Mark Ritchie II

To all my followers: So I just spent a brief time away in the mountains reflecting on the last 15-20 years with my best friend (she also happens to be my wife) and here's what I concluded at least for now when it comes to posting here going forward. I will try and avoid posting things that I do not think will be helpful in the market. The reality in my view is that most of twitter is full of noise, mostly by people who have views/opinions that don't help anyone make actual $ in the market. I am humbled by many of the compliments I've received here and other places (most recently our annual gala) that what I've been teaching is helping both on the MPA platform and here as well. That is my goal. I've done well and want to try and give knowledge to those in search of it. I'm the product of a few great traders influence and trying to do the same for those interested. I will not respond any longer to trolls, skeptics or critics. If you don't like me or what I'm saying do us both a favor and unfollow me. See Teddy above...'it isn't the critic who counts.' I'm not listening or going to respond as life is just too short and honestly I feel sorry for anyone who feels the need to project that kinda stuff on any social media platform. I also want to talk more about generosity and the need for it as people learn to grow in their wealth. As what does a man gain to earn the world and in the end 'forfeit his soul.' I have much more to say on this in time and going forward but a recent talk I did on this was very WELL received and only demonstrated what I believe to be a deficit at least in peoples thinking in this area. I'm going to be posting more examples of real trades and post analysis of both winners & losers. I have more losses so I'll probably be posting more of those but simply so people can see how I've handled things and how I try and continue to improve on process and risk management as ideas are wildly overrated. Lastly (sorry got a little long) I put the 'man in the arena' up there because my wife gave it to me many years ago when I got started on this journey. I've been thinking about what Teddy called 'a worthy cause' and I think investing in others (both generally and personally) is a good example of one going forward. I could be wrong and fail to do a good job but if so I'll attempt to do so 'while daring greatly.' Blessings. MR2

@JURAMPIC no but how many of your losses are exactly 1%, they are often 0.89% or 1.02% so 89 Basis Points or 102 basis points is just a bit cleaner imho but just be consistent would be my rule of thumb

@MarkRitchie_II In your experience, does saying 1% vs 100 bp make a difference? Thank you 🙏

How & why I ended up picking the fighter in the blue trunks...(longer read warning) I may have shared elements of this prior but when I started on my own (Jan 2010), I was nearly 100% a quant. I had some ideas and figured all I needed was discipline and risk management and I’d be a millionaire in no time. I borrowed 50K from my dad in sort of a handshake deal, and he said, “Trade it like it’s 100K, and if you do well I’ll add.” Fast forward a few weeks and nearly all my first trades had been losers, to the tune of about $500–1,200 a piece. I was down a few grand and DYING on the inside. My dad was on the other side of the world in Southeast Asia working with orphans, and I didn’t want to tell him that my new trading adventure, which he had backed, was off to a bumpy start. But who else was I going to call when my confidence was already waning right off the hop? The conversation via skype call (this was 2010) went nearly verbatim like this: “Mac, what’s the problem?” he asked. “Uh, well, nearly all the trades have been losers and I’m losing a bit of confidence,” I said. “Were these within what you expected in terms of percentage drawdown?” he asked. “Yeah,” I said. “Then get back to work and take the next trade. If you can’t stomach the volatility, then cut your size in half.” End of conversation. Fast forward about 2+ years and, through a lot of hard work, I’d managed to run that initial stake up quite a bit and was managing somewhere in the neighborhood of 700K when I had my first six‑figure drawdown. I was up on the year but again dying on the inside and feeling like I’d had my guts ripped out. My pops was stateside when I invited him into the office for a similar chat. “Dad, I’m in the biggest drawdown I’ve ever had and it’s kinda eating me up.” “Why is that?” he asked. We then reviewed the gains and the relative drawdown, and I said, “I think this is normal given the run I’ve had, but it just feels awful. I want to be able to lose 10x this someday and NOT have it feel this bad.” “Now you’re thinking like a pro,” he said. “If you’re going to continue to grow, this is what you signed up for—and you’re thinking about it exactly right.” End of conversation. As luck or divine sovereignty (I always take the latter) would have it, I became friends with @PeterLBrandt shortly thereafter at one of his Trader bootcamps. I heeded his advice to always express risk and trades in terms of basis points and not dollars and never looked back. It felt like a weight was lifted off me. I don’t know how many of our cognitive biases are truly holding us back—and I’m not a psychologist—but for me, telling someone I lost 100 bp does not have the negative emotional pull that telling someone I lost 100K does. Yes, they are two ways of saying the same thing, but for me, one helps me stay grounded while the other leads down a road of emotional volatility that I don’t want to be on. Within a few years (end of 2018), I had the worst drawdown I’ve ever had in a single month and lost nearly 2 million dollars. I only share the dollar amount for illustration. To be clear…it sucked. However, it didn’t have nearly the gut‑wrenching hold that some of the prior periods had, because I was only seeing the BPs from my end and could get back to work knowing that the loss was acceptable (albeit really sucky) relative to how much I was trading and where I was for the year and overall. I wasn’t thinking about losing a house or a boat or all the things we like to attach to the capital we are trading. I think the moral of this story—at least for me (some of this is cathartic)—is that BP vs $ are two ways of saying the same thing, but one gives me much more psychological stability and an edge in my emotional capital and in this business, that can be a really big separator in the long run. Hope this helped someone. MR2

