In sports, you must have a certain physique to win. If someone is 5′4″, they're at a tremendous disadvantage if they play Michael Jordan in a game of one‐on‐one—but in the market, anyone can compete and win if they are willing to put in the work. Investing your money and placing thousands of trades over several decades is largely a mental sport, not a physical one. Success in this business is the result of your thoughts, decisions, and, most importantly, your actions. In order to win, you must bring out your smart money superhero (the best version of yourself) and defeat your dumb money beast (the emotional, lazy, and unproductive version of yourself).
YOUR BIGGEST OBSTACLE
The biggest obstacle that prevents most people from getting ahead is themselves—not the market, not the economy, nor any other external force. At the end of the day, your success in life (and in capital markets) is determined by one factor: the quality of your decisions. Most people spend their life thinking they are making great decisions, but their actions tell a different story. Talk is cheap; actions matter.
Most people live in a near‐constant state of suffering, and most of the disasters that befall them are the result of self‐inflicted wounds. Dumb money people sabotage themselves, often feeding personal addictions. Dumb money people have no structure, no plan, and repeat the same mistakes over and over.
There is a battle between good and evil going on inside all of us. For the purposes of this book, I will call the good side “the smart money superhero” and the evil side “The dumb money beast.” I've named the beast “Shmelf.” Shmelf is a concept I developed while raising my kids. It's the beast inside of them that doesn't want to take a bath, wants to eat candy, doesn't want to brush their teeth, and throws a fit before bedtime.
Shmelf is consumed by petty desires, fears the future, worries about the past, is highly emotional, is not rational, and is consumed by an endless stream of foolish thoughts. We pretend to stomp on Shmelf, squashing the beast while symbolically destroying the base instincts inside ourselves that prevent us from being successful and achieving our goals. “Squashing Shmelf” is a great exercise that can snap anyone out of a funk, change their mental state, and help them focus on winning.
Smart money people recognize the self‐sabotaging forces within themselves and they make changes that allow them to convert suffering into prosperity.
To live your dream life, you have to overcome your self‐destructive desires (stomp on Shmelf) and become the best version of yourself (bring out your smart money superhero). If you make a real effort to level up, showing the world your best version of yourself on a daily basis, your life will improve in ways that I can not even begin to explain with words, and you will thrive in more ways than you can imagine!
The easiest way to do that is by living life with a clear purpose, learning how to overcome the common psychological pitfalls that are holding you back, conquer the dumb money beast inside of you (your dark side), and bring out the smart money superhero (even when you don't feel like it) so you can shine!
ACTIVATING YOUR SMART MONEY SUPERHERO
In this book, I'll share with you how I developed my investment strategy, and I'll show you how you can adopt that strategy and customize it to make it your own. The strategy is simple but not easy. During the early part of my trading career, I struggled with some catastrophic losses. Even after I refined my investment strategy, I didn't always follow my own trading rules and continued to suffer losses. That's when I realized that success in the market is 1% mechanics and 99% psychology. Likewise, this book is a little bit about mechanics, but it is mostly dedicated to helping you achieve the psychological mental state to be able to successfully execute your own winning strategy.
THE FOCUS IS ON WALL STREET
The strategies presented in this book pertain to all publicly traded markets but the discussion focuses primarily on stocks, options, currencies, bonds, and commodities. While this book mainly focuses on U.S. stocks, please keep in mind that the lessons, techniques, and truths are also applicable for any of the aforementioned markets.
Throughout this writing you will see me use many of these words interchangeably: stock, market, commodity, currency, bond, and plenty more. To avoid confusion, simply understand that these are all asset classes and that speculators can, and do, thrive in all of these environments. It is your choice where you focus your attention.
Back in the old days, not long after the Civil War, the first stock tickers appeared. They used the power of the telegraph to transmit the moving prices of stocks during the trading day, which were printed out on a seemingly endless ribbon of paper called ticker tape. Smart traders could follow the market trends they saw hammered out on the tape and they learned not to bet against it.
I'll end by saying: always keep your losses small and never fight the tape.
Trade wisely,
Adam Sarhan
PS: Before we go any further, I want to share an important disclaimer with you: Please remember, everything in this book is general in nature and at no time is any specific investment advice given (it can't be because I do not know you personally). My lawyers want to make sure it is very clear that past performance is not indicative of future results; investing involves risk; leverage can be used for you, and against you; and everything I share is for educational, illustrative, and informational purposes only. Additionally, I want you to know that it is of the utmost importance that you take full responsibility for every decision you make. That is one of my main goals of this book: to help you make smarter decisions so you can join the smart money circle!
Acknowledgments
Welcome to the smart money community. I want to start by thanking you for reading this book. When you're done, I invite you to share your feedback and to let me know if you were able to put the lessons in this book to work. I want to hear the story of how you joined the smart money circle.
Before we get started, I want to give a sincere, heartfelt, over‐the‐top THANK YOU to God—and also to a few key people who have made a huge impact on my life:
I want to thank my family with every fiber of my being. The journey we have enjoyed (so far) is by far my greatest pleasure in life. The love, support, trust, openness, honesty, priceless memories, precious moments, and the joy we have savored over the years mean more to me than anything else I have ever experienced. I also want to deeply thank my extended family for believing in me and supporting me—even when I had nothing. Especially when I had nothing.
Next, I want to thank a few people for their friendship, love, support, guidance, and for being all‐around great people who have helped me on my journey thus far (to protect their privacy I will use their initials; they know who they are): WON, SEK, FS, JR, GK, MC, KG, SS, SS, DS, AO, MO, RT, SS, MR, DS, AS, MK, AH, CL, AD, MB, RS, ML, MM, LM, CM, BI, NH, TB, FB, and RI.
I want to thank all of my clients, members, work colleagues, business partners, friends in the media, and the millions of readers who have read my articles on Forbes.com. I also want to thank everyone who listens to and supports my SmartMoneyCircle.com podcast.
I want to thank the wonderful team at Wiley for all of their support and patience over the many years it took me to write this book.
Finally, I have a very special, huge, from‐the‐heart thank you to my good friend Shawn Vincent, who turned