03.26.08
Timothy Sykes is full of bullship
Timothy Sykes, the boy wonder who turned $12,000 into $1.65 million while still a teenager, has abandoned his hedge fund Cilantro to re-create his day-trading achievement in full view of the internet on his new blog. Sykes is best described as young, brash, egotistical, and annoying. Of course, an impartial observer would describe me in much the same way. Timmay and I also share the preference for shorting stocks over buying them. But rather than being two peas in a pod, we are polar opposites: Tim is the quintessential short-term trader and I am the archetypal buy-and-hold value investor.
I am not like some people who say that day trading is a crock and that it never works. It can work for some people some of the time. The problem with Tim Sykes is that he encourages others to follow in his footsteps by buying his $297 DVD trading seminar. There are several problems with buying a trading system such as Tim’s:
- Even assuming that some strategy works, if enough people follow that strategy it will cease to work. This is exactly what happened to Richard Dennis, the noted commodities trader, who famously lost tens of millions of dollars in 1988 after his trend-following strategy stopped working. Sykes of course likes trading microcap stocks with relatively thin markets. This means that his system is especially prone to break when too many people start using it.
- Trading takes a lot of time; this is particularly true for Timmay’s day trading and momentum trading. Most people have jobs, and very few people have enough in savings and enough trading talent to make a lot of money trading. So for most people, time learning to trade would be better spent nurturing their career or working a second job.
- Trading any system takes incredible self-restraint and guts. Very few people have the self-control to be able to stick to a system even when it is not making money. This is even harder if a trader buys a system (say, from Tim Sykes), because it is harder to become truly convinced in the system if that trader did not invent it himself or herself.
Traders and investors should steer clear of Sykes’ DVD and his trading system. Those few who could be good traders would likely do better developing their own system rather than following Tim’s. Of course, I find Tim amusing, so I encourage you to read his blog for its amusement value.
Disclosure: I have no connection to any person mentioned.
Timothy Sykes said,
March 26, 2008 at 9:49 pm
I wish you’d actually viewed the DVD or read my book before you ripped on what I’m trying to do. If you had, you’d see:
1. I’ve had plenty of experience with destroying profitable patterns thanks to my big mouth so that now I teach people to play all different angles, especially since my short selling angle isn’t for everyone.
2. Unlike the true frauds out there, I don’t teach my students to just memorize the patterns, no, I want them to understand the variables that align to create those patterns so they can adapt to the inevitable changes.
3. I teach people to focus on the most liquid microcraps and smallcraps out there, crap like COIN and CPST, both of which trade MILLIONS of shares daily, aka plenty of liquidity to go around
4. My best trades come about rarely, I prove day in and day out I trade too much so I teach others to focus only on the most ideal, which usually occur 1-4/month, aka plenty of time to live a normal life while waiting for such opportunities.
5. I could care less what you or anybody else thinks of me, amusing, fine, but I will teach as many people as possible about the entire microcrap niche, going long and short, short-term and long-term…next time do more DD and get your facts straight!
PS I encourage you to purchase my book/DVD and see for yourself, the DVD package (which includes an autographed book) comes with a 60-day money-back guarantee (minus a small restocking fee cuz restocking is a #$*#^@) (good thing there’s only been 2 returns so far, or less than 1% of those sold, aka people are loving it!)
Tracy Coenen said,
March 27, 2008 at 9:52 am
Ouch! You’re tough on Timmay!!!
You know I like Timmay. Sometimes I cringe at what he says/writes…
BUT - I do admire his motivation and his willingness to share his strategy with others. He sells the DVDs - so what? Good for him if he can make money by teaching his strategy. (Heck… I’m now writing a book on fraud investigations so I can make money by teaching others MY methodology.)
I don’t use Tim’s system and I haven’t bought his DVDs because I’m not interested in doing what he does. But I don’t fault him for teaching others. Yes, you’re right… if too many people use his strategy, it totally throws the whole thing out of whack and it won’t work anymore.
But why fault him for that? I like his openness about his trades on his site. And he definitely is entertaining…
Sykes’ Saturday Seven: March 29th, 2008 Edition | Timothy Sykes - Stock Trader, Author, Entrepreneur said,
March 29, 2008 at 10:56 am
[…] This blogger tries to pick a fight with me in order to get some press for his crappy little blog…that’s fine, I’ll oblige. See my comments under his post correcting his assumptions with facts. Only one thing worse than a value investor—a value investor who jumps to conclusions without doing the proper research beforehand! […]
michael said,
March 29, 2008 at 11:09 am
My responses to Tim’s points:
1&2. What you are teaching people is still a style of trading. Even if they are not just memorizing patterns, the whole style could conceivably stop working at some point. This was exactly what happened to the trend followers like Richard Dennis in the commodities markets.
