Welcome to the World of the "PSYCLE"............an Interview with Jim Goodman
Q: So, Jim, what is it that you offer people?
* People tell me I am one of a very small number of honest, veteran (17 yrs.) investment Broker/Advisors left, who specialize in helping people with their trading/investing, in stocks, bonds, options, industry groups, and commodities, short-term/long-term, employing my "PSYCLE" concepts to predict/time probable price moves in Equities, and Industry Groups, BEFORE they are recognized by "the masses and the media", who are by natuer, often incorrect in their assumptions, beliefs, suggestions and actions....I became both, a Broker and an Advisor, so I can offer more nice people, more direct aid/services, with my many PSYCLE ideas.
Q: Specifically how do you try to accomplish things for your clients ?
* After determining each person's Financial and Psychological needs, situation, objectives, experiences, and beliefs, I try to match the most attractive PSYCLE ideas available at any given time, to the type of accounts and services desired....special emphasis is placed on maintaining a non-emotional, non-judgemental, diversified, risk-managed approach, over a long-term time period....this will differ greatly from what people have been unfortunately "taught" to believe, leading to vastly increased potentials, since this approach Removes most of the "extra (and unneccessary) risks" which 95% of all investors/traders often insist on taking....
Q: Besides eliminating all Emotions and Incorrect (mis)beliefs, what else are important benefits of letting your "PSYCLE" help me ?
* By ignoring 95% of the inputs which 95% of all "average" people and media sources incorrectly believe might/should affect prices of things from any moment on, we glean the best potential ideas (both long and short) by taking advantage of normal, usual patterns of Chart/Media/Human Behaviors, which have existed and performed in the same way, many times before, in history---this is represented by my proprietary "PSYCLE" of sequential stages of repeating events/activity, over time....we also save tremendous of time, resource chasing, and angst, which are unnecessary, to do well...
Q: Why do you ignore/avoid following/acting upon over 95% of the financial, fundamental, economic, political, corporate, etc., information, which everybody else has always believed is so important to know, on which so many people try to use to base their buy/sell decisions?
* Because all studies going back many decades, have continued to show, that very Little, if any, of the massive amounts of such information disseminated every day/week, truly affects the Prices of individual stocks, bonds, interest rates, etc., in the way that "the 95%" masses incorrectly think they should/will....the problem, is that so many people have been brought up to believe so many things regarding investing, which are just NOT TRUE historically---but few people have gone back and discovered the Truth about these many incorrect "misbeliefs", by observing the thousands of continuing examples of "PSYCLES" repeating, most running counter to "generally assumed (but wrong) presumptions"....You have surely seen countless historical examples, where "acting/following the generally assumed types of news announcments by Wall St." has caused losses for traders, time after time.... think about it; "if" news and fundamentals "were" of future price-predictive-value, then no one would ever lose....and all reporters/analysts would be billionnaires, and never be wrong....sbut they are incorrect.... the vast majority of the time....so why use this info. at all?
Q: So how does your "PSYCLE" know where each item is, and is likely to go in the future, at any given time ?
* Each phase of my PSYCLE is accompanied by a different combination of three elements, which each change in combination, as the stock/industry group/commodity passes sequentially, from stage to stage, over time....Each PSYCLE stage combines: 1) a certain type of CHART price/volume pattern, going back 1-5 years, 2) a certain type of Financial/Fundamental situation and Media/News stories, and 3) a certain type of opinions and psychological feelings from the Media, Wall St., and Investors, about that item....
Q: In other words, you do NOT "recognize/use" the tons of domestic/intl. news and corporate/earnings/product announcements, in the way "the 95%" use them, as potential inputs on which to base your timing decisions ?
* Once again, NO, unless I use them from a Contrary P.O.V.....since I have eliminated the tons of things which "the 95%" try to employ (and we all know how mediocre most people do as investors/traders, trying to use all that drivel), I have greatly Simplified the whole process, while Removing negative and damaging attitudes, incorrect presumptions, and predjudices, saving tons of time and effort and lowering stress, angst, and expenditure....
Q: Why do so Few people do the right things, when they invest/trade ?
* Probably the biggest reasons, are because everybody "wishes" for a "quick fix, black box, overnite approach, which takes no time to employ, works every time guaranteeed, and costs nothing ever"....Yet I have found almost NO ONE ever thinks to "backtest/check" the actual historical facts nor accuracy of the plethora of mostly "wasted output" which pervades the financial media daily....people just "believe" whatever is said/written, just because that person is on the air, or published, or has some "purchased fame or exposure"....plus, almost NO ONE ever looks at a "price chart" of the ideas they're considering putting thousands of dollars into, before they act; WHY ?
Q: What about "earnings", and "company events", and "economics" ?