In this scenario my historical average would be about 4K or 40BP (which yoda aka @PeterLBrandt taught me to always quote risk/trades in BP not $ as it removes the emotional capital element). If things were going well and I'm pressing highs and getting aggressive I would go as much as 10-15K or 100-150BP. I would look to pyramid up in the right situation to something like this or maybe more intraday at times but total risk is still gonna be capped at this boundary.

@guydroog who knows, I get stuff massively wrong ALL the time. The key is risk management imho.

I’d genuinely love your take on this, because I keep wondering whether we’re even comparing the right type of market environment to prior “top” formations. Historically, discussions about meaningful tops usually happen after a broad bull market where making money has become relatively easy across the board. Participation expands, more names work, skepticism fades, and performance disperses wider than just a handful of crowded trades. But this has felt like the opposite. It’s been an extremely narrow tape where ~30 stocks and a couple of alt coins drove most of the upside while even many professionals struggled. If I recall correctly, only 16% of USIC participants are up this year. So my question isn’t really whether this is a top or not. It’s whether we can even frame the discussion through the lens of a “classic” bull market cycle in the first place.

Best evidence we aren't topping here... In my career (I'm officially an adult as I started full time in 07' & 2010 on my own) I've never seen a market top in ANY meaningful way with sentiment that looks like this. Normally this would suggest we have a way to go but more to the point sentiment to me is more about mood/environment (which can get WAY out of whack) than a timing signal. It tells me that most are doubting this rally still here and that macro stuff still has a lot of managers sitting on their hands.

A few things I'm watching assuming this pullback in the general market lasts more than a day or two. -is there clear distribution vs rotation. Some tech stocks definitely should pause or pullback but does $ rotate or just head to the sidelines? -Does the rally broaden out at all if we resolve higher? I don't think we get a massive broadening but some would be good. $IWM pulling back to prior breakout for a retest would be a good sign. NYSE A/D line is something I have my eye on too at least if we make new all time highs in the coming days/weeks I'd like to see that confirm. The Dow getting in gear also wouldn't hurt. -Sentiment. We already have this working in our favor but sentiment staying skeptical/negative or bears vs bulls increasing during this pause/pullback would be optimal. -how do the leaders act? There were a LOT of names that ripped off the lows, many of which doubled in a very short period of time. Do these names base and act healthy or just splinter and fall apart on balance?

Why I like @hkuppy: 1. He's funny. Life's too short to take yourself or investing so seriously, and he seems to make fun of everyone including himself. 2. He actually manages money and his performance is good. How many people are on X giving views/ideas that haven't made much of anything for themselves let alone anyone else? 3. He stays in and knows his lane. If you want to know how a smart value manager thinks read his stuff. Most people would read his 'why I avoid tech' and feel the need to preach or dissuade him on why 'this time is different' or blah blah. Pro's don't let others talk them in/out of positions and they certainly don't let others talk them into a different philosophy and process. 4. He doesn't care what other players think. Real conviction isn't measured by whether people like your idea but whether you can play your game regardless of how the other players act or play. Show me any valid strategy and give me 100 people to teach it to. 70-80% won't follow the rules outright. 15-19% of the remaining will follow them for awhile and then start style drifting or making detrimental changes during the inevitable periods where it doesn't work. The remaining sliver survive and eventually thrive over time. pracap.com/why-i-avoid-te…

Meant to mention these 'momentum' type signals often trigger around short term tops or pullbacks. A lot of leading stocks pulling back and definitely more declining issues today so don't let normal action spook you, but step aside any abnormal action as it unfolds.