3. I traded a couple of the stocks you did, and yeah, there’s millions of shares traded, but they are still not liquid enough for me to day-trade. Anyone with a decent-sized account cannot afford to play your game.
4. The problem is that the trader still needs to find the stocks and opportunities to trade. For example, I am not a frequent trader; yet I spend a lot of time finding the right stocks to short. While it only took me a month to increase my portfolio by 20% with a short position in LSCG, it takes me 20+ hours a week searching for such great opportunities. Most such opportunities do not pan out. My bet is your followers likewise spend a good chunk of time looking for the right patterns.
5. While I didn’t want to waste $300 on your DVDs and book, I have read a lot about you and have read your website. I would hope that you, who espouses ‘transparent investment management’, discusses a very similar strategy in your book as you do on your blog.
michael said,
March 29, 2008 at 11:09 am
BTW Tim, thanks for disparaging my ‘crappy little blog’.
michael said,
March 29, 2008 at 11:19 am
Wait, Tim, so LESS THAN 1% (total of 2) people have returned your DVDs. That means that fewer than 200 people bought them. Seriously, that is pretty weak.
michael said,
March 29, 2008 at 11:19 am
Sorry, I meant slightly more than 200, not fewer.
Timothy Sykes said,
March 29, 2008 at 11:21 am
1. Screw all those people with decent sized accounts, they already have tons of opportunities, this is for the little guys!
2. Small companies and their shareholders will ALWAYS hype them up to raise capital and sell at higher prices, the game n ever stops, ALWAYS trading opportunities, no matter what angle you take.
3. My patterns are damn easy to spot, not many stocks up 200% in 1 week. But who cares if you spend time researching, there’s no free money in this biz
4. My book is about how I came to this strange biz model, I made a fortune off suckers, lost a bit of it when I unwittingly became one and now I’m determined to help as many people as possible.
Timothy Sykes said,
March 29, 2008 at 4:08 pm
Yah dude, i don’t think u realize how small-time i am, i’m just a guy sitting on a couch trying to get other small traders/investors to learn to play the game so they won’t keep losing and thinking this stuff is random
Jon said,
March 29, 2008 at 4:49 pm
Tim is such an idiot when you actually read his site you understand. He lost all his money and expect what - to help others lose their money too? Tim makes $$$ off promoting stocks… like what he did as he explains in his book. On message boards, chats, etc. Watch out!
Timothy Sykes said,
March 29, 2008 at 5:12 pm
I lose 35% on CYGT when i ignored my “idiotic trading rules”. Wow, I guess the lack of due diligence gene isn’t limited to this blog’s author but to its reader (s?) too
Weekend Reading - March 29, 2008 | My Adventures into The Street said,
March 29, 2008 at 8:13 pm
[…] than arguing on this virtual idiot box. If you’re looking for something amusing, check out recent criticism about a microcapper and his response plus ensuing comments. And I thought the Yahoo/Google Finance […]
Mike said,
March 30, 2008 at 6:36 am
You both have valid trading styles that reflect who you are and what is important to you. Why do you bash each other? I value invest and will often day trade around my postion. The reason I make fun of Value investors is that they use it as excuse to be lazy. They wake up one day and thier account is destroyed then they start to blame the broker/blog writer/newsletter scribe et al.
michael said,
March 30, 2008 at 10:32 am
@Mike - we bash each other because it is fun and is a good mental workout. There are plenty of people who are (or call themselves) value investors who are no good at what they do, just as there are plenty of money-losing daytraders. Those people should just invest in index funds and leave the trading and value investing to those who are more skilled.
gerlando said,
April 2, 2008 at 1:35 pm
Michael, You mention you prefer short sells but you’re a buy and hold value investor. That sounds contradictory, what am I missing?
michael said,
April 2, 2008 at 2:13 pm
I buy and hold on both the long and short sides. Long, I look for solid companies that are good values, and I hold them until others recognize the value. Short, I look for the opposite and I remain short until the market recognizes that I am correct. I don’t think it is contradictory, but I guess there are others who do think that ‘value investors’ can’t be short sellers. It is only a label, though.