Transcription
Hello and welcome to another episode of the Investing with IBD podcast. It's Justin Nielsen here, your host, and we are coming to you live at 5:00 p.m. Eastern, as we typically do on a Wednesday. It is May 20th, 2026, and I am so pleased to have our guest on, a returning guest, uh, an old friend, Charles Harris of O'Neal Global Advisors. Uh, Charles and I used to sit next to each other way back when. Um, and then he of course was on the on the inside sitting there next to Bill O'Neal, the founder of Investors Business Daily, while I looked outside from the window. Um, I had all the fun that they were having. Um, so, uh, good to have you back on the show, Charles.
Thanks for having me. Yeah. No, those are good times, Justin.
Yeah, we had a we had some fun. We had some fun. Uh, and uh, yeah, back then, I mean, um, Charles was kind of a legend around the office in '99. Uh, what was it, 400% that you?
No, '99 was a,040%.
140. Okay.
And
what what's a few hundred percent when you get up that high, right?
Well, actually, when you're that when you're into that that kind of zone, it's like if you're up like six or seven percent, like you've added like, you know, if you're up another few hundred percent, you're up 100%. But um that was when was it? 20 was the 1400%.
Okay. Yeah. So the fact that you were able to do it again um is is pretty remarkable. And of course, look, you've been at this for a long time. And um I mean, I'm not going to I'm not going to say what the uh what the age is, but you've been at this for a long time. And
Oh, yes.
Um, it it's amazing how you've kind of uh again sometimes you've changed your style a little bit. Uh you've you've tried to tweak things. Uh sometimes you go back to the old methods uh because you're like okay I tried something different and that's not who I am. Um, but one of the things that you keep talking about, I feel like in the last few years, um, is really about building conviction in your positions, uh, to kind of get more of those long-term capital gains, which of course helps for for tax purposes if you're, you know, trading in, uh, you know, taxable accounts. Um, but maybe we start with just uh an overview of this market because uh I don't know there's a lot about this market that feels like I don't know is is this going to be another thousand percent return for Charles. Uh what do you think?
I hope so. Um so it's um so yeah it's true. I have evolved a lot as a trader over the past um 20 25 years and um and we can talk about that a little bit later but t getting into this, you know, what we're experiencing right now in the market is, you know, we're in a really really strong bull market that I I've only experienced. I mean, we've experienced a lot of great markets o over the years, but this one, the the two parallels for this kind of strength so early on uh for me is um 19 I'm sorry um yeah 1998 and um 1999 and um in 1991, which I wasn't trading back then, and that was really coming off of a a more kind of major bare market. But um I was mentioning that I loaded all the NASDAQ data into perplexity and asked it to grade the current NASDAQ uh run that we've had over the last seven or eight weeks uh versus history to show, you know, what the the best parallels were and it came up with a really nice chart. And so the closest parallels really that over the last 25 years has been uh or actually over the last 40 years has been again '98, '99, '91 and um 2025 is on there. Um, so yeah, th those are really the the ones I'm kind of looking at and I experienced, you know, most of those. You know,
'98 and '99 so uh so yeah, anyway, we're th those are the parallels I'm looking at and looking at, you know, the elements of strength that I see in the NASDAQ and that's that's the index that I look at most carefully and so yeah, here's the '98 and '99 markets. You had the
first run off of that uh kind of double bottom type thing. Uh, you know, that was when long-term capital collapsed and the Fed uh very swiftly reduced interest rates and we went on this major bull run that was super super steep and the corrections were just very swift and shallow. And then we went into that choppy uptrend which was really difficult to trade. Uh, which culminated in the uh, you know, the huge burst uh leading to the the bubble bursting, which was, you know, the NASDAQ was up like I don't know 70% or something crazy in in a six-month time frame. So, um, so yeah, I mean, that that's what this market feels like right now. And, you know, one of the similarities is that both those markets were driven by the kind of internet craze.
And that was something new and exciting.
And so you really had animal spirits and this time around we've got the we have AI, which arguably is is going to be even more um, you know, have a much larger impact on on society. So, you know, there are some similarities and, you know, one of the main differences is that now many of the companies participating in this rally that are levered to the AI trade actually have great fundamentals.
So, yeah, that's something that was missing in a lot of the stocks in the late '90s. I mean, there were some obviously, there was, you know, Yahoo and Cisco and AOL.
AOL, right?
