INTRODUCTION: Learn from the best

Fellow Trader,

I find one of the best ways to learn about trading is to hear the experience of other traders.

It’s why I regularly sit down with experts from all around the financial world to quiz them on their experiences and find out how they’re able to better navigate the markets.

We share these interviews in our Moving the Markets email newsletter, but here I’ve collated three of these interviews for you to explore.

It’s our aim here at Trendsignal to share as much valuable insight with our readers as possible and this is just another way for us to do exactly that.

In the future I’ll collated further volumes, but in this particular instalment you’ll find plenty of interesting insight.

You’ll see:
     
Hopefully you’ll find what follows helpful and find it interesting hearing from these three experts.

And don’t forget, if you’d like to find out more about how to managing your trading as we enter a post-coronavirus world, you can tune in to one of our free online training sessions.

You can hit this link to register for a session that suits your schedule.

Enjoy the report and best of luck with your trading.

Best wishes,

Adrian Buthee
Head of Training
Trendsignal
 
PART ONE: Gold to hit £2,000? An interview with Tom Tragett

Yes, that’s where my first interviewee believes gold could get to...

£2,000.

He’s a professional trader who’s been navigating the markets now for over 40 years.

Having earned his stripes in the City, he left to advise private clients and trade independently.

He’s made some huge calls over the years, and though he’s the first to admit he doesn’t always get it right, it’s always worth keeping an eye on what he has to say.

His name is Tom Tragett and as you’d expect, we got straight on to the topic on everyone’s mind right now…

Coronavirus.

Will the mud stick?

TOM: Where next for Coronavirus…?

Well, that’s a billion-dollar question if ever I heard one.

The risks were high a few weeks back, but the whole situation has escalated and now it’s kind of feeding on itself.

The powers that be have thrown all sorts of mud at it in the hope some of it will stick. It’s early days on all this and we'll only know when it all dries out, cracks and sticks...or doesn't stick.

My fear is we’re going to end up with a series of market shocks that might surprise even the most experienced of operators.

Me included.

ADRIAN: It’s shocked everyone a lot more that I think we anticipated it would.

But now it’s a case of seeing just how lasting those shocks will be, I suppose? 

TOM: Yes. The risks are clear…

Equity markets could have a lot further to go unless a clear solution is found.

Having said that, it could all change very quickly for the better if the news shifts to warrant that. In that sense it is a very fluid situation.

But my other fear is concerning potential supply shocks, which could mean significant inflation down the road.

I think it’s potentially very serious for the pound, especially with such significant downside potential rearing its ugly head again.

The fact is: the UK economy simply cannot withstand the kind of borrowing now needed to finance the panic packages. No way.

That said, I like gold priced in GBP…

I really do think £2,000 an ounce is achievable.

ADRIAN: Very interesting.

From post room to trading floor

ADRIAN: Stepping back from corona, I wanted to get some insight into your background, Tom.

You’ve been trading for decades now…

But how did it all start?

TOM: Well, I can barely remember. Ha.

I know I left school aged seventeen in 1979 with a bunch of mediocre A level results in hand.

I didn’t really fancy university back then and headed straight into the City. I got a job at Williams and Glyn’s, which is now a part of RBS.

The job was in the post room, which happened to be next to the trading room. At that time, it was just a room, as opposed to a football pitch-sized trading floor.

I started taking an interest in what was going on in the trading room and it all escalated from there.

40 years later and I’m still trading day-in day-out.

The strangest thing is I’m still enthralled by it.

ADRIAN: Well, the markets have a habit of throwing new challenges at you every day.

I guess you’ve seen a lot over the years…

What’s the one mistake you find people most often make when it comes to trading?

TOM: Well they always advertise on Bloomberg radio saying:

“Mistakes happen when you sell something because you have to.”

That’s quite true.

But mistakes also happen when you DON’T sell something when you should and stubbornly refuse to take the money or the loss.

It’s usually down to a mix of greed and stupidity.

My best tip is to avoid short term charts if you don’t want to get caught up in too much noise.

Look at the long term charts (and I really do mean long term)...

Recognise the potential…

And then wait to see a catalyst.

It will come.

And when it does, you’ll be ready to go.

I’ve been screaming at people to not buy equities for the past year while they’ve been at such high levels…and it turns out I was right.

That said, I admit I had no clue coronavirus would be the catalyst, but it’s beside the point…

It only ever just needs that one trigger event.

ADRIAN: It’s all in the preparation would you say?

