Podcast: Nick Radge Master Trader Interview

December 17, 2013 / By Nick Radge / In the Media, Podcast Interviews

The Master Trader’s Workshop takes a beginner trader and runs their strategy by an expert. In this interview the apprentice is Jeremy Clifford. Jeremy has worked for Vanguard, but as he said to me he is living proof that the licenses mean nothing for one’s trading skills. The master feedback comes from Nick Radge, aka The Chartist. Unfortunately “The Master Interview podcast is no longer available but you can read the transcript below. You may also like to listen to another of Nick’s interviews here https://www.thechartist.com.au/chat-with-traders-interview-nick-radge/

Nick is the author of several books, his most famous being Unholy Grails – A New Road to Wealth and Weekend Trend Trader. He is the Director of The Chartist – a membership service for individual investors, and he’s got a lot of high quality presentations freely available on his site and on YouTube.

The apprentice’s conversation today is between myself and Jeremy Clifford. Jeremy goes to Law school in Oregon. He has been trading for four years on his own. Before that, he worked at Vanguard Mutual Funds. I hope you enjoy our conversation.

Topics covered include trading an edge, the effect of trade frequency, challenges of trading a small account, and how to add more systems and markets the right way – even with a small account.

Master Traders Workshop – Thomas Dall

Intro:

Welcome to the Master Traders Workshop. I’m your host, Thomas Dall.

Thomas Dall: Let’s see. Let’s jump in then. You were in Law school last year you said, right?

Jeremy Clifford: Right. My last year of Law school just started about a week and a half ago.

Thomas Dall: And before that you worked at Vanguard Mutual Funds right?

Jeremy Clifford: Right. I worked there for about four years. I had my security licenses from there. I enjoyed my time there. It was a great experience. I learned a lot about investing. I don’t know how much you know about Vanguard but they are really “buy and hold”, that’s kind of their mantra –index funds type of thing. It was really interesting to be in the middle of the “buy and hold” and there’s a lot of young people that work there. Whenever you get a lot of young people in the financial market situation there’s always talk of how, “buy and hold is great, but let’s see what we can do beat the market”, there’s that competitive nature like, “let’s see if it can be done.” So that’s where I got started, just by trying to research if there were ways that the normal guy could do it.

You read ‘Market Wizards’ and some of those fundamentalists talk about knowing the company and calling the CEO’s and calling the analysts, which is something that I as as personal investor, would never really have access to. That’s kind of where I got turned on to it. How it actually started is kind of interesting.

I was talking to this guy that sat next to me about trading. I knew that he traded a little bit and he’d subscribed to a newsletter. It was something like stocks under ten dollars or something. The premise was that all of the stocks that this guy was recommending, was all under ten dollars. He let me look at the newsletter and I looked at it and another one of my friends overheard that conversation. When we got done and this guy left, my friend came over to me and said, “don’t listen to what that guy says. He’s talked to me about it before and he doesn’t know what he’s doing. He’s actually really bad. If you really want to know, read these two books.”, and he gave me his copies of ‘Trend Following’, by Covel and “How To Make Money In Stocks”, by Neil.

After that I read those, that’s when I was kind of hooked on the idea of technical analysis and price action trend following. That was in mid 2008 when I started getting interested, and then all of 2008 happened and I didn’t really do any trading. I guess that was the good thing about learning about reading how to make money in stock. It was learning how to only place trades when it was a market to place trades –when you’re in an uptrend. That probably saved me from myself, instead of jumping right in, 2008. I looked at Investor Business Daily and seeing that they were saying it was in the downtrend so, “don’t invest in stocks right now”, I was able to just stay out at that point and then hop into it once the market started to go back up. I’ve had my ups and downs.

Listening to one of your other podcasts, I think I’ve mastered the art of not blowing up my account anymore – I think was the term of art they were using.

Thomas Dall: Yeah [laughter]. That’s a good starting point at least. Trend following and O’Neil’s book. You just started reading that and learning, and then slowly started to trade on your own, is that correct?

Jeremy Clifford: That’s correct. It’s been an adventure from figuring out if I want to do canceling type thing, where you look at, at least some fundamentals, or do you. You want to do just a purely price action trend following. I think I’m pretty much set on just doing a price action trend following after reading a couple more books and some white papers, and talking to some other friends that trade. It seems to me that kind of fits me the best. It just gets rid of all the noise for me which I can definitely see myself getting wrapped up in the emotional aspects.

