Mark Minervini seems to make a habit of disproving the Efficient Market Hypothesis. He's currently up 182% in the US Investing Championship. His long history of success indicates that this is not down to luck, but that the market can be beaten, and beaten by a considerable margin.
Professional Spread Bettor
I don't doubt his consistently outstanding trading results, and I've had a little success using his methods in the past too. But given how well known he is now, I do wonder how much of the growth this year is based on people jumping on his trades straight after he posts them.
Thanks bryans1311. That's an interesting point. Do people jump on Minervini's trades straight after he posts them? I've often wondered that and that could well be a factor in his success. But it can't be the only factor in his success because a lot of his trades fail, and the gulf between him and his competitors is enormous. (182% vs 23% in his division). He's obviously doing something very different from everyone else. His tweets on Twitter indicate an emphasis on money management. And the importance of 'selling into strength' which is counterintuitive as most investors, including me, want to squeeze the last penny out of every winning trade. He claims that 8 out of 12 of the top performers in the US investing championships are his students, so he's a effective educator too.
As a side observation, many people have noted that his methods don't seem to work in the UK markets, possibly because the UK spreads for small companies are much wider than the equivalent US spreads.
I do wonder how much of the growth this year is based on people jumping on his trades straight after he posts them.
On previous threads whenever Mark was mentioned there would be some posters pointing out that the last time his performance was verified was the late 90's and maybe he got lucky for a few years and now he makes his money off MPA. He comes back to the USIC more than 20 years later to prove a point and massively outperforms and now people think he's pumping and dumping (I have seen similar comments elsewhere). Mark is posting a tiny fraction of his trades, he has literally done thousands YTD. On MPA he commented he had done between 300-400 trades in the first half of May.
As a side observation, many people have noted that his methods don't seem to work in the UK markets, possibly because the UK spreads for small companies are much wider than the equivalent US spreads.
This depends on how you define "work", but it has been my experience (and others I have spoken to) that the level of returns in the U.K are going to be a lot lower. In addition to the factors you mention I believe that there is some kind of fundamental difference between how the U.K and U.S markets behave. In addition to Mark's style not working as well in the U.K Stockranks have performed badly* in the U.S but very well in the U.K.
*80-100 is worst performer, 20-40 best since 2014 (£50m Mcap, rebalanced annually)
As a side observation, many people have noted that his methods don't seem to work in the UK markets, possibly because the UK spreads for small companies are much wider than the equivalent US spreads.
To me Minervini's style of momentum trading is best suited to the US market (certainly from 2009) is simply that the S&P has from its low point risen times 6 (Dow times 5) and the FTSE only doubled. The US has far greater momentum even if it is mostly due to technology. Nothing to do with small companies as Investing in large companies such as Amazon and Tesla (just in the last year) would have made you very rich.
UK market is more static (to date) so shares and trading style reflect the market.
I think we have to ascribe Mark Minervini's success primarily to his talent, discipline and ability. This is what he has to say about himself - and other people's attitudes.
Hi Wilkonz
As you might remember I am one of the doubters, for various reasons that I can't be bothered to mention again.
I've never seen that list of accomplishments.
Picking 2:
1 - +33,000% in 5 years?
So he turned $1,000 into $330,000 in 5 years?
Or put another way, he turned $10,000 into $3,310,000 in 5 years
Really?
2 - The only mention I can find of Minervini and "Soros Management" (NOT Soros Fund Management) is this random company formed in the UK last year with zero employees:
https://find-and-update.compan...
Note that the only reference to Soros + Minervini that I can find online (which doesn't look like some dodgy site) is this tweet - from Mark - in March 2021.
https://twitter.com/markminerv...
Now if the competition wasn't some random website, and perhaps run by a reputable company such as Seekingalpha.com, I might be more convinced.
So my apologies, but I'm still not ready to believe.
A
I've never seen that list of accomplishments.
Picking 2:
1 - +33,000% in 5 years?
I can only assume you have never read stock market wizards, written by one of the most famous financial authors. If you have a copy read page 161, 5 x 220% compounds to 33,500%. To be entered into the book all the traders had to have their performance independently audited.
No need to apologise abtan. The investing world abounds with charlatans making absurd claims about their win rates, and offering expensive trading courses on the back of mythical prowess. It's good to be cynical and demand evidence. No, more than good, absolutely essential. I too had serious doubts about Minervini - he was just too good to be true - until I did some basic research and started following him on Twitter. Now I have enormous respect for the man. Not many trading legends risk their reputations by entering a competition where results are independently audited. The success of his pupils also testifies to his genuineness.
It is interesting how he has adapted to the market conditions this year.
