I am one of the founders of the research shop MarketWisdom.com, where we teach people how to consistently make money and manage risk with our swing trade and momentum investing ideas. We offer a 7-day free trial.
I am the author of: Top 10 Trading Setups – How to find them, When to Trade them, How to Make Money with them (2016), The Next Apple – How To Own The Best Performing Stocks In Any Given Year (2015), The 5 Secrets To Highly Profitable Swing Trading (2014), Crash – How to Protect and Grow Your Capital during Corrections (2015), “The StockTwits Edge – 40 Actionable Setups from Real Market Pros” (Wiley, 2011).
My work has been featured in WSJ, Bloomberg, Yahoo Finance, Reuters, CNN Money, UT San Diego, Traders Magazine, Business Insider, Abnormal Returns, Real Clear Markets.
I have an MBA and MS Finance from Webster University in Saint Louis, Missouri.
Follow me on StockTwits: @ivanhoff
Follow me on Twitter: @ivanhoff2
(Yes, my twitter handle @ivanhoff was hacked and I lost access to it.)
Podcasts and Interviews
My Market Philosophy
The stock market is an opportunity machine. Times change, gas prices change, fashion changes, regulations change, but there are always companies that find a way to monetize on an undergoing social and business trend and make their investors rich. The only things that change on Wall Street are the names of the winning and losing stocks.
There is always a silver lining. One company’s rising costs are another company’s rising revenues and the market usually does a good job identifying the winners and the losers. Money never sleeps.
Simple is better. You could make your investing life as complicated as you want it to be, but the degree of complexity is not positively correlated with market returns.
The stock market tries to be forward-looking. Sometimes, it is spot on in predicting the future. Sometimes, it even impacts the future. Other times, it ends up very wrong. The market has a tendency to overreact to both good and bad news. This creates fantastic opportunities for both momentum and value investors.
Intrinsic value is overrated. In 2018, a rare 1793 penny was just auctioned for 300k. Supply and demand, which depend on perceptions and expectations for future gains are often more important than any fundamentals.
Prices change when expectations and perception change; the latter can change for many reasons, including price action.
Early adopters (trendsetters) usually sell early and end up making as much or less money than people who hop on already established trends.
Every trend needs skeptics and doubters. Otherwise, there won’t be anyone left to buy.
Buy and hold forever doesn’t work with most individual stocks. Most trends eventually end. Have an exit strategy.
In trading and in life, sometimes being wrong is not a choice, but staying wrong always is. Cut your losses, cut your losses, cut your losses, so you live to fight another day.
There should be a very clear distinction between trading and investing. Long-term investing is essentially a bet on how other people’s perceptions will change over time. It is about answering the question What are the catalysts that will change market’s expectations? Trading is about understanding the constant cycle of range contraction and range expansion, it is about risk/reward, it is about constantly adapting to changing markets.
How I Think About Trading
There are two major ways to consistently make money in the market:
1) Hunt for several huge winners in a year. Build large positions in them and ride them for monstrous gains.
2) Hunt for hundreds of 5% to 30% short-term winners, where the goal is to compound capital quickly by actively moving in and out of them.
There is no right or wrong approach here. Both have a place in the arsenal of each active market participant.
Everything comes at a price. If you want to catch a 200% to 300% long-term winner, you have to be willing to sit through multiple consolidations and several bigger than 30% pullbacks. Not everyone has the stomach to ride big stock market gainers, but maybe you don’t have to.
If you sell all your winners, when they are up 20%, you will never catch a double or a triple. Fact.
What is also true is that in any given year, there are a lot more 20% moves than 100% moves. If you learn how to catch hundreds of quick 10% to 30% moves, your capital could appreciate very quickly while you keep the drawdown in your account to a minimum. Plus, you can catch those moves on the short side as well.
Swing trading is among the fastest ways to grow capital if you learn how to properly apply its principles. Swing trading is all about velocity and an opportunity cost of capital. The goal is to stay in stocks that are moving quickly in our favor and avoid “dead money” periods.
Stocks often move in 10% to 30% momentum bursts that last between 2 and 20 trading days before they mean-revert or go into sideways consolidation. The goal of every swing trader is to capture a portion of a short-term momentum burst while avoiding consolidation periods. Then to repeat the same process hundreds of times in the year by risking between 0.5% and 2% of capital per idea.
The beauty of swing trading is that it provides many signals. You don’t need to risk a lot per signal, which means that you won’t second-guess yourself whether to take a signal or not. One trade is not going to make your year or your month, but it also won’t ruin it.
How I think about Market Timing
They say that the definition of insanity is doing the same thing over and over again and expecting different results. If you do the same thing in the market, you are guaranteed to get very different results because the market constantly changes.
Different setups work in different markets. Everyone makes money in a bull market. Not everyone keeps it when the market changes. There are four different types of markets and each of them requires a different approach.
In rising markets, I buy breakouts and in anticipation of a breakout in stocks with hot price and industry momentum and recent IPOs.
During range-bound, choppy markets, I trade less and with smaller size, focusing on the industries that are showing clear relative strength or weakness. If there are no such industries, I stay in cash.
During corrections, I like to keep a large cash position (over 50%). If I trade, I focus on volatility and leveraged inverse ETFs. Correlations go to 1.00 during downtrends, therefore stock-picking almost doesn’t matter and sticking to a few liquid ETFs makes sense.
When I see signs of bottoming (momentum divergences), then I look for mean-reversion trades, especially in severely beaten stocks with huge short interest – those could quickly go up 30% to 200% during market recoveries. I also pay attention to stocks showing notable relative strength. They are often the future leaders of the market.
For more information, just read my books or email me via the Contact button at the top of the page.