This note from @NautilusCap pretty much says it all. Pair this with the level of skepticism out there and it's everything you need for a market that likely goes higher. I may do a post on 'lockout rallies' next week and the ones I've traded as well as some historical precedents I've studied.

@markminervini I can attest to that...we've shared many a meal at the Brazilian steakhouses in his neck of the woods aka carnivore heaven!

I'm semi-fasting today; light, healthy, raw food and fresh coconut 🥥 water. And before you respond with " you need protein" and all the other blah blah blah, this isn't all I eat. I am not strictly vegan.

lower... For starters the stock is 12$ and has no earnings which means very low/poor institutional sponsorship=poor quality -Stock is not really in a stage 2 uptrend -Stock is running into a LOT of overhead supply -Stock does not have a good looking weekly in terms of volume characteristics -Stock doesn't have good volume characteristics on the daily as last 7 days are all above average with not much price progress and wider action, I want exactly the opposite -Stock has negative earnings, does have sales so mixed bag at best -It's also in the cyclical area (mining/metals) so a discount there as well -stock is not tight on its right side as a breakout to yesterdays lows measures +/-17%, no where close to what I'd want to see Doesn't mean it can't work (it'll probably blast off here) but I'm a probabilities guy and this is an avoid every day of the week for me

$UAMY – VCP style breakout near highs. Tight price action with volume expansion on breakout. Currently in a strong trend. Would you consider this A+, B or even C quality? Curious how you would rate this setup @MarkRitchie_II

In 2021 I kept running into people who said they 'wanted to go full time trading' after running up a RobinHood or crypto account in the prior year 1-5x and thinking markets were easy. There were 'diamond hands' (SPACS) and 'laser eyes' (Crypto/BTC) ALL OVER the place on X. I see little to none of that froth currently. Are there reasons to be concerned...of course, that's how the real world works. The fact that everyone hates this rally or market IS why it probably has further to go as that is the nature of the market as Livermore said; 'The market is never obvious, it is designed to fool most of the people, most of the time.' (How to Trade in Stocks) Draw your own conclusions but 4/5 weeks ago the oil situation was all anyone wanted to be an expert on and the world was coming to an end as WWIII was starting. The market told a different story (still is btw) and now seems like most are calling it a bubble...again draw your own conclusions.

Stocks are pushing to all-time highs while sentiment is getting more bearish—bulls down, bears up. That’s a sign of disbelief. Investors are fighting the rally, which is a classic Lockout Rally condition. minervini.com

@AlexLaanOslo Is this the Alex Laan I know from the old PLB bootcamp? If so man great to hear from you and hope you and the family are well!

@MarkRitchie_II Not really working well these breakouts, but thanks for the postive vibe ;)

This is phenomenal news...market pressing new highs and majority is skeptical to bearish and the world is horrible (war, inflation, oil roofing, affordability crises, Yankees & Dodgers in first place...you name it, it's all bad). This IS the best backdrop for swing/momentum equity traders IF (big IF/qualifier as always) trades are/start working.

@BobWalker127 Thx Bob, guys like you are who I'm trying to help, hopefully we get to meet at the Gala this year as it's great putting faces with names.

@MarkRitchie_II Hey Mark, as a MPA client and being close to MM in age, I’d really like to thank you and Brandon. I love the way you think! You both are excellent teachers and I have gained a lot of relevant knowledge and know how learning from the MPA group. Thanks! Enjoy your weekend…