He has commented that since February really, its been a "hard penny" environment, where swing trades typically held for weeks, possibly months are struggling to get traction. That is certainly aligned with my experience (specifically in the US markets), and I know a lot of traders have been finding it challenging for most of this year.
He described the markets as 'whack-a-mole', where many breakouts would get sold and reverse; "retail buyers running into institutional sellers".
He has adapted by reducing holding times, basically holding for just a few days, and getting out.
It's been interesting to follow his market commentary, I do use him as a point of reference.
Yes. He's a useful point of reference. The markets have been range bound since mid-February. I found it reassuring to hear him say so, especially when he said that his account was virtually all cash a couple of weeks ago. If he can't find profitable trades, there isn't much hope for the rest of us so we might as well hold on to our cash and wait for better times.
Doesn't he use leverage which flatters his returns? I recall him tweeting this in the past. In any event, I wouldn’t complain with those returns, and he does it consistently.
Yes. He uses leverage, according to his tweets. Many of the greats like Dan Zanger use(d) leverage to make spectacular gains. But you have to be an exceptional money manager to make it work for you, otherwise you just multiply your losses, especially in the current flat market conditions. My guess is that he's taking 2-3% profits and leveraging them into 4-6% returns (or greater) over trades lasting a few days. He hasn't mentioned his leverage ratio or his exact tactics recently. The corollary must be that he's using very tight stop losses, probably <1%, or else, like Dan Zanger, getting out of trades as soon as they move against him.
Came across this (two part) video on youtube, which provides an excellent breakdown of Minervini's trades from 1997.
I found it to be very useful and helps to clearly understand and visualise the methodology.
Worth a watch for anybody interested in this approach to the markets.
Enjoyed reading this... Thanks.
Like you I have so many questions in regard the investing championship, which could be either a highly reputable organization OR a superb marketing tool, I'm not one to suggest otherwise, but it could arguably be either.
That aside, I like Mark Minervini and his approach, the rationale behind his thoughts is very solid and I have no doubt he is making excellent returns.
The question I will always have is what kind of risk is he taking to get these returns, this is the KEY factor for anyone looking to emulate his approach.
On the assumption that the championship is a fully vetted organization it would have been great for them to disclose this kind of detail, i.e Ticker/Date/Position size % etc etc. Failing that there is a survivorship bias, and i say that because the website host only shows the the best performing traders AND if you don't want to submit your results you don't have to, in which case if you fail miserably, don't post your result, you wont be listed..... I know this because I asked questions of the organization with a view to entering - Once I knew the process I was less inclined to do so, knowing there is a flaw to the process.
So has Mark (or others) entered in previous years, with huge risk to get exaggerated results but lost it all and did not submit the results, its possible. AKA Survivorship Bias.
Nonetheless I think Minervini himself has been (is) a great ambassador for the trading community.
I wonder If i can get the data from Mark to complete a video on his 2021 success, i'll try...
This year is the first time Mark has entered since his win in the 1990's. The competition allows the use of leverage, 300% intraday and 100% overnight. Mark is using leverage when he thinks it's appropriate to do so. He does not recommend using 300% leverage if your trading account represents most of your net worth. The reality is the $1m entry limit is a small part of his wealth.
Intriguing thoughts Gareth. Thanks. I too speculate on what, exactly, it is about Minervini that sets him apart from the crowd. It's certainly not originality, because almost everything he says has been said previously by men like Livermore, Weinstein and O'Neil. It is clear that he is a typical driven American alpha male: hard working, confident, ambitious, disciplined, super-bright and determined. It is indeed possible that his competition success is down to selective reporting of his results, even so it is an astonishing achievement to win the US Investing Championship even once. If you can get some data from Mark, that would be brilliant.
In the meantime, below is Mark's summary of why he is successful (recently posted on Twitter). There are some omissions, such as the somewhat counterintuitive 'sell into strength', by which I guess he means spotting when something's overpriced before everyone else does.
"The question I will always have is what kind of risk is he taking to get these returns, this is the KEY factor for anyone looking to emulate his approach."
Minimal is the short answer. Among other things -
He never places big bets without a backlog of profits to fund the potential loss and without confirmation from the market that his style of trading is working.
He always wants what he describes as odds on his money - if he's risking 3% on a trade, he sees upside of double that.
He de-risks trades at the earliest opportunity by taking partial profits or moving stops to break even.
He'll sell into strength at a multiple of his risk and not care what the stock does afterwards - he doesn't want to risk losing his gains in a reversal anymore than he wants to risk suffering big losses at the outset.
All outlined and explained in the books/videos he's done over the years.
Mark has entered the USIC 3 times - first time it was cancelled when he was way ahead, second time he won it. Third time this year is way in front.
David Ryan who uses a very similiar approach has entered on 4 occasions , winning it 3 times. His son is competing this year, currently up 60%.