TOM: Yes, you’ve got to do your research.

ADRIAN: How do you go about that process?

Patience is key

TOM: I listen to so many people all day on the wires.

I soak them all up and arrive at my own judgement about what’s happening.

It’s like my brain is its own algorithm.

I guess it should be after 40 years of digesting this stuff day in, day out.

ADRIAN: That’s a lot of historical data.

TOM: Ha. Exactly.

My own interpretation of things makes sense most of the time and that's what guides me.

But I’m certainly not always right.

I think the key thing is to know when you are wrong, accept it and move on.

Dust yourself down and make sure you can come back to fight another day. That’s the real secret in this game: never give up.

It’s true what they say that there will always be more opportunities.

ADRIAN: I agree.

TOM: So, it really comes down to having the patience to wait.
 
It’s like Charlie Watts from the Rolling Stones says:

Unlike most of the band, he always wants to make sure the roadies and equipment were sorted...

So, he figures he’s spent most of his time just hanging around in car parks between shows.

That’s what I call patience.

ADRIAN: It’s not always about the glamour. Thanks, Tom. That was great.

TOM: No problem. Good luck to all your readers trading out there at the moment.




 
PART TWO: More trouble ahead? An interview with Darren Sinden

I’ve got a really interesting conversation for you here that I had with financial expert, Darren Sinden.

Darren has worked in the City for over 30 years at a number of big-name companies as a trader and market analyst.

Though he’s worried about how damaging the impact of the coronavirus could be on the UK economy, he does see opportunity ahead.

Before digging into his past, we naturally kicked off on the coronavirus and I asked him where he sees things going right now…

There could be more trouble ahead

DARREN: Where we go from here will depend on how long the current restrictions are in place for.

A large chunk of the economy has shut down.

What's impossible to tell is whether that will be temporary or permanent? 

Despite efforts by the government, businesses are going to go broke in this period. For just one example, we saw Carluccio's file for administration recently.

That's two thousand jobs at risk but it has an unseen effect on suppliers, landlords, neighbouring businesses. 

The leisure industry is in the immediate firing line but what's the future for the high street if there are no pubs, restaurants or small independent shops still in business in six months’ time?  

We have a domino effect in the making, one that radiates out from the centre and as one business folds or shutters for good it knocks on to another and so on.

If we are shut down for six months, I don't think there would be much to come back to I am afraid. 

ADRIAN: It’s not a pretty picture, is it?

DARREN: It’s not. But that is worst case, I suppose.

ADRIAN: How do you think it could play out?

DARREN: Yes. I hope that we can soon move beyond the current restrictions and start to get back to some sort of normality.

That might mean that the elderly and vulnerable stay in isolation while the rest of us go back to work.

If not, there will come a point when the treatment for the economy is worse than the disease threatening it. But by then it may be too late.

I have seen various forecasts for UK GDP growth during 2020. If I say that a generous figure might be a fall of -5.0% then you will see why I am so concerned.

If the lockdown we have now persists for 6 months or more then I think we could be talking about a fall of -10% to -15% in UK growth.

ADRIAN: That would be severe.

DARREN: It would. What's more, the longer the lockdown continues the harder it will be to bounce back.

ADRIAN: A U-shaped recovery rather than a V?

DARREN: Exactly. We will recovery, but it’s how long it takes.

Right now, it’s hard to look beyond this year. But I do think there could be some structural changes.

ADRIAN: How so?

DARREN: I think we may see working from home and remote working become a lot more commonplace and we may all hasten towards a cashless society too.

On top of which the government's plans to pay a percentage of people's wages during the crisis could provide an insight into how a system of universal basic income might work in future.

Or not as the case may be.

ADRIAN: Interesting. Before I ask you where you see opportunity right now, I always like to find out how people got into this business. Did you always want to be in finance?

Fantasy Stock Trading

DARREN: I didn't exactly plan it.

ADRIAN: Ha. Few do.

DARREN: The town I grew up in was known for engineering and electronics and although I enjoyed science at school, I wasn't particularly practical or good with my hands. So, I thought I had better find something I could do. 

In our sixth form we had a careers section with a small library of books on the world of work, one of which was called job opportunities in your area. 

We were less than 40 miles from the City of London, so it wasn't too surprising to find businesses based there had contributed to the book.

At the same time, in my economics class we participated in a nationwide fantasy stock trading contest, between schools. I seem to remember it was organised by the Bank of England and the FT. 