In Law school you learned about one of the ways to make arguments appeal to authority, or to appeal to your emotions. Coupling my Law school education with what I’ve read, I’ve really seen on CNBC at least –not to focus on them but they’re kind of the biggest financial journalists out there. What they do a lot is appeal to your emotions by getting two guys on there just to yell at each other and be really passionate. I’ve seen myself in the past get caught up in that. Also, I’m the oldest of four boys, so when you’re the oldest of four boys, it really is the person who wins the argument is the person who yells loud enough. I was use to watching that and having it in my own life, then watching CNBC, and that appealed to me because that’s how I thought you won arguments –you yelled louder and so you were the winner.

I’ve been able to kind of get away from CNBC and that financial journalism of appealing to the emotions and really sticking to just the price action, and looking at that.

Thomas Dall: Do you succeed in doing that when you’re trading? Just to put on a trade and be completely emotionless about it? Is it still popping up somewhere, somehow?

Jeremy Clifford: Yes, and no. I think that I’ve gotten a lot better, especially this year. I think part of it might just be that I’ve been so busy with Law school. My in-laws moved to India over the summer, and so my wife and I really helped them move. We’re from Arizona and they lived up here in Oregon and that’s where I’m going to law school. While we were in Law school we were living with them, and then they moved to India. They moved, and we moved, and we had the new baby. There really wasn’t a lot of time for me to get emotional about any of my trades. It was really just a matter of me sitting down at the end of the day and plugging away at my spreadsheet that I have, and see if there were any trades that hit, if there were, where I stopped out, was it a buy signal, and then just placing those orders and not really worrying about the emotion. The only place that I really saw emotion creeping in was where I’d see a buy signal and I’d place it, and maybe the security kind of just muddles around and doesn’t do anything. And then I’d start to see something in the news that will make that security start to pop up, and then I’ll start or make it go down – that’s when I’d start to get emotional. I found a way to control that. I really only check the market when I wake up, just to see what’s going on for the day. By the time I wake up out here on the West Coast the market’s been open for an hour or two, and then I’ll check it at the end of the day. I found that the less I checked the market throughout the day, the less emotional I am about the trades that I have on. It’s been kind of a different experience because you hear or read interviews or see people online talking about how many screens they have up at all times –they have twenty screens that they’re looking at all day. When I first started trading I thought that’s what trading was. I’ve come to realize that you can do that, people do it, but it doesn’t really sound fun or exciting to me at all – looking at screens all day.

Thomas Dall: Just eliminating the noise. Does this mean that you’re not following CNBC anymore?

Jeremy Clifford: No. Actually my wife and I just moved and we don’t have cable. There’s not even really the ability to watch it.

Thomas Dall: Okay, great. So you say that one of the reasons why you can control your emotions or avoid being emotional about trade, is that you don’t have a lot of time to actually trade. Or you’re setting up yourself so you spend that much time actually trading. Trading is not just sitting in front of the computer and trading, it’s also research like testing systems, doing other things. It’s not immediately related to the act of trading. What is your routine there? What do you do? You studied research, tell me about that?

Jeremy Clifford: I do read a lot of books. I especially, during this summer, tried to read as many books as I could because during the school year it takes me a lot longer to read a book since I’m reading all of these different law books. I like to read the whitepaper, I’ve gotten some good ideas from there and then I think that’s part of it –besides the move and having the baby, keeping myself busy with that. I tried to keep myself busy with stuff that doesn’t need the market news of that day. Reading a book doesn’t really need the market news of that day to understand what’s going on in that book, or coming up with a system and testing that and playing around with it. It doesn’t really need the market news of that day. The more I’d find activities like that is the more I’d find that I can fill my time not needing market news to get through the day. I had other stuff to do, trying to come up with different ways on a spreadsheet to calculate, and make a graph, or trying to understand different places where buy signals were at a fifty day high, or when it crosses the ten day moving average. Trying to understand more this year, I’ve really found how helpful the average true range can be. Trying to understand that more and trying to understand the things that I’m putting into these systems –trying to understand those parts.

I’ve found that I really enjoy the process of coming up with a system and trying to test it. If the system doesn’t work that’s not really a bad thing, I find it’s a really good exercise to do that, and see that, “oh this isn’t going to work, let’s get rid of it”, and try something else.

Thomas Dall: So you enjoy the process of testing systems. I’m curious about how stable is the system that you are actually using to trade now? I suppose this is something you’ve tested as well and now you’re satisfied with that system right?

