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Tharp's Thoughts Weekly Newsletter (View On-Line)

January 07, 2009 — Issue #405
  
Trading Education

$700 Discount Expires Next Week on Systems Development Workshop in Phoenix, AZ

Article

The Belief Examination Paradigms by Van K. Tharp

Workshops

Sydney Workshops Coming Soon

Trading Tip

Bonds and Gold – Talk of Bubbles and Bugs – Revisiting Our Outlook by D.R. Barton, Jr.

Update

Update on Melita Hunt by Van Tharp

 

Trading Education

How to Develop a Winning Trading System That Fits You 
Three-Day Workshop

January 30-Feb 1, 2009

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Feature

The Belief Examination Paradigms

by 
Van K. Tharp, Ph.D.

Your beliefs create your life.  Whatever you believe creates your reality and that’s what you experience.  Those might be strong words for some of you, but that’s probably because you don’t believe what I just said.  And, of course, you get to be right about your beliefs; that’s why it’s important to start examining them.

Whatever you believe about yourself is what you experience about yourself.  Whatever you believe about the market is what you experience about the market.  Whatever you believe about your trading business is what you’ll experience about your trading as a business.  And if you don’t believe you have a trading business, then, of course, you don’t.  In my opinion, you do have a business; it’s just not likely to succeed because you don’t treat it like one.

In our psychological workshops (and even in some of our systems oriented workshops) you examine your beliefs.  So let’s take a look at one belief and put it through a process I call the Belief Examination Paradigm.  One belief I hear all the time from many of you is the belief, “I’m just an average investor,”  so let’s put that one through the paradigm.

Step 1:  What Does This Belief Get Me Into?

This might be the same thing as saying, “What does this belief mean for me?”  But as A Course In Miracles says, “nothing has any meaning except for the meaning you give it.”

Now, I don’t really have this belief, but I’m going to imagine that I’m someone who has it and answer it according.  You might have this belief and find that the answers you give are totally different than mine.  If so, it’s just because your meaning is different.

Here are some possible answers:

     I still think I can make money in the market because the market generally goes up by 10% a year. If I can just be patient, I’ll make money.

•     I can turn to people who claim to be really good to invest for me… like the best mutual funds.

•     I just buy stocks and hold onto them, hoping I’ve picked the right ones.

•     I can get by just reading a few newsletters and watching CNBC.

•     I think I can make money in the market, even though I’m average. If not, why would I invest?

•     I tend to listen to people in authority for advice.

•     I have a simple understanding of the market.

So given your understanding of the principles of successful investing that we teach, how would such a belief help you?  But before you answer, let’s do the other steps.

Step 2:  What Does This Belief Get You Out Of?

The answer might be different for everyone, and, again, I’m just pretending that I have this belief.

        I don’t have to spend a lot of time on the market because I’m just average.

        I don’t have to do anything complex.

        I don’t have to treat trading like a business because the average person doesn’t do that.

        I don’t have to do a lot of work to ensure my success.

        I don’t have to develop a working business plan to guide my investing because I’m just average and the average person doesn’t do that.

        I don’t really have to have a system either… perhaps I’ll just follow other people’s advice because having a system would get too complicated.

Your responses might be different but these are some of the possible answers.  Again, do you think this belief might help you?  Let’s look at the third step.

Step 3:  Who Gave You the Belief? 

Was it your parents? Your peers? The media? Or did you deliberately pick the belief for yourself?

Your answer might be, “Well, I’m not sure, but I don’t do much and I’m just like everyone else, so I must be average.”  In other words, you probably got the belief from everyone else… the media, your peers, etc.

Step 4:  What Is the Evidence for the Belief?

Now, this one should not be hard because you are always searching for evidence to make yourself right.  You should have plenty of evidence for your beliefs: 

        Well, I have a 401K like most other investors.

        I don’t spend a lot of time on the markets, so I must be average.

        I’ve made very little money in the markets, so that probably makes me average.

        And I lost 45% on my retirement accounts in 2008, sigh, so that’s probably average.

Step 5:  Is the Belief Useful?

Since you have thoroughly examined the belief by asking the other questions, you can now ask how useful the belief is.  And a related question would be “Is there a much more useful belief that I can substitute for this belief?”