* Again, since NO fundamental items have ever exhibited real, consistent, predictable effects (all fundamentals are subjective, and can be manipulated and are often "adjusted" later anyway), no usable "rules" exist on these kinds of "input items", which might be combined into a trading strategy, which can actually PREDICT future PRICE movements in a stock, DIRECTLY from such numbers/news....for example, many people "try" to "force" fundamental items, into a "hope" that a stock will "rise", based upon "something they heard/read" somewhere. Then, they compound this illogic, by having NO disciplined strategy/plan, no preset "up" targets, nor stop-losses, no diversification, no portfolio/money mgmt., etc. Sound Familiar ? I invented my PSYCLE to solve this situation for you.
Q: What do you mean by "Future Price Predictive Value ("FPPV") ?
* In order to achieve the most, with the least effort and angst, you must SEPARATE inputs/factors which can be DIRECTLY used to predict price moves, from news, announcements, and items which, while they may be important or interesting to know from corporate, or political, or economic, or human interest reasons, DO NOT directly lead to the ability to predict the near-term rise/fall of a specific stock/commodity, etc....as I keep saying, over 95% of all inputs are NOT of a "price predictive nature", and are therefore USELESS to put into our brain/psyche in the first place....plus, you must learn to buy things BEFORE they rise ("the 95%" buy at much higher prices than they should, and/or on "breakouts" only....why not buy BEFORE the rise/breakout ? somebody is). You should ONLY be concerned with PRICE move....period. You didn't buy the "news item"....you bought a stock.... dig ?
Q: Meaning, that news items, and changes in corporate fundamentals, are totally Separate from price moves which might follow announcements ?
* YES....but this is so hard for people to accept, they really fight me on this....always to their detriment financially....but even more insidious than this plethora of incorrect misbeliefs and wasting of time and effort chasing fudamentals to no avail, is what led to the "PSY" in my PSYCLE....Psychology.
Q: You mean, How people "react" to things/events is at least as important as a specific trading strategy itself ?
* Absolutely....but even this does not occur in the way most people have been "taught"....after 20 years near this business, I discovered that the single most important thing to learn, is to be strong enough to ADD MORE MONEY to your account, AFTER an occasional "downer" period....re-read that.... Every good trader will have "off" periods....the key, is to take advantage of the likely improvement which follows, by INCREASING your investment specially at those times....dig ? VERY valuable advice....but, I have found very few people do this....in fact, they do the opposite...they STOP trading after a "down" period, and add money only after they have been "hot" for a while....have you noticed this also ? So they are always buying near tops, and selling near lows....another PSYchological problem most people have, is they fail to learn their OWN internal "psycle"....whether they personally are "hot or cold"....and fail to take advantage of the trading opportunities this provides....I could cover many more examples of this, if I had the space....
Q: What about "Sentiment"....do you use sentiment as timing help ?
* Of course....Going opposite ("fading") the masses or the majority of individuals, newsletters, media, etc., always helps, but I figure you already are aware of this phenomenon....BUT---just because people are "aware" of a concept, does not mean they ACT properly to take advantage....I have found few investors know how to use Sentiment. ...much of the time, what invetors "say", differs greatly from what they actually "do" with their investable funds. ...and, I have had clients who are, themselves, great "contrary indicators", which has helped me and my clients many times (you know, people who are most always late, and/or wrong, right near major turning points in stocks, etc.), especially people who work FOR the very companies/ industries my PSYCLE predicts will rise/fall....the biggest sucker punch for most people is the "I know something about or someone with XYZ Co., and they say,......" Yeah, right....I hope I don't need to discuss this deeper....
Q: So you're saying that "the chart" of an issue, itself, is pretty much THE biggest single aid, in future price prediction for your clients ?
* Great....if I had only one item I could choose, the PRICE/VOLUME CHART would be it....which is great, considering so few people use them.... actually, it is partly BECAUSE so few people use "etechnical analysis of charts, that it works so well....It's like "shorting" or buying Puts, to take advantage fo the DECLINES in specific issues....so FEW people do this, that it leaves 95% of the gains here, to the 5% (or less) of traders who even try this side of the marketplace---ever think about that ? Almost ALL the money on the downside is made by just a FEW players....pretty good, huh ? Have YOU worked with Puts before ? Why not ? I find most people harbor massive, illogical fears of things they know very little about, and actually believe that it is somehow "riskier" to play the Down side, than the upside.... yet many issues do Fall in price, every week....hmmm.
Q: Great....now, let's cover your "Relative Rotation" concept....
* Not only have I eliminated the many psychological, misbelief, and information problems which 95% of all investors/traders have, plus most all "timing" problems as to when and where to B/S issues, plus most "portfolio/risk management" problems people let hinder their performance potentials, I also discovered a layer of protection I add on top of all the benefits the PSYCLE offers....after viewing Thousands of individual stock charts every weekend, I find that often, Several attractive issues will come from the same few Industry Groups, which I'm sure you have noticed, but perhaps not taken advantage of enough.....i.e, Not only do most Energy stocks move together generally, so do the Airline, Drug, Food, Utility, Financial, Technology, etc., stocks.....plus, when many companies price chart patterns in similar industries have the same Patterns, at the same time, this gives us even more protection/potential for being correct in our future price prediction...."Groups" move, independently of "the market", every year....
