How we made 18,000% in the Stock Market

Trade Like an O’Neil Disciple: How we made 18,000% in the Stock Market is actually a pretty decent book. I’ve read it and skimmed over various chapter a few times. The most interesting portion of the book was regarding a market-timing tool that, at least according to their accounting, blows away just about anything else and reportedly it has been audited by KPMG.

However I stumbled across this website. Simply titled GilMoralesFundPerfomance, it is written by what is allegedly an investor in Morales’ (one of the co-authors) fund. Check out his performance:

The full monthly performance is on the website. As you can see, -77.33% return, a little off from 18,000%.  Apparently Gil Morales sued this individual and lost; Court documents are also available on the site. He later published a rebuttal on his website here. Basically he states he was able to bounce back from that slump and he has experienced 80% draw downs before.To come back from 80% capital loss seems like a bit of a stretch to me, no? With that much loss of capital one would have to return 400% to get back even.

Granted the market conditions during that time were extremely tough, many of the best funds lost a lot of money during that period. But these individuals are selling a membership/subscription site and it’s important to know how your hard earned money is being spent. In a perfect world, ALL these guru’s would share their monthly or daily returns of their trading accounts. I don’t really know of any subscription site where the owner does this? If you do, please leave a comment as I would be very interested! If you subscribe to one, please ask the proprietor to supply you with one and see what they say, share here as well!

It’s important to realize that no one is infallible in this game and that the bear markets separate the winners from the flash in the pan. 18,000% return was the result of a massive bull market, throw a dart and go long and you would’ve made money in those days. Add a little leverage and you have the title to a very intriguing book! The boring stuff like preserving capital, risk management, etc keep you around till the days of easy money come back. It’s quite easy to get someones attention when everything you touch turns to gold, like in a bull market. And trust me, they will let you know!

Not all these guru’s are bad though and many supply a good learning service or provide a good adjunct to your current work. Just be cognizant that they do not have all the answers, are not gods, and are wrong probably just as often as you are! In my case I know I’m wrong quite a lot! These past few weeks have been quite a difficult market for my strategies. My only saving grace has been my exposure has been greatly reduced so even though I’m not making money, the draw down is easy enough to bounce back from (hopefully!) Capital preservation & risk management!

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~ by largecaptrader on June 7, 2011.

3 Responses to “How we made 18,000% in the Stock Market”

  1. I subscribed to the Kacher/Morales service at one time. I stopped when I discovered that in their “back tested” performance claims they used EOD prices for trades that were signaled after the close. The explanation was that most of the time people will be able to get the EOD price after hours, and if not, the prices should average out.

    Well no, actually. If their timing model is worth something then the prices will, on average, move in a favorable direction by the next day.

    Anybody who biases their results and then tries to avoid explaining it realistically is not somebody I want to do business with.

    • Thanks Doc!

      Interesting, at my old fund we used a system that was based on Closing Prices and trading based upon the closing value of that index. I would say 80% of the time, the signal was substantially on long or short so a simple MOC order would work. Of the 20% or so of times it was a close call, we would initiate the trade based on our best guess, and then utilize futures AH to reverse the entire position. So if we sold the S&P and needed to buy it we would buy 2x as many futures. It was crude but worked fairly well, there was still enough alpha from the signal to make a profit, not as much as a back test but then we never expected to match any back test anyway in real trading.

      Curious though if you followed the service long enough to get a feel to its accuracy? I understand not getting exact prices but it should’ve produced SOME profitability if it was of any use? Thanks for your input, very appreciated!

  2. Gil lost his case to the investor you mention. Barry, the investor, posted everything on his website: http://gilmoralesfundperformance.com/Page_2.html

    You can read about the funds performance and the lawsuit there and decide for yourself.

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