligence looks at millions of data points and other markets which are correlated to each asset to find the key price drivers for each asset.

We deliver these  trend forecasts 1 to 3 days in advance with up to 87.4% accuracy.

This is the winning combination.

Find the trend.

Scrutinize the 1-3 day forecast.

Enter with minimal risk.

Be beautifully positioned before the herd even knows what happened.

Lather. Rinse. Repeat. 

Did we forecast the COVID-19 Virus?  No!  But as you can see from the charts, Vantagepoint Power Traders were kept out of harms way by trusting the downtrend trend forecast which was generated at 3366 on the S&P 500, right before a 35% decline.

All of our Vantagepoint family knew, in advance that the trend was for lower prices and to exit LONG positions.  Seasoned veterans and experienced traders took advantage of the downtrend by getting SHORT and amassed huge profits in a very short period of time.

When you see artificial intelligence in action, I can pretty much guarantee, you will never trade the same way again.

What’s Your Best Chance To Make Money In The Financial Markets Today?

The Answer AI offers will surprise you.

Today Artificial Intelligence, Machine Learning and Neural Networks are an absolute necessity in protecting your portfolio.

Futurist Alvin Toffler, the author of “Future Shock” predicted that in the future change will happen faster and faster.  No truer words have ever been spoken.  Which is why artificial intelligence gives traders that important edge responsible for long term success!

During tough times in the markets, if you turn on your television and watch your favorite financial news show you will quickly see the talking heads debating what the news means in light of all the economic indicators.  In the process, they create enough content to fill up the 24-hour news cycle.

It’s horribly complicated.

Interest rates, Unemployment, Trade Balances, Budget Deficits, Political Tensions, Retail Sales, Crude Oil Prices, Technological Innovations.

I’m hearing words that I have never heard before.

A “V” Recovery!

A “W”  Recovery!

Massive Hyperinflation!

Stagflationary Depression!

It’s very easy to get lost and confused trying to connect all the dots and feel good about trade selection.  I’m not smart enough to try and figure out what happens next.  No one is!  And trading on an opinion and great story line is a very fast way to lose money.

Thanks to artificial intelligence it’s also unnecessary.

I, like everybody else, have my opinions about what will happen next.  But I never let my opinion get in the way of what the artificial intelligence is forecasting.

“SHOULD” is the most expensive word in a traders vocabulary! 

I have a very strong opinion that GOLD will do well based upon all of the new money that has been pumped into the economy in the form of new stimulus bills.  But my “NORTH STAR” will always be the artificial intelligence.

Sometimes the trades only last a few days.

Sometimes they last a few weeks.

But when “SHOULD” and “IS” meet, that is where you want to be as a trader.

Here is what the artificial intelligence Power Traders GOLD chart has looked like over the last few weeks during the stock market meltdown.

 

If survival of the fittest makes you uneasy, stay out of this zero-sum game.

If you want to win, its all about who has the best tools.

Artificial intelligence is so powerful because it learns what doesn’t work, remembers it and then focuses on other paths to find a solution.  This is the Feedback Loop that is responsible for building the fortunes of every successful trader I know.

That should get you pretty excited because it is a game changer!

While reporters, talking heads and analysts want to discuss esoteric economic ideas, my only loyalty as a trader is to the trend!  This is how Vantagepoint artificial intelligence simplifies and empowers traders daily!

I invite you to check it out at our Next Live Training.

It’s not magic.  It’s machine learning.

Make it count.