So forth, but um, but now we we have a lot more and there are the the biggest companies in the world with with, you know, gigantic profits like Nvidia and Google and Amazon and, you know, all the stocks, you know, Micron and all these stocks that we've been trading are showing gigantic profits. So it's really in a way even a much better environment. And so having lived through that and, you know, we were
we were
sharing a cubicle at that time, right? And how crazy it was, you know, this
you it was remarkable what stocks were doing, like you kind of have to live through it to realize like what can happen. It always surprises me, you know, it never ceases to amaze me what a stock can do. You know, you think you figured it out and then you just get surprised. So anyway,
um
well, and and just real quick, you know, because again, this market, you know, the the whole internet build out, the infrastructure, and, you know, all of these different elements uh phases that happened kind of before things went crazy and it was just, oh, companies are just slapping .com on their name and that's their business model, you know. Um, that that's that's what we saw in here. Um, but, you know, it certainly started, you know, much earlier, the whole internet thing with again, Cisco's IPO back in the early '90s, um, AOL coming out in '95, '96, and um, you know, then again in '98, but, you know, even even then, like the the feeling of, you know, and I I I always am amazed that the irrational exuberance speech that Alan Greenspan gave at what was at the American Enterprise Institute, you know, you you think of that as being like, oh, Alan Greenspan knew that things were getting crazy, but that speech was given
in December 1996.
Yeah.
Four years. Yeah. He was
it got a lot more irrational and a lot more exuberant. Uh, you know, from there. So, I guess the the my question is, you know, how how early are we in this um, you know, I guess that's the million-dollar question. Are we more uh in this kind of final phase, final year or two, or a little bit more where we could have we could have a few more years of?
I I think we're still relatively early in all this. I mean, we haven't even, you know, uh Tesla, just not Tesla, SpaceX just announced the, you know, the IPO um I think after the market closed. I got a little post and um, you know, those are whole areas that there really isn't an industry yet. You know, we're just the these are really emerging industries and we haven't even seen how AI is really going to touch our lives yet in terms of medicine and biotech and um, you know, the workforce and productivity. I mean, we're we're starting to see it, but it's really nascent. So, I think we're potentially very early in this phase and we had, you know, as strong as this rally is um off the lows, and it is pretty extraordinary. The NASDAQ's up what, maybe 11 or 12% for the year, the S&P's up under 10%. It's not like we're having those years like we did in the late '90s where the NASDAQ was up 20, 30% almost year after year after year,
you know, culminating in that gigantic, you know, 80 or 90% or 70% move in the NASDAQ. So, I think we're still relatively early. Um,
although some people are you know, pointing to again, after 2022, I'm just going to go to a weekly chart on the current, you know, after the 2022 bare market um, we had a a very strong year in 2023, though mostly Magnificent Seven stocks, so not not very broad-based. 2024 was no slouch either. 2025, as much as that was maybe a tough year um overall uh with the, you know, the the tariff tantrum and everything like that. Um, if you timed that right,
holy cow, that that that could have been a phenomenal year for you. And to see that kind of play out again um, you know, in in almost a similar manner uh, with this kind of V-shaped recovery that we got with the Iran conflict.
Yeah. Well, I mean, you also have to remember though 2022 um, it it was a Yeah. was an asset fell as 30 something percent I think
at its lows. Um, you could probably tell me right off the bat with your fancy tools on the new market surge.
Yeah, there we go. So, um, yeah, roughly 38%. Uh,
yeah. So that that was a pretty extraordinary bare market in that.
That as bad as that 38% was in the index,
the tech tech sector was completely devastated, right? I mean, I almost blew up my account with with Tesla. Tesla fell 75%.
Nvidia was off 75%. Shopify was off 80 or 90%. I mean, that was really um a devastating bare market. So, um, so yeah, you know, to kind of bounce back from that in a very powerful way, I mean, it's not quite as surprising, but I mean, you never know. We don't know where we're going. But I I I just think AI hasn't been with us for that long in terms of um really uh as it's been delivered to the masses, you know, now, I mean, it's it was kind of like a, you know, up until ChatGPT, I mean, AI was around, but no one really used it or knew how to use it. Really a scientific thing,
but now that it's it's the cat's out of the bag,
it it really is um
you know, going into all kinds of different industries and I think it's going to have a very, very powerful impact. And I mean, I think we're we're probably still early in this. Uh, which doesn't mean you're not going to have bare markets along the way or intermediate corrections, just like we had throughout
or even minor pullbacks. I mean, like this latest minor pullback, uh, I mean, we saw some stocks that were down 30% in
Yeah. So I mean
very quick style.
