How to Beat the Market Trading Zoomers

Wall Street - because they are the market. They cannot outperform themselves. Wall Street realized long ago that there is a lot more money in charging everyone 1% of their assets than in trying to make a few clients rich. So the name of the game is assets under management, not performance.

Academia - well, where do I start? If an academic could make money trading, he or she would. But I am not aware of any academic who got rich implementing their theories. Building up their own brilliance by justifying mediocrity is their preferred theme. Selling what Wall Street will pay for is how they make their living.

To justify mediocrity, Wall Street and academia focus on the market as a whole. If no one can beat it, what's the point of trying? To make mediocre returns palatable, they have invented an endless number of benchmarks for every occasion. All they have to do is outperform the relevant benchmark on a relative basis. That includes "beating" the benchmark by being down "only" 10% when the underlying index is down 15%. Some "outperformance"!

The simple truth is: the market cannot make you rich. But every year it produces enough zoomers to create some serious wealth. All you need to do is find them ahead of the crowd and latch on to it for the ride. How?

Stop listening to professionals.

Nobody on Wall Street ever opens their mouth without benefiting themselves. Think they are there to help you? Think again. Their job is to help you part with your money so painlessly that you don't even realize what happened.

Do your own research.

99% of what's out there is noise and opinion. Learn to separate facts from opinion and operate only with facts. How do you find zoomers ahead of the crowd? Simple. Change your mind set. Each time you hear something new, ask yourself: how do I make money off this?

Focus on small caps.

If you like the product, check the stock. That's a good starting point. Every year brings new trends, new products, new business concepts promulgated by new innovative small companies led by aggressive hungry management. These are your best zoomers.

Learn to read charts.

Charts reflect what people do, not what they say. Although not perfect, a chart is more reliable than 90% of what is being said about a stock. At the very least, it will prevent you from making costly mistakes; at best, help you select the right stocks at the right time.