I recently had the pleasure of speaking with our first customer – Forrest M. – ten years after we launched TradeStops.
Forrest worked for Norfolk Southern Railways for over 40 years and is now enjoying his retirement near the beach.
My conversation with Forrest was one of the highlights of the year. It’s always great to hear from folks that appreciate your work and have benefitted from it.
I got a lot out of my conversation with Forrest. It was a great affirmation that I’m on the right track in encouraging investors to pay close attention to the behavioral challenges of investing… and in providing solutions to do so.
I enjoyed the conversation so much that I thought you might enjoy it as well. The transcript is below.
As you read the transcript you have to imagine one of those very comfortable southern drawls – smooth and unhurried… like a good bourbon.
RS: What exactly did you do for Norfolk Southern, Forrest?
FM: Well, I started out just about as low as you can get in the signals and electrical department. And forty years later when I retired I was head of the company’s signals and electrical department. I don’t know if you know anything about what signals are on the railroad, but railroad signals are what trains run by. So all of those on Norfolk Southern… all the highway crossings signals… all the distribution yards and automatic yards where they distribute box cars… all that kind of stuff was my responsibility.
RS: Wow. That’s a lot of signals.
FM: It was a lot of signals. It was fun. I enjoyed it. I enjoyed every day I worked… but the day I retired, I retired for good. I never went and visited the place any because I knew enough about it that I knew that whoever was heading up the department didn’t have time to fool with me ‘cause they were busy
RS: What was it that convinced you to sign up for TradeStops?
Well, that stuff kept splittin’. I think I sold a hundred shares of it at one time and I bought 30 shares at one time and sold 30 shares another time. I’d about gotten my money back out of it by that point but I still had about 2,400 shares due to stock splits.
If you followed the history of that stock, you know I’m telling the truth and it did split many times.
At one time, that sucker was about a half a million dollars for me. And I just sat on it and sat on it and it went down and it went down and then I kept saying, “That’s a good stock. It’ll go back up.”
Well, you know the story… It didn’t go back up. And in the end I probably sold that half-a-million dollars I had for about $8,000. I just got sick of it.
I’d already gotten my money back out of it by just selling little dabs of it. So I didn’t have anything left to lose but my profit. Boy I lost my profit. I lost darn near all of it.
I met you just about the time that all this was going on… I mean, the end of it was going on. And, boy I said to myself, ‘this sure makes sense and if I’d been smart enough to know this or just done it myself, I’d be a heck of a lot richer than I am now.’
That was what convinced me to get in. And of course, I’d had a few other little old things where I’d wound up that it’d go up and then come back down and I’d wind up maybe just getting my money out of it and not gettin’ me any profit, but that was the real clincher.”
RS: So once you got into TradeStops, did you start really using it, honoring your stops and getting out when your stops were hit?
FM: Yes, I have. I have bought and sold a lot of stocks in the last ten years and I pretty much follow that, pretty close… every time.
RS: Who are your favorite newsletter writers?
FM: Ummm … I’d say Alexander Green.
RS: Do you get most of your investment ideas from newsletters?
FM: I would say I do, yes. I don’t pay much attention to what these guys on television say. In fact, I hardly ever even watch one of those programs… ‘cause a few years ago I was watchin’ ‘em and I found out that most of those guys don’t know what they’re talkin’ about.
I like Green. I like Sjuggerud. Stansberry… I like him… but sometimes I don’t know for sure. He seems to make a lot of those End of America statements and those ideas may very well someday come to pass… but so far they haven’t.
RS: What’s interesting to me about Porter is that he really combines strong ideas with good marketing and it’s a pretty potent combination.
FM: He’s got some really interesting people there. That Doc Eifrig… I haven’t ever heard him speak but I get his letters and I read what he says and I think he’s pretty sound. I like his approach on buying and selling options ‘cause he seems to be really good at it. I don’t mess with options a great deal but I sell puts occasionally. In fact, I bought and sold one this mornin’ because I was gonna wind up gettin’ the stock if I didn’t. I follow what he recommends and most of the time it works out. But I’m not heavy into options. I do it just to play with it a little bit.