Yeah. Yeah. Yeah. And so, you know, if you look at the daily charts of the of '90 of, you know, coming out of October '98 and
uh October '99 and look at how powerful they were and what the pullbacks look like. It's very normal to have a two to three day pullback of three to four percent uh bouncing off a 10-day moving average or maybe if it's more severe, coming down to a 21-day moving average. And during those time frames um, you know, if you're in the real heat in the market, your stocks can easily fall 20 or 30%. So, as an example, uh, I mean, I'm trading Bloom Energy. I have a a pretty large position in it. And again, this is my personal account, we're talking about. Um, and
and when when Charles says personal account, he also is a portfolio manager for O'Neal Global Advisors. And so he is trading
I can't I can't really talk about that that portfolio.
Um,
but um, but yes, but I'm, you know, actively trade my own personal account as well, personal accounts, I should say. And um, and in this little, you know, 3.8% or whatever it was, close to 4% pullback in the NASDAQ from the high of a few days ago to the low of um yesterday. Um, Bloom fell like 22%.
Yeah, 22% exactly. And in four bars.
And it was brutal. So, um, so you have to prepare yourself mentally for that kind of pullback if you're trading something with such a high ATR that's just a volatile stock to begin with. Um, and if you look if you look at Bloom in the first runup uh late last year um in 2025, there's that pull back to I guess it was a 6137. What's the date of that?
Yeah. So that was um uh in September. Let's see.
Right. So, in that September three-day pullback, Bloom fell um 29% in three days. And if you look at the NASDAQ during those three days, it was one of those normal 2.7% pullbacks that we just experienced, you know, very similar pullback that we just experienced over the last few days. So, you know, that's one way I kind of mentally prepare when I'm in this kind of environment. Um, because if you're not prepared, you're just going to spit out all your stocks. I mean, it's uh, you know, it's kind of shocking to to to uh suffer losses like that on a short-term basis. So, if you're ready for them and you've got cushion, then you can survive.
Um,
well, this brings us kind of to, you know, one of the main points here. That's again, another one of those million-dollar questions is um surviving some of those. Again, this is where I think your style in terms of selling into strength and, you know, buying some weakness on occasion uh can really put you in a good position. Uh, it it it gets you cushion when you need it and uh prevents you from, you know, uh overstaying your welcome. Uh, it's not easy, you know, because sometimes again, things can come down much, much more than you think they can. Um, but yeah, maybe maybe you could talk a little bit about that balancing act that you do. The conviction uh versus discipline of kind of knowing when it starts getting abnormal or starts getting too much of a pullback.
Yeah. Um, well, that's uh it's a difficult balance uh to master and I certainly haven't mastered it. Um, even respect to Bloom. So, you know, Bloom, I didn't just get into Bloom on this last run. I was also trading it in that um kind of sideways area uh as well. And there I finally did have to
the one in the one in March here, or the one at the end of the year? The one in March. The one in March. So, I mean, I had a position there when, you know, when it was, you know, trading up out of that uh kind of double bottom. Uh, you know, I had kind of high hopes for it back then and I had a pretty large position that um where I had a, you know, a decent gain at one point and um and I had to cut losses or, you know, take take profits um much smaller profits than than I would have wished, but um, but, you know, I got back in and and it's been great, but yeah, so I don't want you don't want to pretend that I always, you know, have it down. Same thing happened if you pull up Rocket Lab.
Rocket Lab is
And I should mention I do have a position in both uh Bloom Energy and Rocket Lab myself.
You had a good day today, Justin.
It was okay. It it was it was uh clawing my way back from some ugly days, right?
Yeah. So, Rocket Lab, I initially got in on that cup, the first cup with handle back in late last year with a average price around 50 and ran it up to, you know, almost doubled in, you know, what, six weeks or so. So, so go
Are you talking about this this December one?
Yeah. So I I got in I I um kind of on the in the handle really on the pullback.
