Chris’ note: Yesterday, the U.S. stock market suffered its steepest declines in more than two months. This follows rumors that Fed will raise rates higher than expected in its fight against inflation.
It’s all part of the hellscape bear market that’s been raging for more than a year. If you’re a buy-and-hold investor, you’re likely tearing your hair out over all the volatility.
So, it may surprise you to know that friend of Legacy and legendary trader Larry Benedict is loving this turbulent market. Since the bear market began January last year, he’s given his readers the chance to close out 89 winning trades. And 64 of these winners have been for gains of 100% or higher.
Larry has done it by harnessing the crazy volatility we’ve been seeing. He’ll reveal how at 8 p.m. ET tonight during his Money Shock Calendar event. So, make sure you’re registered to attend, and RSVP with one click.
Then read on for more on Larry’s storied trading career… and how he’s been able to turn bear market volatility into a profit-making machine.
Q&A With Larry Benedict, Editor, Trading With Larry Benedict
Chris Lowe: You have one of the most extraordinary trading records I’ve ever seen. From 1990 to 2010, you didn’t have a losing year. And in 2008, as the financial world was falling apart, your hedge fund made $95 million.
It earned you a place in Jack Schwager’s 2012 book on the world’s best hedge fund managers, Hedge Fund Market Wizards. He featured you alongside Ray Dalio – who manages the world’s largest hedge fund – and Ed Thorp. He’s the MIT math whizz who delivered an average 20% annual return over 30-plus years with rarely a losing month.
What struck me reading the book is how obsessive you are about managing your risk. Where did that obsession come from?
Larry Benedict: I learned that lesson the hard way. If you read the chapter about me in Hedge Fund Market Wizards, you’ll know I did two things consistently at the start of my career – lose money and get fired.
Chris: Knowing your track record, that’s hard to imagine. Tell me about those early years.
Larry: In 1984, I worked as a clerk in the pit at the Chicago Board Options Exchange. It’s the largest options exchange in the U.S. Clerks answered phones, jotted down orders, and ran them out to the pit for the traders to execute.
We also used the old open outcry system. You’ve probably seen it in the movies. It involves a lot of shouting and hand signals.
Larry (right) on the exchange floor
My boss was this brash trader. He had a clerk of his train me. This clerk told me, “Look, you’re going to get fired every day. But don’t listen to it. Come back tomorrow, and everything will be fine.”
Chris: Did your boss fire you?
Larry: Yes. On my first day. And every day after that for about eight months. I didn’t know the ins and outs of working on a trading floor. And on day one, my boss threw me right into the fire.
He was giving me hand signals for what trades I should be making from the pit. I had all the signals on a sheet. But learning them was like learning sign language. I’d look up at the scrolling tickertape, and it looked like gibberish to me.
Inevitably, I messed up an order. My boss went ballistic. He told me I was an idiot… and fired me.
But I came back the next day. And as miserable as it was to get fired every day and return with my tail between my legs, I kept coming back. I loved the energy of it. It was like playing competitive sports. And I’m extremely competitive. So, getting knocked down wasn’t an issue for me.
Chris: What was the turning point for you as a trader?
Larry: In 1989, I got a job with a trading firm called Spear, Leeds & Kellogg. That’s where I learned about the importance of sticking to a trading discipline. And after Goldman Sachs bought the company in 2000, I set up my own trading firm, Banyan Capital Management.
Eventually, I became as consistent at winning as a trader as I was at losing as a trader in my early years.
Chris: What was the secret to that transformation?
Larry: Over my career, I learned that you make a lot of trades. So, you don’t have to let one trade define you. There will always be new opportunities. I’ve often made 100 trades in a day.
Put simply, I learned to accept losses. And I learned to keep them small.
Chris: You’ve talked before about “earning your risk.” What does that mean?
Larry: It means you shouldn’t take on much risk until you’ve had a string of smaller winners. That way, you build a pile of capital you can speculate with.
If you don’t have a big enough base of capital, you shouldn’t take on any high-risk trades. You should be targeting only 5%… 10%… 25% returns… and grabbing these smaller wins when you can.
Same goes if you’re just not trading well, for whatever reason. You want to cut your risk as much as possible.
You never go broke taking a profit. That’s why I tell my subscribers they should always look to put a “P” on the page. Once they’ve built a strong foundation of capital, they’ve earned the ability to take on more risk.
Chris: You’ve shown how that kind of discipline pays off at your newest trading advisory, One Ticker Trader. It’s where you pick one stock or exchange-traded fund (“ETF”) and focus on trading that single ticker symbol.
Last year, you made 11 recommended trades. And all of them were winners. This gave your readers the chance to make a 240% return on their cash at risk.
It’s proof of something I hammer home with Daily Cut readers all the time. Even during a bear market, you can make money… if you use the right strategy. You’ve averaged a win of roughly 14% on those 11 trades. And your average holding time for each trade was 5 days.
And you’re not stopping there. Tonight, you’re pulling back the curtain on the core strategy that helped you earn those market-busting returns. It’s all about something you call “Money Shock” days. What are they? And why are they so important?
Larry: What I call Money Shocks are spikes in market volatility on a pre-scheduled day of the year.
And although this may sound strange to buy-and-hold investors, traders like me love it when stock prices bounce around a lot. It increases profit potential on winning trades.
This surge in volatility can be as much as 20 times that of the average trading days. And they happen on just 32 days of the year.
That’s why, when I saw this pattern, I put together a Money Shock Calendar. It tracks all 32 days when volatility surges.
Chris: What causes these shocks?
Larry: These are all days when the federal government or our central bank, the Fed, releases key information. And regardless of what the information says, the release causes a Money Shock.
I’ll be revealing all the details at 8 p.m. ET tonight during my Money Shock Calendar event. It’s free to attend. So, I hope your readers will join me for that. [To join Larry, you can RSVP with one click here%%[ENDIF]%%.]
But the short answer is that these shocks amplify your trading returns. I’ve learned a lot over my 35-year career as a professional trader. But trading these Money Shock days is a big part of my secret sauce.
I’m really excited about this event. Because I know a lot of buy-and-hold investors have suffered painful losses over the past year or so.
But since the bear market began in January 2022, I’ve given my paid-up subscribers the chance to close out 89 winning trades.
And you don’t have to be a pro to follow these trades. If you can read an email… and follow simple instructions… you can piggyback on the trades I recommend.
Chris: Thanks, Larry. I’m looking forward to your event this evening. And I hope as many Daily Cut readers as possible clear time in their schedules to join you… even folks who are new to trading.
Larry: Thanks, Chris. Appreciate it.
Chris here again – Don’t forget to go here to automatically sign up%%[ENDIF]%% for Larry’s Money Shock Calendar event.
Tonight at 8 p.m. ET, I’ll reveal why these 32 Money Shock days are the only ones that matter to traders… and how you can profit from them.
And when you sign up, you’ll even get access to the Money Shock Calendar he’s created. It will populate your calendar app with all 32 Money Shock days for 2023… so you don’t have to worry about missing these major profit opportunities.