Longer post on 'IFs' and 'strategic thinking'... Most of the time I'm doing my work/analysis my co-pm and I are looking for scenario's that would get us aggressive i.e. where we ask ourselves what we think should happen with a stock/trade as knowing that ahead of time IS everything. The longer I've done this and the more I've tried to help people the more I think this is underrated. It is also why piggybacking successful traders never works because you can give someone an idea but never conviction as convictions cannot be given, they are only earned through time & experience. This is also why I think a background in sports/games is sometimes a good backdrop for trading & speculation. I didn't play much baseball but I've watched/played enough to know the best hitters (Ted Williams wrote the bible on hitting) know their zone. So when they get a favorable count then they start looking to smash the right ball in the right zone. Selective aggressive is what it's all about, PTJ used a similar analogy with boxing in the interview I reposted. I often say 'if xyz happens' I'll do 'abc' and it doesn't happen. Then people think I don't know what I'm doing because it didn't happen, which I find hilarious as I don't care (I literally had people posting/critiquing PTJ video I reposted this week, talk about arrogance and lack of respect). The point isn't about being right but knowing IF your strategic scenario plays out you are ready in real time to act/move. You don't need someone to tell you what to swing at because you are ready ahead of time. I played O-line for years and called any changes to blocking out at the line and I could usually tell based on the call we had and the front we were facing in certain scenarios if we were gonna get a first down or not. I wasn't always right but again if you know what should happen given a set of circumstances you can't predict the future perfectly but you don't need to in order to have an edge, which is what this game is all about. Here's my current working example. We've had a face ripping rally off the lows that most people seem to be hating or fading. Meanwhile there are a number of highly liquid names that have doubled in short period of time ($AAOI, $ARM, $AMKR, $BE, $AEHR, $MRVL, $INTC just to name a few). I've been screening the market every day for going on 17 years and I don't know that I've seen this many names quite like this. I'm pretty long but if this market digests and some of these names setup pivots/flags I'm gonna get scary long. That's my 'IF' scenario currently. Closest thing to this I've seen was the stay at home type stocks off the C19 lows, they all started setting up through the summer and working. Will it happen? Probably not, but if it does...I'm ready. Have a really great weekend if you read this far!

Listened to this while driving yesterday and it's outstanding. I have listened/read to just about everything ever done on PTJ and this I think may have been the best. So many great nuggets even outside of trading on faith/values/generosity/work vs retirement. A must listen imho.

On the road till the end of the week so won't be doing much in the way of posting, however this resonated with the exception that I had (still have to guard against) the opposite problem. Rather than being afraid to pull the trigger I wanted to shoot everywhere and at everything. Learning how to sit on my hands and the discipline of 'sit out power' was a big key for me.

@JURAMPIC then hang out with them or jockey, those are the only two options imho

@MarkRitchie_II I’ve certainly gotten more exposure regardless of the news and indexes, but not fully invested as I was waiting to finance bigger positions. I may be late… but my stocks have not had real traction yet. They are mostly hanging out.

Longer post on recent Market/Sentiment reflections: Been pretty busy watching/trading/highlighting stocks the past week or two but been meaning to do an update. It was exactly a month ago when I said based upon what I was reading that I thought the lows may be close. I also said I didn't think we'd get a 'V' recovery. Got one right and the other way wrong but neither matter to me as I follow rules not my personal opinion. I've incrementally gotten fully invested (decent amount of jockeying required) over the past two weeks but I made a comment yesterday during a Q&A that prompted me to do some self reflection...the comment/question was 'how many of you would have more exposure if you were just watching stocks and ignoring the news or the indices'? We've had a rip your face off rally to new highs and then have started to have some stocks form handles and emerge. How many people took BIG positions in these setups? I have no clue but if history is any guide my gut says most bulls are underinvested and there's a LOT of macro bears (all straits of Hormuz & oil experts currently) shorting this rally. Who knows maybe we crash, I highly doubt it but as my buddy @Upticken says 'there will always be a reason NOT to buy'. Ask yourself this: how many people have had more reason(s) than normal not to buy? I jokingly took a snap shot of my journal yesterday talking about how 'my feelings don't matter' because at the end of the day the market does not care so to have a process that overrides how I feel is paramount. This is what my mentors have all had in common, the ability to follow rules regardless of feelings. I'll never forget a convo I had with @markminervini in May of 2020 when we both saw a ton of stocks setting up in the worst of Covid and I asked him 'what do we do'? He said 'I'm terrified, but we buy and if we get stopped out, we get stopped out.' Everything I bought for the next six months felt like it went straight up and anytime I made a bullish comment people said I was a moron. I already felt like a mature trader/risk manager at that point yet I felt like I became a real pro as I completely let the price action & process dictate my movements. Everyone likes to think they can divorce their ego from the trade or their performance but that is often what you have to risk/sacrifice first. If you are worried about looking/feeling dumb because you lost money or got something wrong then you are likely to struggle. Consequently that period from May of 2020 through early 2022 was the best risk adjusted (real measure of skill for a risk manager) period of performance I'ver ever had. This has a similar feeling although not nearly as extreme. We have a pretty decent wall of worry out there (war, politics, inflation, who knows what else) and the market seems to be telling a different story. Good luck and don't take your cues from anything other than your own process, just sharing how mine has hit a recent inflection.