And I had a really nice cost basis. Ran it up. I sold some into strength in the high 80s and 90s, but, you know, when something is is looking that powerful, had very high conviction in it. Um, I round-tripped, you know, most of it. You know, my it took very modest gains at the end of the day. Um, and had to get in again. So, in a way, I'm I'm using that. I I wish I would have been a little more aggressive in my selling. And it's always 2020 hindsight. You know, the times when you sell more aggressively,
you wish you had it because it keeps running. In, you know, the times when you when they fall apart, you wish you had been more aggressive in your selling. Right now, I have a a large position in it. And um and I I sold into strength um actually a couple days ago and used yesterday and today to kind of get back in some of my position. But I think it's important if you have conviction in a name, especially something that has just broken out of a base, which is a pretty perfect looking base in my book.
Um, I like almost I like everything about it. I like the fact that you had that shakeout uh in the bottom. Um, which is just like classic. Came right back up. You have an element of strength and that gap up on the right side. a nice looking handle and a very powerful uh, you know, breakout through the pivot. Like to me, it's it's perfect. And so a stock like this, you know, I have Bill in my my mind thinking, well, this can really be something special. Don't mess it up, you know, and my tendency is to sell into strength and usually I end up overselling.
So, uh, and if you oversell, sometimes it's very difficult to regain your position. Um, so I'm really trying to maintain a large position in this and trade around the core, but just not as aggressively as I usually do. And the same same applies to Bloom. Um,
and ju just real quick before we move from uh Rocket Lab, um, you know, I I I this is where I bought too. I I bought on this earnings uh gap up that happened uh very early in the session. Um, and it was one of those things where I I had a tight stop. I said, "Look, if if this works, I'll hold it, and if it doesn't, I'm, you know, I'm gonna take a loss on it uh fairly quickly." But yeah,
how do you get into something when it's up 34%, you know, a breakout that's up 34% in a day?
Um,
so yeah,
how are you getting into that?
Well, so I like to buy on pullbacks.
Uh, so I was buying in the handle.
Okay.
So like I have a
before earnings. Yeah. So I I have a cost. I mean, part of my thesis on Rocket Lab is it should benefit from the attention that's going to be placed on the space industry because of the SpaceX IPO.
Uh, and even though SpaceX is by far the leader, like nothing, they're in a completely different category.
Uh, Rocket Lab's actually a very high-quality company that had a great conference call, a great uh earnings release recently uh on that gap up um on through the pivot. It was a great call and there's very little publicly traded merchandise in com in launching companies. There's really Rock Lab's the only one I know of that is a private company that's in the launch industry and satellite industry. They're very vertically integrated like SpaceX. So very high quality. And my my assumption is if SpaceX is going to have a, you know, $2 trillion dollar market cap um
on day one.
Yeah. Then maybe Rocket Lab is worth more than, you know,
50 or 60 billion. So, um, and again, you know, just based on, you know, looking at the greatest stocks of all time in our model books, when they start this powerfully, um, often times they can run a lot, lot further. So I don't want to be too cute with this one. I really want to try to hold a big position and kind of trade around the edges. I would love to hold it for eight weeks like like Bill would, you know, call for. And now that it's really up and out of there.
Um, I mean, it's possible we have another correction like we did after the last time I bought it where, you know, it had doubled and came all the way back. But um, I I mean, the only way to make the big money is to do your homework, have conviction, and let the stock um tell you when it's not working. So I mean, if it were to fall back and break the 21-day or come back into the the handle, I I would, you know, roundtrip the stock. But, you know, your original question was how do I keep my cost basis lower? Like like my cost basis is in the 70s. So, I don't want to run it up too high. I did sell some in the 130s and bought some back in the I guess 121 yesterday was my average price. I bought a little today as well. Um, but yeah, I'm keeping a low cost basis and this is the the best situation you can have is to be in a super strong bull market like we're in where you've got, you know, extreme strength, the right sectors are leading like technology and like exciting sectors. You've got the SpaceX, which I think will be a catalyst for for the whole overall sector and um, and you're in a, you know, strong bull market. We're in a power trend. We've had multiple accumulation days after the follow-through, like everything is lining up. And even if you look at the psychological indicators,
um, there's so much skepticism still in the market. Like even if you look at the bull bear
an amazing amount of bearishness. Yes.
Yeah. It's like I I think what's happened is the rally has been so powerful and the headline risk has, you know, with the the war in Iran and um inflation and gas prices and potentially rising interest rates. Like there's plenty of negativity in the headlines, plenty of risks there. And I think that the rally was so swift and powerful that just a lot of people just never got in.
Yeah.