I don't think we did that well, but my interest had been piqued and there were several London Stock Exchange firms advertising for staff in the careers book I mentioned.  So, I wrote to two of them, not realising they were two of the most prestigious businesses in the markets.  

In the meantime, I applied for a place at college to train as chartered company secretary and got two offers to do that. But out of the blue, a letter dropped through the door from Wedd Durlacher Mordaunt & Co inviting me for an interview.

I had two successive interviews and got an offer to start with them in September following my A levels.

I accepted, thinking if I didn’t enjoy the job, I could always go to college the following year.

ADRIAN: But you ended up staying?

DARREN: I did. And I’ve been involved in the industry ever since.

ADRIAN: Who would you say have been your biggest influences over the years?

DARREN: I have been lucky enough to speak to, advise and work with some very clever and talented people in my career.

I’d say one of the biggest influences was my boss when I moved over from price making and trading to brokering and acting on behalf of clients.

He taught me so much about the market and the way to behave and treat people. I sat next to him for seven years and soaked up as much as I could.

Another big influence was a hedge fund manager working for what was at the time one of the world’s biggest hedge funds.

I decided to cold call him one day when I was self-employed at a tiny brokerage based in Essex. He took my call, saying it wasn’t his job to turn away new ideas and thinking. He asked me to impress him, so I gave him a trading idea and a timescale. 

I phoned him back three weeks later when the idea had come to fruition. I will never forget him saying I had his attention.

The next day he phoned me to give me a multimillion-pound order to execute. That taught me to value my thinking and ideas and gave me the confidence to approach other major clients. 

Respect the leverage

ADRIAN: What’s the piece of advice you always come back to when speaking to those less experienced in the markets?

DARREN: I think you’ve just got to be sensible.

I always sum it up by saying…

Be realistic in your expectations, do not trade anything you don't understand, and if you are trading on leverage, respect that leverage.

ADRIAN: I like that. Respecting the leverage.

DARREN: Yes, it can magnify your profits…but it can magnify your losses just as well.

I also recommend people read widely, seek out different opinions to your own and never be afraid to ask questions.

ADRIAN: And on the flipside, where do you think people often go wrong?

DARREN: I think they have unrealistic expectations about how the markets work and what’s involved.

We all know that get rich quick schemes are usually scams, so be dubious of anything like that.

But the fact is: you can make money in the markets, it just doesn't happen overnight, and it requires a lot of hard work and discipline on the part of the trader.

ADRIAN: Very true.

While I have you, Darren, we’ve talked about the potential dangers on the horizon, but I wondered where you see opportunity right now?

DARREN: Well, it’s important to remember market corrections treat all stocks the same regardless of their individual merits

We can see this in the FTSE 100 where the average stock has fallen significantly. 

But some of these falls are probably not justified.

Take a stock like BP, which is down by -31.0% YTD at the time of writing.

It is under immense pressure at the moment, but oil prices have been at these levels before, back in 2002/2003 in fact.

And BP stock was at similar levels then.

But just over three years later, in 2006 the BP share price had all but doubled.

Of course, things are different now than they were in 2003…

But the example shows just how effective buying value for the longer term can be.

ADRIAN: It does. And I agree we’re going to see some great value in the market over the coming months.

Darren, thank you for your time – it’s appreciated. Where can people find you if they’re interested in following you?

DARREN: I post quite regularly on LinkedIn, so you can connect with me on there. Or you can find me on Twitter at @fatdaz.

ADRIAN: Ha. An excellent moniker. Thanks again, Darren.



 
PART THREE: Markets were in trouble before coronavirus: An Interview with Vince Stanzione

In this interview, my guest points out the writing was already on the wall for a crash before coronavirus came along.

He has a point.

And when you consider he’s been successfully trading the markets himself for over 30 years...

He sure knows how to spot emerging trends.

You see, my guest today is Vince Stanzione.

He’s a very well-known trader, entrepreneur and New York Times best-seller, no less.

We discuss the impact of coronavirus and where he sees value in the markets right now

But I started by asking Vince how he got into trading...

“Dad, can you buy these shares for me?”

VINCE: I started to become interested in shares at school.

The first share I ever owned was BT.

I got my Dad to buy me £130 worth in 1984 when they went public.

From then I was hooked.

I blagged my way into a job as a junior in the City. It was for National Westminster and they had become part of what was known as the World Money Centre.

From there, as you do, I worked my way up.

But then came the 1987 crash.

ADRIAN: That must have been a strange time.

VINCE: It was indeed. I actually decided to leave that whole world behind for a while in 1989 to set up my own business selling car phones.

