What Pain Do You Want?

Everybody wants what feels good. Everyone wants to live a care-free, happy and easy life, to fall in love and have amazing sex and relationships, to look perfect and make money and be popular and well-respected and admired and a total baller to the point that people part like the Red Sea when you walk into the room.

Everybody wants that — it’s easy to want that.

If I ask you, “What do you want out of life?” and you say something like, “I want to be happy and have a great family and a job I like,” it’s so ubiquitous that it doesn’t even mean anything.

Everyone wants that. So what’s the point?

What’s more interesting to me is what pain do you want? What are you willing to struggle for? Because that seems to be a greater determinant of how our lives end up.

Everybody wants to have an amazing job and financial independence — but not everyone is willing to suffer through 60-hour work weeks, long commutes, obnoxious paperwork, to navigate arbitrary corporate hierarchies and the blasé confines of an infinite cubicle hell. People want to be rich without the risk, with the delayed gratification necessary to accumulate wealth.

Everybody wants to have great sex and an awesome relationship — but not everyone is willing to go through the tough communication, the awkward silences, the hurt feelings and the emotional psychodrama to get there. And so they settle. They settle and wonder “What if?” for years and years and until the question morphs from “What if?” into “What for?” And when the lawyers go home and the alimony check is in the mail they say, “What was it all for?” If not for their lowered standards and expectations for themselves 20 years prior, then what for?

Because happiness requires struggle. You can only avoid pain for so long before it comes roaring back to life.

At the core of all human behavior, the good feelings we all want are more or less the same. Therefore what we get out of life is not determined by the good feelings we desire but by what bad feelings we’re willing to sustain.

“Nothing good in life comes easy,” we’ve been told that a hundred times before. The good things in life we accomplish are defined by where we enjoy the suffering, where we enjoy the struggle.

People want an amazing physique. But you don’t end up with one unless you legitimately love the pain and physical stress that comes with living inside a gym for hour upon hour, unless you love calculating and calibrating the food you eat, planning your life out in tiny plate-sized portions.

People want to start their own business or become financially independent. But you don’t end up a successful entrepreneur unless you find a way to love the risk, the uncertainty, the repeated failures, and working insane hours on something you have no idea whether will be successful or not. Some people are wired for that sort of pain, and those are the ones who succeed.

People want a boyfriend or girlfriend. But you don’t end up attracting amazing people without loving the emotional turbulence that comes with weathering rejections, building the sexual tension that never gets released, and staring blankly at a phone that never rings. It’s part of the game of love. You can’t win if you don’t play.

What determines your success is “What pain do you want to sustain?”

I wrote in my article last week that I’ve always loved the idea of being a surfer, yet I’ve never made consistent effort to surf regularly. Truth is: I don’t enjoy the pain that comes with paddling until my arms go numb and having water shot up my nose repeatedly. It’s not for me. The cost outweighs the benefit. And that’s fine.

On the other hand, I am willing to live out of a suitcase for months on end, to stammer around in a foreign language for hours with people who speak no English to try and buy a cell phone, to get lost in new cities over and over and over again. Because that’s the sort of pain and stress I enjoy sustaining. That’s where my passion lies, not just in the pleasures, but in the stress and pain.

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There’s a lot of self development advice out there that says, “You’ve just got to want it enough!”

That’s only partly true. Everybody wants something. And everybody wants something badly enough. They just aren’t being honest with themselves about what they actually want that bad.

If you want the benefits of something in life, you have to also want the costs. If you want the six pack, you have to want the sweat, the soreness, the early mornings, and the hunger pangs. If you want the yacht, you have to also want the late nights, the risky business moves, and the possibility of pissing off a person or ten.

If you find yourself wanting something month after month, year after year, yet nothing happens and you never come any closer to it, then maybe what you actually want is a fantasy, an idealization, an image and a false promise. Maybe you don’t actually want it at all.

So I ask you, “How are you willing to suffer?”

Because you have to choose something. You can’t have a pain-free life. It can’t all be roses and unicorns.

Choose how you are willing to suffer.

Because that’s the hard question that matters. Pleasure is an easy question. And pretty much all of us have the same answer.

The more interesting question is the pain. What is the pain that you want to sustain?

Because that answer will actually get you somewhere. It’s the question that can change your life. It’s what makes me me and you you. It’s what defines us and separates us and ultimately brings us together.

So what’s it going to be?

Should you buy a stock that breaks out just before it reports earnings?

1. How is the overall market doing?

Is the current outlook a confirmed uptrend or something else?

It’s generally best to avoid making any new buys while the market is in a correction.

If the outlook is “Uptrend under pressure,” that also adds risk, since it means signs of institutional selling have been on the rise and it’s possible the market is on the verge of slipping into a correction.

So as a general rule, only take on the added risk of buying a stock that breaks out ahead of earnings if overall market conditions are positive.

2. Is volume unusually heavy on the breakout?

To help minimize risk and increase the odds of success, make sure volume spikes higher on the day of the breakout. It should be at least 40% – 50% higher than normal.