And now everyone is waiting for a pullback to get in. And if that's the case, if the pullbacks probably aren't going to be,
you know, the market's not just going to come down nice and gently and say, "All right, everybody, come and join us." I mean, it's it's going to be tough.
Come on in. The water's fine.
Yeah. So um, so I think that's what's happening. Like like Investors Intelligence, the um the bull bear spread is I think 27%. I think I wrote it down. It's like 27%.
That's not I mean, that's like neutral. That's not very, you know, you'd think in this kind of market it would be much higher, tilted toward the bullishness. So,
yeah,
the bull bear spread is is certainly not indicating that we're anywhere near um, you know, uh, you know, complacency. We've got um the AI survey is um for for weeks um leading into the follow-through day, we had more bears than bulls. And even now, even if there is a a slight tilt toward more bulls than bears, there's still a ton of bearishness. It's like, I don't know, 40% bulls, 35% bears or something like there's
right.
There's people. There's just a ton of fear and skepticism. And if you look at the overbought, oversold oscillator. um that's actually showing kind of neutrality if not a little bit oversold.
At the at the I don't know if you have that on the on market surge, but
basically, there's a the the contra indicators are indicating that people aren't on board yet. And so there's room to run in my opinion. So I mean, there's just so many things lined up with this market. I mean, we're well above the 21-day. We're experiencing those short, swift pullbacks. Leadership is is great. Um, there's been some rotation in the market like when we did fall over these few days, the beat-up um software sector kind of took the baton for a few days while the memory stocks and
and then immediately seemed to uh, you know,
I mean, that downside reversal yesterday, and I mean, it came back a little bit today, but it got ugly first. Uh,
yeah. Yeah. Yeah. Yeah. And so, I mean, there's just like a lot of really positive things I think in this market. Um, and again, if you look at those market precedents in '98, '99 um, and, you know, April of last year, I mean, these kinds of markets that start really strong usually have much further to run. And we've we're only in this um, we're only like seven and a half weeks off the bottom and five or six weeks >> since the follow-through on the NASDAQ. So, to me, this is a beginning of a a super powerful trend and um, and I'm, you know, everything's lined up. So, I'm going to play for as long as I can. And um, and again, I that my style of selling some into strength and buying on weakness kind of prepares me for these pullbacks a little bit. Um, I mean, I I still lose like everyone else, but I lose maybe a little bit less and I look at them as opportunities. Sometimes I completely miss out on a stock like the memory stocks, my Micron. I got shaken. I tried it a number of times. I kept getting shaken out like even intraday, like and by the end of, you know, like I'd sell like, ah, it doesn't look good, and then by the end of the day, it's at a new high and then it gaps up. You know, I think I bought it, I sold, bought it and sold it on the same day, my on my last trade, and like three days later was up 150 points. Like this is recently, a couple weeks ago. Like, you know, you can't get a break there. But
yeah,
it's um there's enough merchandise out there that if something is out of there, I don't have to feel like FOMO because there's plenty of other things to buy. I mean, you're not going to own, you don't necessarily, I think I wouldn't recommend owning just, you know, LIT, Micron, Bloom, and Rocket Lab. I mean, you're you're in for a heart attack.
Yeah.
Um,
well, you know what? To that end, let's just one one quick second because this is a a note that came through on YouTube. You know, some folks were asking kind of, well, you know, what what kind of level of, you know, when you talk about conviction and a larger uh position size? Um, what does that mean for you? How how many stocks do you regulate yourself to? What's a large position size to you?
Um, uh, well, okay, this is my personal account and I I don't really necessarily recommend this, but
do not try this at home.
Yeah, I don't I don't think I I would really um for most people. I mean, when I'm in when I'm on a run, I I can be very aggressive, but um I have like a 50% position in Rocket Lab. I have over that in Bloom. I I'm on margin.
Yeah.
So, um, I'm like pretty much fully on margin. Um, I have a large position in Tesla still.
Um, so for me, a large position is like 50% position. Um, which is
and you have multiple accounts. You know, again, it's it's important, I think, sometimes to for people to recognize that, you know, you're talking about in some accounts, but then there's your overall wealth and you have
so, you know,
money in the bank that you don't touch, and that's good. I guess I I have two things to say on that. One is
something that I've instituted that I've spoken about in some of my um presentations is um that concept of self-care. Um, and most of the majority of my net worth is in the market. I don't need any more money in the market. So I regularly take money out of the market as I'm making gains. And that does two things. One is it gives me comfort to have money in the bank, so I know that wow, if I blow up or something horrible happens, I'm going to be okay. Um, and I've always hated that. Like I hate having money in a CD or something earning, you know, 3% when I could be trading it, and that was always my um
or even before that, it was getting like less than 3%. It was getting like nothing. You're like, what a waste.
