Full transcript of independent trader Alessio Rastani’s TEDx Talk: The Psychology of Trading @ TEDxManchester conference.
Listen to the MP3 Audio: The psychology of trading by Alessio Rastani @ TEDxManchester
Alessio Rastani – Independent trader
Great, fantastic. Before I start, I want to ask you a favor.
I’m going to do a little quiz – just had that on – Who likes a little quiz? Yeah. Come on, we can try without.
Everyone up for a quiz? All right. Let’s go back – those slides up guys –
So the first slide is – let’s get that up – Ah, I’ve got to press forward.
Ah, there we go. So, who said this? If you guys know this, just say it out loud OK? Not Gordon Gekko, no.
“Be fearful when others are greedy, and be greedy when others are fearful.”
Who said that? Warren Buffett.
Well done! Who is Warren Buffett? Yes, he is the world’s richest share investor. Remember his name, I’ll be coming back to him shortly.
So, what we’re going to talk about today, we’re going to talk about how to profit from a crisis. All right, so that’s what we’re talking about. OK, who said this? OK, second question.
Who said, “The way to make money is to buy when blood is running in the streets”?
By the way, the last time came to Manchester, I asked this question, about a few months ago, someone said in the audience it was Dracula. It wasn’t Dracula!
Now, what d’you guys think? I’ll give you a clue. It’s supposedly one of the guys, one of the families, the big families in the world, who controls the world. It’s not the Rothschilds. Whom do you think it is? (Audience shouts a name) Not quite! It’s Rockefeller.
Oops! Er, sorry about that. I think the way this presentation is done is a little bit – skews up the screen.
Yes, “the way to make money” is Rockefeller. He’s an American oil tycoon, supposedly one of the guys who built America.
And who said this, “I go to bed every night dreaming of another recession, governments don’t rule the world, Goldman Sachs rules the world”? (Audience) You did.
By the way, this is back in 2011, I’d been in a live television program on the BBC, it was the afternoon, so a lot of financial things were happening at the time, markets were going down, there was a talk of the eurozone’s splitting up, and the lady over there, Martine Croxall, asked me on live television how I was going to fix it.
I said, “Well, I’m not looking to fix it,” and I just said, “Well, it came to me honestly.” And I’m going to explain to you exactly why.
One thing happened was, by the way, that within 24 hours I had every television network around the world, from Washington, from CNBC Bloomberg, to Israel, to Australia, calling me and basically, wanting to do an interview with me. Even Piers Morgan and David Frost were calling me up to do an interview.
And I got a call from Forbes magazine the same day, – because they videoed, this went viral, you can find it on YouTube anyway – and this reporter from Forbes magazine said, “Hey, listen Aless, we want to do a positive report on you. Don’t worry, nothing negative, positive news story on you, give us some information.”
So next day the article was published, everybody saw this, and here it is, “Stock Traders Are Psychopaths.” I thought wench, she sounded so nice on the phone.
So, she says today, “Unless you’re a stunny blah, blah, blah, admit it honestly – all I can say is -,” I think what really shocked people most about this interview wasn’t just what I said but the fact that it was, well, they said it was an honest interview – and that’s what I wanted to do.
People said I did it for effect. Not true at all. I genuinely did not believe the video would go viral, anybody would pay attention to it.
So next day a few other papers called me a psychopath, and even the BBC trying to protect – But the bottom line is folks, that picture of me where I did the majority of my research, you know, I’m sure most of you are probably thinking, “Well, surely what you said was immoral. It wasn’t morally right to say you’re dreaming of another recession,” even if most of you probably agree that governments don’t rule the world; it’s the big corporations, the big banks, JP Morgan Chase, Goldman Sachs.
But why did I say that I’m looking forward to the next recession? And by that, so you guys understand, I did not mean what the paper said, which was that I was happy about people losing their jobs. Not true at all.
I want to explain to you what I actually meant. And you might be thinking, “Is it even moral? Is it a moral thing to profit from a next crisis?” I think of it like a hurricane, you know, coming towards you. Famous one in 1987 came to this country, plenty of hurricanes come to America all the time.
And what do you do if a hurricane’s coming to your destination, where you live? Well, first thing, I’m sure you agree, is that you protect yourself, protect family, right? It’s about being prepared.
If a financial storm is going to come – there will be another by the way – I’m going to show you why I believe the next financial storm will be this year 2014. I’ll show you why.
But the next financial storm that comes, most people, I’ll say 90% of people, are unprepared. Would you agree with that? Yeah.
In 2008 so many people lost money in stocks and property because simply they got stuck in a bubble phase; they thought they’d never be, they were in denial, there would be a crash; anyway.
So I want to share with you a big major lie. This is a lie which I can tell you almost every person that you know believes in. You might believe in it too. I used to believe in it.
It’s not your fault if you believe it, because let me say this. This lie is perpetrated by the media. Remember this by the way guys: there are two types of information, there are two kinds of information; information for the masses, and information for the classes.
What you want to know is information for the classes, not what the media are saying to you. Because the majority of the stuff the media tells you is completely wrong and useless. Here’s the lie.
If the economy is doing better, so the stock market should do better too. Well, if you ever hear any person, any economist, saying those words on television, you know he doesn’t have a clue what he’s talking about. It’s actually the opposite. You might think that’s a little bit strange. Why would that not be true? OK, let’s talk about that.
The fact is guys, there’s no correlation between the economy and the stock market, none whatsoever. Let me show you.
Warren Buffett again, world-renowned share investor, he doesn’t even care about what the economy is doing when he buys stocks. He doesn’t pay attention to unemployment, reports, interest rates, housing, etc.
Peter Lynch, one of the most famous top money managers in the world. He says “If you spent 13 minutes thinking about economic forecast, you’ve wasted 10 minutes.” Right, let’s take a look at the crash, the 2008 crash.