So how might you answer that?  Here some possible reasons you might think the belief is useful:

        I don’t want to do a lot of work, learn a lot of things, or do a lot of research.  This belief allows me to have an excuse not to do that, so it is useful.  (If this is you, please examine what you just said.).

        I didn’t make a lot of money and this is why, so it’s useful to let me know why.

And here are some reasons that you might think the belief is not useful:

        My investing is a joke because I don’t take it seriously.  I spent 8 years learning my profession, yet here I am trying to make better money in the markets without doing what it takes to be a professional.  No, it’s not useful!

        I need to examine myself.  I need to treat my investing like a business and have a business plan.  I need to have some well-researched systems. The whole idea that “I’m average” is not useful at all because it is keeping me average.

Are you beginning to see the impact that your beliefs might have on your experience as an investor/trader or even on your life?

Step 6:  Can I Pick Something More Useful or Does the Old Belief Have Charge?

One of the nice things about beliefs is that as soon as you decide a belief is not useful and find a more useful belief, you can usually adopt the more useful belief.  So let’s look at a few more useful beliefs:

        According to Malcom Gladwell, the best people in the world have to put in at least 10,000 hours of practice, and I’m on my way to being one of the best investors.

        I’m in the process of learning what is important to be a successful investor and doing whatever it takes.  That includes examining myself, developing a business plan, and developing systems for all types of markets so that I consistently make money.

So if you think you are an average investor, what happens when you try on one of those new beliefs?  Perhaps you feel a lot of fear —“What if I put in a lot of time and I still lose money?”  Perhaps you feel dread —“I already went to school to learn my profession. You mean I have to learn more?  That’s too much work, and I don’t want to do it again.”

This says that the old belief has charge, and you need to release the charge.  When the charge is gone, you can adopt much more useful beliefs.  But as long as that belief is attached to negative energy in your body, you won’t be able to release it.  The good news is that people can get rid of charge.  (We show you how in the Peak Performance Home Study Course and in the two Peak Performance Workshops—PPTS 101 and 202.)

How powerful do you think this Belief Examination Paradigm could be for you?  What if you spent three days examining your beliefs about yourself, your trading business, the market, systems, etc.  You dig inside yourself to discover the beliefs that are running your life.  When you do that, you can start getting rid of the old beliefs that don’t serve you—either by immediately adopting a more useful belief or by getting rid of the charge and then adopting the more useful belief.

This is why our Blueprint Workshop is so powerful.  First, you get to see all of your beliefs and how they run you.  Second, you get to see the big picture about what is important to trading success and how you currently fit into that.  And, third, and most importantly, you get a complete blueprint of what you need to do to be successful.

The Blueprint Workshop will be offered in Sydney, Australia next month along with Peak Performance 101 (to help you get rid of the charge on non-useful beliefs) and our new four-day Advanced Peak Performance 202.  It’s a very powerful combination.  I know some of you are travelling over 10,000 miles to go there, but we’ll offer these courses in Cary, NC as well in 2009.  But for those of you who live in Australia, New Zealand, Singapore, Hong Kong, China or Japan, this is an exceptional opportunity to get all of these workshops together.  Don’t miss it because it is not likely to happen again for some time.

About Van Tharp: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling book Trade Your Way to Financial Freedom and his outstanding Peak Performance Home Study program - a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Van Tharp at www.iitm.com.

 

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February 6-8 Blueprint for Trading Success
February 10-12

Peak Performance 101

February 15-18 Advanced Peak Performance 202

 

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Trading Tip

Bonds and Gold – Talk of Bubbles and Bugs – Revisiting Our Outlook

by
D. R. Barton, Jr. 

 

We’ll break from our series on volatility to revisit two markets that we talked about three weeks ago—bonds and gold.

Back in the middle of December, we talked about the bond market being overcooked and the gold market’s thinly disguised downtrend.

And since that time, the bonds have broken spectacularly, and gold still can’t get out of its own way, despite a shooting war between the Israelis and Hamas breaking out in Gaza.  

Let’s first revisit the bond market chart we looked at on December 17th.