RS: What do you think of all of the new tools I’ve been launching over the past year?
FM: Well, what is it you call that, “Smart Stop” or something?
RS: Smart Trailing Stops?
FM: I’ve been following some of that now and I like that approach… and I’ll have to admit, I think you offer some things about how to keep up with your option trades that I’m not really utilizing because I don’t have that many options going at any one time that I have much trouble keeping up with ‘em.
RS: Is there anything that you wish the service did that it doesn’t do right now?
FM: Well, I was afraid you was going to ask me that question. I expected you to… and I thought it about a bit over the last few days and I guess the truth of the matter is I was afraid that if I tell you then I might find out that you already got it and I’m just not using it.
RS: [Laughing] No … don’t worry about that. I certainly haven’t done the best job of communicating all of the new features and benefits I’ve added over the years. If you missed something, I’m sure it was my fault.
FM: The only thing I can think of is that the last time I had my dues come due, I had a heck of a time getting the thing paid for… but that’s about all. I joked with your support agent that he better tell Richard that he’s about to cancel out the very first customer he ever got. He laughed.
RS: We’ve grown a lot over the past couple of years and there have definitely been some growing pains. Sometimes things don’t always the way you planned but I’m sure you know all about that.
FM: Yeah, I do. The main thing is, I always found, that the quicker you recognize that and turn in another direction, the better off you are.
RS: Sounds kind of like stop losses.
RS: What would you say to someone who was new to investing to help them not have to go through what you and I had to go through before we learned our lessons? Do you think that it’s possible for newcomers to not have to learn the hard way?
FM: Well, I have talked to some of my grandchildren about your plan. I don’t think any of ‘em’s ever got in. But I have told ‘em exactly my experience and I’ve told ‘em that I think that the idea of something like TradeStops will prevent that from happening to you and if you’re going to get serious about getting into the stock market and if you plan on ever making any money out of it … you better not just have a plan to buy. You better have a plan on when you sell. And I’m not smart enough to know when that ought to happen. So I need something that triggers it. That’s what I tell everyone that I talk to about dealing with the market.
I don’t know that I can name any one that’s done it. I suspect that some of ‘em are going through what your experience and my experience was early on.
I don’t think any one of us know everything about the markets and can anticipate all the ups and downs that occur but they’re going to happen whether you believe it or not. If you don’t have some plan to deal with it, you’re gonna lose… you’re gonna lose a lot of your profits.
Of course, if you sell, you never know. It may turn right back around and go back up but that’s ok. You just have to forget about that and think about how you protected what YOU had and didn’t just lose it.
RS: One of the new tools that I recently launched is called the Re-Entry Rule. Have you read anything about that?
FM: No, I haven’t. Tell me about it.
RS: It tells you when it’s safe to get back in to a stock that you’ve been stopped out of.
FM: That sounds like a good thing. I’ll have to look into that a little bit.
RS: I think that it helps people to follow the discipline of trailing stops if they know that they have a way of getting back into a stock that they have to sell because the stop was hit. Selling often isn’t fun but it can be easier if you know that you’re not closing the door on a loved stock forever.
Hey, did you know that Isaac Newton lost most all of his money in the stock market of his day?
FM: No sir.
RS: He sure did. He invested in the South Sea Company and accumulated massive paper profits before finally losing it all when the bubble popped. He had no idea when to sell. That tells you that it’s not about brains that tells you when you should get out.
FM: Well, that’s exactly right. I think that within each of us there’s a certain ego that once you ride something up so high and then it starts dropping back down… then you start thinking about, well, if I had sold two weeks ago when it was 10% higher than it is right now and then you say, well, it’ll probably go back up. Sometimes it does but it don’t always … and I’ve learned that.
If you don’t have a plan to get out when you get in, you’re in trouble.
The day you get in, you had a plan to get in, you better have a plan to get out.
[End of interview]
Couldn’t have said it better myself Forrest.
To the growth of your wealth,
Richard M. Smith, PhD