Q: So Wall St. homilies, like "all boats float/sink together", are wrong ?
Not only is MOST ALL "Wall St. Wisdom" WRONG in historical fact, I have noticed, that sometimes, "groups of groups" can be combined to predict things like interest rates, BEFORE the move occurs....i.e., if all utility, bank, insurance, mortgage, bond funds, are in depressed "bases" (the cornerstone to all PSYCLE long buys), then, not only might we make money buying these for you, it also means "interest rates" are very likely to FALL as well, helping you in other areas of your financial life, like Real Esate and general Business questions....see it ? I do not have space to illustrate all the benefits of such PSYCLE SENSE here....but it covers most everything....
Q: What about trying to time "the market", indexes, etc. ?"
* more money has been lost, or should I say, not made, by the infernal and ridiculous attempt to find a "holy grail" system for picking S.T. moves in averages themselves.....look, why buy ALL the issues in an index, when you can easily Pick the best/worst few ones ? also, individual issues will always, by nature, give you bigger % moves, than any portfolio of hundreds of issues, right ? If you are overly concerned with "risk", try having preset targets and stops, and more portfolio mgmt., and less emotion, etc....
Q: What about costs, and/or the number of trades per year per account you manage for others....I "assume" trading, means "more trades" ?
* Once again, "conventional assumptions" are Wrong....Two things.... First, you'll do a lot better if you concentrate on positive RETURNS and Risk mgmnt., over long time periods, than by worrying about costs.... strategies which carry much Higher return potentials might carry seemingly slightly higher internal costs, but the real key is "the bottom line"....who cares what it costs along the way, as long as the end results are high(er), including costs....Second, contrary to incorrect investor assumptions, PSYCLE accounts only effect about 25 trades a year, versus "self-trading" accounts which tend to Overtrade, perhaps 100 trades per year, or more, at so-called discount firms....studies have shown that such supposed discount accounts actually cost the investor MORE each year, because they tend to do so many more trades, not even counting your additional expense of time and angst, which I save you, by using my PSYCLE....
Q: I know you are working on your "PSYCLE" book, but can you just give a few historical examples of your "PSYCLE" in action from recent years ?
* Too many to list here, but try these: a) 1990: during the Gulf War, the Media and Wall St. were consistently (and perfectly) telling the masses to buy and sell the exact Opposite of what stocks/groups/commodities should have been sold and bought, every step of the way....my PSYCLE was at it's best during this period....they said buy gold/oil if a war started, and they FELL instead....they said interest rates would skyrocket, and they FELL instead....etc. b) early 1993, they all said to sell/short the health-medical-drug stocks, after they had already fallen, for illogical fear of Clinton's pending health plans....so we BOUGHT them depressed, and did very well....and, c) I knew So. Cal. real estate (and many collectibles) had topped, in late 1990, because tons of people were opening shops, and my yuppie friends said such things would "never" go down.... d) precious metals, you ask? easy....I just watch the charts, and wait for the crooks in the newsletter and TV biz to get excited, then I short gold....vice versa, when in depressed bases, like earlier in 1993....e) the "new issues craze" ended recently, giving me bunches of OTC overpriced issues to short successfully.... f) most all Wall St. pundits have continued to be incorrect in predicting huge drops in Defense stocks, which have Risen a lot instead....into anexpected drop in business.... what happens to a "company", does NOT necessarily translate into a similar move in its "stock".
Q: For what kinds of accounts does your PSYCLE work ?
* Obviously, all personal trading/investing account needs....for both short-term and/or long-term, for rises and/or declines in items....for high-priced and low-priced ideas, NYSE and OTC and Bonds and Mutual Funds....for all types of Pension, IRA, Keogh accounts....for conservative as well as speculative needs....for all ages.... etc....specific strategies can be molded to YOUR situational needs....There are tons of consistent, historical examples of how and why the PSYCLE works so well, so often....too many to list....I'm sure you know of many anyway....the problem, is that 95% of all people self-defeat their potentials with useless and damaging inputs, incorrect and inbred (mis) beliefs, wasted energy, needless pressures, lack of portfolio risk mgmt. skills, and ignorance of historical facts and technical analysis.... life is wonderful and difficult enough, without sabotaging, what is a pretty simple process, which "the 95%" insist on complicating....I have spent my life creating a possible answer to the investing/trading question, "the PSYCLE'', for you to take advantage of....hey, I didn't invent Physics, or Human Nature....but isn't it about time YOU took advantage of the easily identifiable Patterns which repeat in the financial marketplace, for your own benefit, for the rest of your life ?
Please contact me a.s.a.p., at (714) 786-2577, M-F, 12-5pm, EST, or at: P.O.B. 17596, Irvine, Ca., 92713-7596 Thanks for your sincere and serious interest,
Jim Goodman
©1994