Back then, I said, “Markets can remain overbought for longer than we expect, but the correction in bonds will most certainly be a violent one when it comes.”  Indeed the drop was fast and furious as we can see on today’s chart (1/7/2009).

After an historic run for the roses, the bonds have relieved part of their oversold condition; however, the intermediate to long-term outlook has to remain bearish.  Selling pullbacks (as noted on the chart) would be a more logical way to enter versus just jumping in at low points…

Gold on a Run, But It’s Far from a Bull

When we discuss gold, it’s interesting to note that neither a world-wide credit crisis nor a shooting war in the Middle East could give gold a lift out of a ten month downtrend.

Three weeks ago, we looked at this chart (below), and noted that due to progressively lower highs and lower lows, gold has been in a downtrend since its March highs.

The “question mark” in the chart above was asking if gold could break through its bearish technical constraints.  For three weeks, the answer has been mostly a “no.  Here’s the updated chart.

There is no doubt that gold has a very bullish long-term fundamental outlook with central banks printing money and spending it like drunken sailors. But for now, gold remains in a downtrend with a bearish intermediate outlook, and will remain so until trend lines can be broken and higher highs made.

Great Trading,

D. R.

About D.R. Barton:  A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena.  He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at  “drbarton” at “iitm.com”. 

D.R. is presenting the upcoming How to Develop a Winning Trading System That Fits You Workshop, January '09.

Melita Hunt Update

Update on Melita Hunt

By Van Tharp

We know you’ve all been concerned about Melita Hunt. Many of you noticed her articles disappeared from the newsletter a couple of months ago.

As many of you know, Melita was diagnosed with Stage 4 lung cancer in September 2007. Also, those who have followed her blog know that the tumor in her lung was considered to be in remission in October.

However, shortly after Melita returned from her visit home to Sydney, she quite unexpectedly began to feel very sick and she was having a much more difficult time just being here alone. She wanted to go back to Sydney where she had felt so much better under her mother's tender loving care. 

After returning to Sydney the second time, her symptoms worsened, and she went back to the doctors for more tests. She and her oncologist had believed some of the symptoms she was exhibiting were side effects from her last chemo treatment. Sadly, the new tests indicated that the cancer had metastasized to her brain.

This led to swelling in the brain and she began to experience neurological effects on her motor skills. Using a keyboard, for example, has become too difficult.  It has also adversely affected her speech. So it is a struggle for her to form sentences or have conversations. 

The good news in all of this is that she is home under the care of her very capable mother, who is a retired professional nurse. Melita is being well cared for and surrounded by her family, including her beloved niece and nephews who bring her such joy. 

She is now in palliative care and not receiving further treatments as the cancer is aggressive and treatments were no longer effective.  Her mother reports that she is not in pain and still manages to laugh and find humor in things around her. 

She is no longer able to work or write, both of which she loved very much. In the past year+ of living with lung cancer, she never wanted to stop working and continued to make very valuable contributions as our CEO.  I was dedicated to keeping her on the job as long as she wanted. However, December was her last month as official CEO of the Van Tharp Institute. 

Like all endeavors that Melita took on, the Van Tharp Institute is a better place for having been under her guidance for the past seven years.  We are grateful to have had such a capable, inspiring and intelligent CEO. I am personally grateful to Melita for the tremendously positive influence she has had on my life. My whole staff feels blessed for the huge impact she made on each of them. I know many clients also feel the same way.  Because of Melita’s hard work, her vision and her strategy, the Van Tharp Institute is strong and on a very solid footing to endure the loss of such a key person. We will begin our search for a new CEO over the next few months. In the meantime, I’m in a good position to oversee the company for the short term, and my staff is the best I’ve ever had. Cathy, for example, has been with the company over 12 years now and is very well versed in all day-to-day operations.

I wish I had better news to give on her health, but this is it for now.  Further updates on Melita may be posted on her blog, www.myleftlung.com

Thank you to all of you who have asked about Melita and also a special thanks to everyone who enjoyed her articles over the years. She loved all the feedback she received and, like the rest of us here, she frequently commented on what a pleasure it is that we work with such genuine, smart and caring clients. 

 

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