Exploring Markets

You Lost Everything In The Stock Market? Here's What Paul Tudor Jones Would Say

People lose a lot of money in the stock market. Sometimes they lose everything. It can happen to both investors and traders. It also happens for a variety of reasons that include taking on too much risk, over-trading, making psychological mistakes, and buying speculative companies. But all is not lost. Here's what one of the greatest traders the world has ever seen says about losing everything in the stock market – it's happened to him, his friends, and other market legends:

“I think I lost $10,000 when I was 22, and when I was 25 I lost about $50,000, which was all I had to my name. I think it’s no coincidence that our greatest champions, our greatest artists, our greatest leaders, our greatest everything all seem to have experienced some kind of gut-wrenching loss. I think their greatness, in part, was fashioned on the crucible of that defeat. To a certain extent, I think that holds true in my field as well, and I am leery of traders who have never lost it all. I think that intense feeling of desperation that accompanies such a horrifically deflating experience indelibly cauterizes great risk management reflexes into a trader’s very being.

There are two unpleasant experiences that every trader will face in his lifetime at least once and most likely multiple times. First, there will come a day after a devastatingly brutal and agonizing stretch of losing trades that you’ll wonder if you will ever make a winning trade again. And second, there will come a point when you begin to ask yourself why it is you make money and if this is truly sustainable. That first experience tests an individual’s grit; does he have the stamina, courage, guts, and smarts to get up and engage the battle again? That second moment of enlightenment is the one that is actually scarier because it acknowledges a certain lack of control over anything. I think I was almost 38 years old when one day, in a moment of frightening enlightenment, I knew that I really did not know exactly how and why I had made all the money that I had over the prior 17 years. This threw my confidence for a jolt. It sent me down a path of self-discovery that today is still a work in progress.”

Ray Dalio Believes American Politics Will Cause The Next Stock Market Crash

Have you ever wondered how politics impact financial markets? Does the President of the United States matter? The simple fact is this: the Dow Jones Industrial Average climbed 29,225% from 1918 to 2017. Over that same timeframe, there have been 17 Presidents and even more congressmen and senators. The market has rarely cared, over the long-term, about politics. The American machine is strong and alive. But, that does not mean one of the world's smartest hedge fund managers is asleep.

In 2017 and 2018, Ray Dalio thinks politics will cause the next great market crash. In this post, we've highlighted his thoughts that everyone needs to see. As you read them, ask yourself if you agree or disagree with Dalio. You can read the entire post at the link below:

"History has shown that democracies are healthy when the principles that bind people are stronger than those that divide them, when the rule of law governs disputes, and when compromises are made for the good of the whole—and that democracies are threatened when the principles that divide people are more strongly held than those that bind them and when divided people are more inclined to fight than work to resolve their differences. Conflicts have now intensified to the point that fighting to the death is probably more likely than reconciliation." - Ray Dalio

"The majority of Americans appear to be strongly and intransigently in disagreement about our leadership and the direction of our country. They appear more inclined to fight for what they believe than to try to figure out how to get beyond their disagreements to work productively based on shared principles." - Ray Dalio

"A) Most realities happen over and over again in slightly different forms, b) good principles are effective ways of dealing with one's realities, and c) politics will probably play a greater role in affecting markets than we have experienced any time before in our lifetimes but in a manner that is broadly similar to 1937." - Ray Dalio

"While I see no important economic risks on the horizon, I am concerned about growing internal and external conflict leading to impaired government efficiency (e.g. inabilities to pass legislation and set policies) and other conflicts." - Ray Dalio

Read Ray Dalio's entire post here titled, The Principles That Divide Us Might be Greater Than Those That Bind Us Together