A big spike in volume indicates heavy buying by institutional investors, and it’s critical to see that enthusiasm as the stock breaks past a key area of resistance (i.e., the ideal buy point in the base).

Be wary of any breakouts on tepid or below average volume, especially when a stock is also scheduled to soon report its latest earnings.

3. How far off is the earnings report?

When the stock breaks out, is it 2 or 3 weeks away from reporting or just 2 or 3 days?

The amount of time can certainly impact your risk. If a stock breaks out a few weeks prior to reporting, that can give you time to potentially build a profit cushion that can help you sit through the earnings release.

4. Does the company have a history of steady – or wildly fluctuating – earnings?

Take a look at the last several quarters: Are the numbers fairly steady or do they show huge swings from quarter to quarter?

While past reports certainly do not guarantee how a company will fare in the future, in general, it would be riskier to buy a pre-earnings breakout with a stock that has a history of wild swings.

5. Is it a top-rated CAN SLIM stock breaking out of a sound base?

To help keep the odds of success in your favor, make sure the stock has the kind of CAN SLIM traits the best stocks have just before they launch a big move.

Also make sure the chart pattern is sound.

6. How has earnings season been going so far?

Have companies generally been reporting well – and getting rewarded with a nice bump in share price? Or has sales and profit growth been generally disappointing?

Also, if some leaders have missed estimates by a penny or so, has the market just shrugged that off or has it sent those stocks sharply lower? That will give you a sense of how forgiving or unforgiving the current environment is.

It’s obviously riskier to buy ahead of earnings in a more unforgiving market.

7. How have other leaders in the same industry group reported?

If other stocks in the same industry group have already reported, how did they do? Did they show good earnings growth and shoot higher? Or did they disappoint and decline?

While that’s no guarantee of how your stock will report, that can give you a sense of the overall direction and health of the industry.

Have Your Selling Game Plan in Place

Remember: If you do buy a stock that breaks out ahead of earnings, be sure to have a selling game plan in place.  You may also choose to use stop-loss and trailing stop orders to help protect your profits and cut short any losses.

Key Trading Insights

Always wait for the best setups. When you see them, take advantage of them. If you don’t see them, don’t force them.
Jimmy Rogers, a very wealthy, very successful trader and fund manager says “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up.” Be patient. Wait for the best setups.

Don’t mix up your time frames. If your trade is based on a daily setup, don’t pay too much attention to intraday charts. Intraday swings are more frequent and they can cause you to exit too early. Likewise, if the trade is based on a weekly chart, don’t pay too much attention to the daily chart.
As a wise trader once said, “Too much attention to price fluctuation all but guarantees financial suicide.” We need to define our plan for the trade and have the discipline to stick with it.

Diversify. No matter how strong the trend is, it isn’t a good idea to put all your money in one market or one sector.

Manage your money. Many of the top pros limit their risk to one or two percent of the account balance per trade.

If you’re buying options, buy time. The biggest problem with options is time decay. The more time you buy, the less you pay per day and the more you minimize the effect of time decay.

Have reasonable expectations. I once talked to a novice trader who lost his job and hoped to replace his income by making $50,000 a year on a $10,000 account. That’s a lot to ask in any case, but if you add the pressure of trying to replace your regular income, the stress alone can beat you.
Warren Buffet is one of the richest men in the world. I’ve read that his compounded annual rate of return for over thirty years is just under 25%.

You can’t win if you’re afraid to lose. Being afraid to lose can cause us to sabotage our trading. As a rule, risk about half as much as you think you can handle. The less you risk, the less afraid you’re likely to be, and the more likely you are to follow your plan.

If you catch a good move, be patient with your profit exit. Let your profits run, or hedge them with options. Jesse Livermore said, “After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight.”

No matter how good they look, not all signals and setups work. If the market gives a good solid signal and it doesn’t work, it often results in a significant move in the opposite direction.

 In my opinion:

The most important part of the trade is knowing where you’re wrong.

The most important action is cutting losses.

 The easiest step in the trading process is getting in.

 The hardest part is letting profits run.

The keys to success are consistency and money management.

A successful trading plan essentially boils down to this:

Know what will trigger your entry

Know what will cause you to close the position with a loss

Know what will prompt you to take profits

Last but not least, we must have rules regarding money management.

Flat Base Pattern

Flat base is a powerful chat pattern that has a box-like appearance. It usually forms after a breakout from cup and handle pattern or a double bottom pattern. 

In a flat base, the consolidation lets the stock digest prior gains. Stocks can also form flat bases when the overall market is in a downtrend or can’t muster much progress.

A flat base is one of the shorter price patterns. It only needs a minimum of five weeks to take shape. Most other price structures need at least seven weeks.

