In a recent moment of self-reflection, I was forced to arrive at the conclusion that I do not view the world the same way that many others do. In fact, more specifically I was forced to arrive at the conclusion that I do not view the world the same way that billions of others do.
Yep. Billions.
The interaction that spurred such a startling conclusion came two weekends ago. I spent my Saturday and Sunday at the Seattle MoneyShow, a two-day financial extravaganza that brings unique joy only to stock market geeks like me. Alongside a wonderfully stacked list of insightful speakers, Gatis took the stage on Sunday for a presentation about our 10-stage Tensile Trading methodology, the very same topic on which we co-wrote our book.
After Gatis' presentation, we both stuck around to answer questions, meet the audience members and sign a few books. Anticipating that some attendees would be interested in actually purchasing a copy of Tensile Trading after the talk, we brought along a box full of books as well. Sure enough, as soon as the presentation came to an end, we were swarmed by a group of eager listeners and soon-to-be readers.
One gentleman in particular took his place in the little line that had formed, patiently awaiting his turn. He stepped right up when the time came, credit card already in hand. I told him the price, swiped his card and handed it back to him – transaction complete.
Looking down at the table, he noticed the white cube that I had just used to run his card. He asked, "Is that a Square reader?" I happily replied, "It is indeed!"
"Man, what a crime, huh? Aren't those expensive? What do they charge you, like 2.5% or something ridiculous?"
It's 2.75% actually. And I'm thrilled to pay it.
A Little Backstory
You see, Square (SQ) has been a great investment for me. It's a position I've held for quite some time now, one that went from a short-term trade to intermediate-term hold to a longer-term investment that I still own. I started monitoring the chart of Square when it crossed $10 per share, stalking my entry. As a beautiful uptrend formed, strong momentum took hold and the stock began to firmly outperform both the broader market and its peers. I pulled the trigger, jumping into a long, multi-month run that took the stock up as high as the $100 level.
The important point to emphasize here, however, is that my discovery of this trade wasn't technical. I didn't stumble across the chart first. I didn't run a single scan to find it. It didn't trigger any alerts, ring any buy signals or pop up on any watch lists.
It wasn't fundamental, either. I didn't run any valuation calculations or determine that SQ was underpriced. And no, it wasn't the latest stock tip from any talking heads.
To discover the SQ opportunity, I looked out at the world around me and noticed a great product appearing more and more frequently in my every day life. I saw small vendors at a local famers market using the little white mobile card reader. I saw shops in our neighborhood starting to use it. I noticed bigger, more established retailers using the full-size tabletop Square readers. Gatis and I even started using Square products to sell books at our speaking events and process registration payments for our Boot Camp course.
In the moment described above, talking to the gentleman who purchased the book, I was struck by a very clear difference between the two of us. As most folks do, he looked at the Square fees as little more than a silly number. I, on the other hand, looked at the Square fees as an incredible profit machine. Distributing card readers around the globe allows Square to convert thousands of retailers, both traditional and non-traditional, into a massive army of 24/7 cash-generating card swipers. 2.75% sure sounds like a magic number to me.
Welcome To The Investors Mindset
What I'm getting at is something I call the Investors Mindset. Successful investors appreciate that the world around them is full of endless opportunity. Obsessed with capitalizing on the value they discover in that world, they seek out these profitable opportunities at every turn, never shutting off the uniquely analytical perspective that is the "Investors Mindset". In this way, we see every day life through a very different lens than the masses.
Every product you use, service you buy or good you purchase is an opportunity to stop and ask yourself, "Can and should I invest in the business behind this?" At the end of the day, every stock you trade or invest in is more than just a collection of bars on a chart of numbers on a balance sheet. There's more to the story, often something tangible that you can touch or see or try or examine. If you let yourself look for those opportunities and take note when they start to reappear week after week or day after day, you will find an important synergy between the markets and the real world that moves them.
I characterize myself as 65% technical, 25% fundamental and 10% observational. With my Investors Mindset dialed in, the observational portion of my Investor Self is often a powerful source of profitable trading ideas.
So Here's Your Challenge
So, take a page from my book. Grab your investor goggles and open your eyes wide. As you carry on through your normal everyday life, away from the charts on your screen or the reports on your desk, challenge yourself – are you embracing The Investors Mindset?
p.s. If this article intrigues you, I discussed some similar themes in this previous blog from last November.
Money In, Eyes Open.
- Grayson Roze
VP of Operations, StockCharts.com Author, Trading for Dummies (Wiley, 2017) Author, Tensile Trading (Wiley, 2016) StockMarketMastery.com