And that that was always how I felt was like I didn't really I I wanted it all in the market. And then having experienced in 2022, you know, near blow up of my margin account, which was the second time I had done that, you know, and, you know, people have probably seen or may want to see the trader journey presentations that I gave that are on my YouTube channel where I go into quite a bit of depth, ex talking about those blowups and how they happen and what was going through my mind and so forth.
So, uh, so one thing I regularly do now is I take money out of the market when I'm on a run. And so, and actually I I have a little worksheet right where I have my um on my Excel sheet where I have all my trades and I can see the money changing every moment. And I take 25% out so of my of my profits and I put it in savings.
Um, that way I feel, well, I still have 75% of my profits to continue trading. My capital is still growing, but so are my savings.
So that's something I do, which is um, which has been really good for me. It's it's just been, it helps me take more risk.
Or the ability to take more risk.
Absolutely. And I I just wanted to make that point because, you know, some people are like, well, gosh, if you have, you know, all your wealth in kind of the market and you're talking about 50% positions um, you know, in Rocket Lab, but 50% and look, you know,
some of this you learned from Bill O'Neal himself. I mean, he
he would go in very heavy um, and but even he changed, right? um, you know, in 2008, I feel like after 2008,
he got a little bit more like I don't think I ever saw him go 100% in a stock, you know, after that.
Um, I mean, I I still will be like I said, I'm still very, very aggressive as far as my concentration, but my liquidity requirements though are also in line with that. So,
I don't. And what do you mean by liquidity requirements?
So meaning it has to trade, they have to be very active traders where I can get in and out without moving the stock and have no trouble doing so. And
if I put in a market order to buy or sell 10,000 shares, it wouldn't it wouldn't do a thing to the stock. So if you look at Bloom and Rocket Lab and Tesla and Nvidia and Amazon and all these stocks that I do trade um AAB wi-i which I was been trading um, they all trade over a billion dollars of average daily um, dollar volume. So I set a limit of like 550 million, but all those I think are all well over a billion. And so it's um, so yeah, I will never build a huge position like I've been doing if I can't get in and out easily and quickly. So I think that's, you know, and if you have a high liquidity requirement, that right there is going to um really filter out your buy list quite a bit. So there might be, you know, 500 stocks that I might be interested in, but there might only be 50 stocks that I would actually trade the way I do.
Um, because I don't want to really waste my time with a, you know, a three or four or 5% position that is not really going to impact my account. And I don't know that I mean, that's just me. It doesn't mean if you're not comfortable with with um trading the way I trade that you you can't do well with smaller positions. I think it's really important to trade in line with your own psychology.
Yeah.
Um, you know, a lot of people have said over the years like if you, you know, if you try to uh emulate Bill O'Neal and how he would put all his money in one stock, I mean, that not everyone can do that and manage a position properly. I mean, I I can't even do that. So it's that it's people are built differently and I think you should trade in accordance with your own strengths and know what your strengths and weaknesses are. So for me, I mean, I'm comfortable holding um, you know, four, five, six positions. Sometimes up to 10 positions in my personal account, but usually I would say between four and six is what I typically have. And I one of the things I did uh last year was I actually opened up a new trading account and I did not give myself the ability to use margin.
Okay. So that was another way to kind of control my risk because margin has been, you know, over most of my career, the use of margin has really been a wonderful thing, but uh being kind of um someone who's experienced the boom and bust cycle, um I know that I have been prone in the past to misuse margin and again um and I've done that more than once. So, I would say I I have like some very aggressive accounts, like my main margin accounts, like super aggressive, and then most of my other accounts are not nearly as aggressive where they're just like my I have a big Roth IRA, which is um I have no margin on there. I have this again side account, which I don't use margin. So, I'm uh yeah, I I would advise against having all your net worth in a big margin account trading 50% positions. I I think you're you're asking for it. So,
yeah.