– Correction in the base should be no more than 15% from the stock’s peak
– Volume on breakout day should be 40% more than average
– Entry price is 10c more than the high of the pattern

Words of Experience

Starting your own business can be a risky, time consuming and often costly labor of love. There are many traps that budding entrepreneurs can fall into. So knowing about what to look out for, and what to avoid can be the difference between your business flourishing and collapsing.

For Gareth Williams, co-founder and Chief Executive of Skyscanner, the vacation price comparison website, placing emphasis on who you hire – especially when your business is in its infancy – is of paramount importance.

“Make hiring your top priority and not a side job,” he told CNBC.com. “Normally, you’re so busy that you try to fit interviewing and hiring around the edges of your job, but actually the success of what you do will be guided by your success in hiring.”

(Read more: Has the UK become the ‘number 1’ place to start a business?)

Choosing the right medium for your message to potential clients and investors is another issue.

“Avoid communicating important or complicated messages by email,” Williams added.

“When you’re an entrepreneur, a lot seems obvious: you’re thinking about your concept and its context all the time. If you try to take a short cut and explain something by email then you’re probably going to find that only 10 per cent of the message is understood. You’ve got to do it in person, got to spend time explaining your message and taking feedback.”

Clarity of vision and facing facts is also key, according to William Chase, a potato farmer and entrepreneur who founded the luxury crisp company Tyrells, and now runs the Chase Distillery in Herefordshire, England, which produces one of the world’s best vodkas.

“People don’t react to things that aren’t working,” he told CNBC.com. “If you’re trying to sell something to people and they don’t want it, you have to act. You mustn’t keep going, you’ve got to stop, find out what it is they do want, and then turn around and sell it.”

(Read more: The entrepreneur’s biggest risk may be retirement)

Reining in your ambitions – at least initially – can also be beneficial. “Rather than start something that’s too big, start small so you have time to move the business in the direction you want it to go,” Chase added.

Starting small should not, however, limit your business. “If you set modest goals for the company, it’s unlikely that you will exceed them,” Williams, of Skyscanner, said. “Absolutely start small, but if you’re not aware of the larger opportunity, then you will never exploit it.”

Rekha Mehr started Pistachio Rose, a boutique bakery specializing in luxury Anglo-Indian cakes and biscuits, last year. This March, she was chosen to be an ‘entrepreneur in residence’ at the Department for Business, Innovation and Skills, where she is aiding the UK government in its efforts to connect with small to medium-sized enterprises.

“Not finding a mentor early enough into the journey,” is a key error that many fledgling businesses make, she told CNBC.com. “This was certainly the case with me. I didn’t appreciate the difference that having a lack of structure and nobody to bounce ideas off of would have on me.”

(Read more: Small business confidence at 3-year high)

Realizing the toll starting a business will have on your emotions is also vital, Mehr added. “I didn’t appreciate that, actually, it’s incredibly emotional,” she said. “The downs are the biggest I’ve ever had in my life. Working alone, in an unstructured environment and not having a mentor in place, you have self-doubt.”

Eighteen months into running her own profitable business, what else would Mehr advise others avoid? “Applying for finance too early, or believing that everyone needs a loan to start a business. There is something to be said for going back to the old school principle of starting small, generating cash and just building up organically,” she added. “Anybody who thinks that they can’t do it because they don’t have money, that’s not accurate. You can get by on very little.”

Perhaps though, the best piece of advice – simple, to the point and obvious – comes from Chase. “If you’re in a hole, stop digging.”

Flat base pattern

Flat base is a powerful chat pattern that has a box-like appearance. It usually forms after a breakout from cup and handle pattern or a double bottom pattern. 

In a flat base, the consolidation lets the stock digest prior gains. Stocks can also form flat bases when the overall market is in a downtrend or can’t muster much progress.

A flat base is one of the shorter price patterns. It only needs a minimum of five weeks to take shape. Most other price structures need at least seven weeks.

– Correction in the base should be no more than 15% from the stock’s peak
– Volume on breakout day should be 40% more than average
– Entry price is 10c more than the high of the pattern

CAN SLIM

C: current earnings 
Earnings growth of at least 25% in recent quarters

A: annual earnings
Earning growth of at least 25% in last 3 years

N: new
New product, services, management, price highs

S: supply and demand

L: leader

I: institutional sponsorships
Big money accounts for 75% of market activity.

M: market direction
3/4 stocks follow the general market trends

Conventional and new wisdom

Conventional wisdom: Buy low, sell high

New wisdom: Buy high, sell higher

– At or near 52 week high
– Leading stocks in leading group
– During a confirmed uptrend
– Be careful when buying stocks $15 or lower. You want to buy right, not buy cheap.

Conventional wisdom: Buy on dips

New wisdom: Buy on the way up

Conventional wisdom: Buy and hold

New wisdom: Hold a leader for the run, then sell.

– A leader’s average run lasts for 12-18 months.

老人院的一天

用钱赚钱是挺聪明,不过用思想赚钱才是另一个境界。

我宁愿给他分多一点期权,我也不要承担所有的风险。

期权让你分到利润的一部分,股份让你分利,但也分险。