I was still young and very driven, and I made my first million by the age of 21.

But the trading bug never went away and soon after I came back and started trading and investing my own money.

The rest is history, as they say.

ADRIAN: Who were your biggest influences over that time? Was it the people you worked with?

VINCE: It sounds weird, but most of my influence came from dead people.

ADRIAN: Ha.

VINCE: I like reading books more than anything, especially those from the 1920s.

One of my favourites is Reminiscences of a Stock Operator from 1923 by Edwin Lefèvre. It’s told in the first person by a character inspired by the life of stock trader, Jesse Livermore.

I also like How I Made $2,000,000 in the Stock Market by Nicolas Darvas from the 1950s.

I also see myself as a student of stock market crashes. It’s amazing how history keeps repeating itself.

But then when you think about it, there’s no wonder: it’s all really driven by human psychology, not technology.

ADRIAN: You’re right. Very interesting.

And on that idea of the influence of human psychology, in your experience, what have you found to be the biggest mistakes people make when it comes to trading?

VINCE: People over trade and they make it too complicated.

ADRIAN: I agree with you there.

VINCE: I also think people spend too much time on deciding what to buy yet spend little time on when to sell.

The exit is just as important, if not more important.

Had I not had exit systems in place in my own trading, I would have lost millions this year alone.

Thankfully, when markets started to fall in February, I was able to get out and avoid too much damage. And, at the same time, I was able to profit from the falls.

Had I not had an exit system in place, I would still be in.

ADRIAN: That’s very true. It’s so important to plan every trade from entry to exit. You need to know when to get out if things are going against you. It’s something we talk a lot about here at Trendsignal. I know you do too.

VINCE: Very much so.

I also think people shouldn’t pay too much attention to the news and the media. It can be so misleading.

Concentrate on price action.

And, as I say, keep it simple.

I use fairly simple systems myself and they tell me when to get in and – more importantly – when to get out.

If the price goes to 50, 51, 55, 60 – it is going up. Fact.

It doesn’t matter what the news says or what you think should be happening. The price tells you the truth and should always be obeyed.

Often, by the time you read something in the news…it’s too late.

ADRIAN: Are there any commentators or newsfeeds you do follow?

VINCE: Not so much. I stay away from most mainstream business media. But Real Vision – which was set up by ex-hedge fund manager Raoul Pal – is a good source of information and has interesting interviews. I find that useful.

“We we’re in trouble before corona”

ADRIAN: What are your thoughts on the financial impact of coronavirus here in the UK?

VINCE: I mainly trade the US markets and the US dollar is my base currency, but frankly, the US and UK both have the same problem...

Simply, the financial system is over leveraged.

I don’t believe the majority of the issues from the 2008 crash were ever really sorted.

European banks are still a mess and they will need serious bailouts. They did before the coronavirus hit.

The fact is, we’ve just had 10 years of a pretty decent economy...yet many have no savings.

The Bank of England never managed to normalize interest rates and even before the virus, I don’t think UK stocks were doing that great.

We had a bubble in financial markets and coronavirus is the pin that has popped it.

ADRIAN: How do you see it playing out?

VINCE: Well, the world is in a recession. And likely it’ll be a depression too, especially the US.

We have just had 10 years of easy money and stupid ‘unicorn’ companies that think they are worth billions but don’t make any money.

Whilst, say Uber for example, may be a good app – it’s not worth $35 billion, especially when it’s never made one cent of profit.

I believe US companies have been playing shady accounting tricks and using share buy backs to make their businesses look stronger than they really are.

That is now coming to an end.

I mean, I hope I’m wrong, but everything points to a 1929 crash where stocks fell 89% from their highs.

Even my best case is that US stocks will fall 50% from their highs before years of new real growth.

ADRIAN: Interesting. Where do you think people can still find value right now?

VINCE: Gold is still well valued and as governments print money, I think it will hold up and do well.

Whilst it’s much more volatile, I do think Bitcoin is also worth a small investment. I believe it will do well in this new era we are heading into.

Silver should also do well.

As a trader there are always opportunities.

ADRIAN: There really are. Thanks, Vince. That’s great and I appreciate your time. If folks want to find out more about you, how can they?

VINCE: Best bet is to visit www.fintrader.net and you can sign up there for my emails. Plus, there are a couple of free reports you can grab too.

ADRIAN: Great. Thanks, Vince. And good luck with your own trading.



 
P.S. Don’t forget…

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