So, yeah. Um,
well, and and so let's talk a little bit about how you build that conviction um in in a stock like that. You know, the liquidity requirement, that that's huge. And look, I remember when we were sitting next to each other and this was when your account was a lot smaller, but you know, we both had our ILX machines and sometimes I would hear you put your order on the phone and then I'd see, you know, oh, there's Charles, you know, I could see it on the ILX machine. Um, so, you know, liquidity kind of takes care of some of that for you in terms of being able to get
conviction. There that that um right there um that again, that's going to filter out a huge number of stocks and just having high liquidity usually means that there is a little more quality there because institutions are are playing in the liquid stocks. They're not playing in the little
stocks that are trading, you know, 50 million, you know, average dollar volume. I mean, they they can't, if you're a big fund. So liquidity helps a lot. Um, and that I would say that's one of the ways I've evolved over time is that uh when I was when you and I were sharing a cubicle, we and I was, you know, having that first, you know, thousand percent year, I was just in and out, in and out, in and out constantly. I I might maybe made 3,000 trades that year. I was really just focusing on compounding my account as quickly as I could and I was like really looking.
Yeah. What was it, what was the number you showed me? You're like, if I can just get 20% a month.
A month?
Yeah. Yeah.
Yeah. 20% a month was like my goal, which would be like some ridiculous amount. Um, I think it was it was hundreds of percent a year.
10% was over 100%, you know. So, I mean, and I and I because we're in that crazy '90s market and I was trading so quickly in and out, I um, you know, I had a 700% year and then two years later, the thousand percent year. And it, it um, it could be done, but I don't think it could be done easily with a really large account, you know.
Yeah. So um, so I I think I've graduated now and evolved to see that the real big money in in out there with regard to traders, and this is this is different from money managers or hedge funds that you know, are managing other people's money, but I think the huge money is really playing out some big winners and being a little more patient. And that was never my strength. Identifying the big winners. That was Bill's strength. And so that works if you identify the big winner. If you're not identifying the right stocks, you're not going to do too well holding them for longer periods of time. So, you do have to learn how to identify them. I think I've gotten a little bit better with that. But yeah, I mean, I am trying to play out some of these moves for, you know, more than a 20 or 30% gain and maybe go for a triple digit gain here or there with a big position, and that can really just take you to a different level. So, um, so yeah, I trade a little slower and I but I continue to trade around a core position, trying to maintain that core and take some off the, you know, off when a stock is extended, peel some off and buy some back on a pull back to the 21-day or 10-day. That's that's what I do well, I think. And and you can, the only time you can really do that is in a really good market where the pullbacks, where you can kind of trust the pullbacks to stop logical areas of support, whether it's a 21-day or 50-day moving average or the top of a prior base. You know, that that's when you want to take advantage of that kind of buying, where you look at the pullback as an opportunity as opposed to something you should fear.
Yeah. And it doesn't mean it won't be painful. You know, those those pullbacks can be very painful. Um, but I I love, I love that term, you know, trust the pullbacks. And especially when we're early on here, uh, you kind of get the feeling you can trust those more. But um, maybe to close this out, going forward, you know, if again, we use the analog of '99, um, there were the analysts that were saying, look, all you have to do to win in the market is buy Yahoo or Cisco on the pullback and you'll do fine. And that was awesome strategy when it worked, except for that one time where it didn't, and it just the pullback kept on going and going and going, and then you turn around and it just goes down 90% and you're like,
that has that has been my my one major weakness is that I do overstay my welcome when the market um goes into more a severe drawdown, whether it's a, you know, an intermediate correction or or a deeper bare market. And in fact, I did a um a post analysis of my trading of of all my trading, like in my whole career, by putting all my trades into Perplexity and asking for an analysis and going back and forth um and making sure everything was right, because you'll be surprised how you just really can't believe what the AI generates without, you can't you can't just rely on it without a lot of fact-checking. Uh, so there were a lot of mistakes made early on, but I went back and forth and the summary of AI on my trading was, you don't have a buying problem, you have an exit timing problem. And I had it give me a cheat sheet and really um to to kind of hit on your question, which was like, when do you, what do you do when buying the pullbacks doesn't work anymore? And that um if you have a strategy of buying pullbacks, eventually it will stop working. And that last time that you do it will be typically painful. You're going to take losses on that on that time um when when things ultimately break support. And so one of the things that I'm going to rely on, again, this was based on my own post analysis um that I I did with Perplexity, was to um to start to peel off exposure as the market starts to show um areas of weakness. So, for example, we're in a power trend right now. We're very comfortably above the 21-day moving average. And in many powerful um power trends, we maintain that distance above the 21-day or or support above the 21-day for an extended period of time. I mean, you would know better than me because you keep all the data, but it it could run 15 to 20 weeks. I think there's even longer instances. So we're into this for five or six weeks, maybe seven weeks, but not more than that. So um, so if we break the 21-day, that is a signal right off the bat that if we break it for more than a day or so, and by more than, you know, a percent or so, um that usually doesn't bode well for the near term. So the next thing I would be looking for is support at the 50-day. But no need for me to look for support at the 50-day with uh if I'm fully margined. Right? So right.
