Jack Schwager’s interview with Ahmet Okumus from Stock Market Wizards is yet another example of a trader who has been incredibly successful trading a strategy that is almost a polar opposite from my approach. Okumus trades purely on fundamental information. He believes that he has the ability to out-research every other investor and analyst on Wall Street. He buys stocks that are cheap relative to his valuations and scans the new lows lists for idea.
Despite all of the differences between our approaches, Okumus did mention a few things that can be applied to any trading method.
Top Five Quotes From Market Wizard Ahmet Okumus:
“I spend a hundred hours a week on research.” – Ahmet Okumus
While we spend our time researching different things, Okumus and I both share the drive to learn as much as we can about our investments. Okumus spends his time studying fundamentals, while I have been spending my time studying trading systems and successful traders.
Regardless of what you are studying, a strong desire to learn is obviously very important to trading success.
“On average I would say 35 percent school and 65 percent stock market, but the stock market percentage kept going up over time. By the beginning of my senior year, I was devoting 90 percent of my time to the stock market, and I quit school altogether.” – Ahmet Okumus
Okumus is discussing the amount of time he invested in studying for school vs studying the stock market while in college. This stuck out to me because it reminded me of my college days. I was bored by most of the classes I was forced to take, so I would bring my own personal studies to class with me and work on that, completely ignoring professors.
Unlike Okumus, I did stick it out and finish school. I am not sure that that was a good decision though.
“My main goal is not to lose money.” – Ahmet Okumus
This money management trait can be applied to any and every trading strategy. The number one goal of any approach should be capital preservation.
“Simple logic: My top ten ideas will always perform better than my top hundred.” – Ahmet Okumus
This is very similar to the O’Neil style trading that I spend years studying. I still believe that when it comes to picking stocks, you need to concentrate your positions in order to maximize gains, however I am not very good at picking stocks.
“Be disciplined, and don’t get emotionally involved.” – Ahmet Okumus
Here we see another truism that can be applied to any form of speculation. This can even be applied to poker, blackjack, and other forms of gambling. It is important to stay disciplined and stick you your plan. If you let yourself get emotional, you will make poor decisions.