That would be my first signal. Actually, my first signal is if we start to come in
to the 21-day, I might peel some some off. Um, and once we break the 21-day, I would peel off even more and look to how the market reacts around the 50. But, um, one of the things I learned is that it's when I trade or keep high exposure in a risk-off environment. And a risk-off environment is basically when the index is trading below the 50-day moving average. Okay? Once you're below the 50-day um if I look at all my 25 years of trading um in the context of the uh 50-day, I have huge losses during those time frames. So if I just peel off exposure faster and just stay away from the market um that's going to save me a ton of money. And and one thing I've learned over the years is that the fastest way to significantly improve your returns is simply um limit your losses. Don't stick with something that's not working. Um, don't overstay your welcome. Uh, be flexible enough to realize that you can always change your mind and get back in if things change. Uh, and and that's always been a way, a weakness of mine that I, you know, I'm still improving and evolving. Um, you'd think I'd figure it out by now, but still, uh, still a.
Well, and again, it's it's not that you haven't been successful. You've been wildly successful, but there's always, I think, um, I think we all have this. There's always that
desire to improve, right? Even Bill, he had made a fortune and he was still having everyone do studies uh up until his retirement so that, you know, he could figure out a way to get better.
Yeah. No, I mean, there there's there's always room to improve in the market and um, and for me, I think I'm still getting better and and yeah, even with the some of the mistakes I've made over the years, it's it's been a pretty darn good career. I can't complain. So,
um, so you can, that's the nice thing about the markets. You can actually make a lot of mistakes if you don't
blow yourself up.
As long as you make it, make them not big, right?
Yeah. I mean, you really want to try. I mean, I've had a few quite big ones, but again, I have these different accounts, so if my if my most aggressive account blows up, it's not like I don't have any money. It's just
one account. But um, but yeah, I think those are are ways to protect yourself from yourself is is just
take a percentage of your profits out of the market,
keep it in savings, buy a vacation home or a piece of real estate or just put it somewhere else.
Yeah. Um, and consider maybe keeping some accounts where you you don't even allow yourself to use margin because really, if if you don't have
and I should mention that because you brought up the Roth accounts before. Yeah.
Um, you know, and someone got confused. They thought that you were somehow using margin in your Roth. You can't do that, you know, but you've got a sizable amount in some of these Roth accounts. No, my my my
Roth account is um
is the biggest
Yeah.
part of my net worth is is my Roth account, which is um whenever like if I'm on the phone with the broker, they're like, "How'd you get so much money in your Roth account?"
And it's um it's amazing what you can accomplish if you if you have good returns and you don't pay taxes.
Yeah.
It's it's a huge thing. Taxes are a killer,
which is another reason why I'm trying to slow down a little bit and um
and hold some stocks for a longer period of time.
Well, Charles, it's always a pleasure chatting with you. Um, I feel like we could just go on and on and uh hopefully we can do that on our own. You know, uh yeah, we're going to get together soon. Uh see each other in person because it's been a while. Um, but thank you so much for coming on the show. We always appreciate having you on and um great chatting with you, man.
Great. I really enjoyed that. Thanks, Justin.
Yeah, and next time we can share a cubicle. Uh, I'm I'm game. I'd love to do it. So, uh, give me a little chair next to you in your office there and we're all set.
There's a space.
Okay.
Thanks a lot, Charles.
I'll see you soon.
Okay, that's going to wrap it up for us this week. Thank you so much for watching. And hey, join us next week cuz we've got another uh just legend in the market. Uh, Jim Roel of the Ropel Report is going to be on the show. Hedge fund manager uh Bill O'Neal disciple. So, it's going to be great to have Jim Roel Ropes back on the show and we'll see how many times he talks about the golden goose of uh capitalism and uh it'll be a fun time. Hope you join us for that. We're going to be live at 5:00 PM as we typically are. Join us then. Take care, everybody.