Jeremy Clifford: Right. I feel like maybe my testing is lacking a little bit. I feel that the system that I’m at now – and that’s why I find whitepaper so helpful, you can read a white paper about using a moving average and moving and using just a new high. Whether it’s just a three, four, six, seven months higher, or year high.

I tend to like and gravitate more towards using a new high than using a moving day average crossover in the basic testing. I don’t want to come across like I’m an expert at all –I’m not. The basic testing that I’ve done when it comes to transaction cost, that’s a big thing for me because I don’t have a lot of trading capital right now, so I really want to try to find where one of the things I’d look at is how many trades I’d be doing. I really want to limit the amount of trades because that could really eat into my return fairly quickly. That’s why I’ve kind of gravitated in my testing towards getting new highs, because it seems to me when I’m looking at a new three month daily high, or sixth month, I tend to gravitate towards the three, six and twelve month highs in that. That seems to me in the testing to just be better for my personality and my overall goals of not having a lot of transactions and still coming up with some type of return.

It’s been kind of interesting in just the system that I’m running. I just started it this year in January. It’s been interesting. The system that I did is basically all ETF’s, all markets that has a hundred thousand shares in volume or more, so that there was some liquidity there. All the markets across the world that met that and then if I’m ETF –so commodities such as Gold, Silver, Copper, Agricultural, Oil, Natural Gas, and then the U.S. domestic markets. You have your regular QQQ or your S&P 500 and then some sector ETF’s.

One thing I found, at least this year, that I hadn’t really thought of when I was looking at the system and just kind of backtesting it a little bit, is that it seems to be a good system when the U.S. market is not doing so well. You get some of those non-correlated returns like a running Oil or running Gold or something like that. When the U.S. is doing well, as a trend follower, you’re kind of, by design, late to that party of the market upswing because you want to make sure that it’s a confirmed uptrend. That’s one thing I’ve been thinking about lately –how to add maybe just individual U.S. stocks that might outperform the market. I’ve been toying around with looking at stocks and making new fifty week highs.

I read an Alexander Elder book over the summer. One of the things I thought was interesting was his new high and new low index and so I’ve been following that a little. Just going in and looking at the stocks that I would want to use in that market. These are stocks which have over five hundred thousand shares in volume a day, over twenty dollars, and they’re making new highs or new lows and kind of seeing where the market in that specific sector is. So that’s been kind of interesting.

I haven’t placed a trade on that system, I’ve just been kind of watching it. While my system has been profitable, I think I’m around 3% or 4% for the year. When compared to the S&P 500, that’s not quite where we want to be.

Thomas Dall: So you are not yet consistently profitable, right?

Jeremy Clifford: I’ve been at this since 2009 and I’ve had a lot of ups and downs, and blown out my account. This year is the first year where, while the profit wasn’t very high, it’s been steady. There hasn’t been a huge peak to valley, which has been nice for me psychologically to not have to go through that for another year.

Before, I would make 10% and lose 10%, and just kind of vacillate between the two. I felt like I didn’t really have any control over my return, whereas now, with the trend following and knowing where I’m going to get out, I feel like I have control over my return. I just wish that my return would be a little bit more. I’d like to have control over a bigger return than the return I currently have.

Thomas Dall: So what changed, with respect to before, when you were not doing so well? Why does it work better now? What do you do differently?

Jeremy Clifford: I think I had more of a system. Before I was really focused on when to buy and I had no idea when to get out. I would buy a stock and it would go up 6% and then it would go back down to 4%, and I would get scared and I would sell it. Then, it would go up to 50%.

Netflix was the perfect example of that a couple of years ago. I had bought it and made a quick 10% or 15% and then it went down to 7% and I got scared and I just got out of it. Then it went on to double. I felt pretty foolish, and that’s really where I started looking at when I needed to get out. Also, during the rookie mistake of buying a stock and thinking because I bought it, it needs to go up, because I’m a smart guy so it should respect me. Having it go down a couple percent and then saying, “oh it will turn around”, and then having it go down more and keep telling myself that it would turn around, then finally closing it out at a larger loss when I finally lose hope on it. So that was something I really wanted to do to just stop.

A turning point, when I tried to to something with my system this year is just personal accountability to myself and to my wife. This is our money, it’s not just my money. We were going over our taxes and she was telling me the numbers to put in as she was reading them off the form and I was on turbo tax and she pulled up my brokerage tax return, and I had an eight hundred dollar loss for the year, which, on the amount of money that we had was a big percentage amount. Eight hundred dollars was just gone. Psychologically it was not the most fun experience for her, not knowing that I had lost eight hundred dollars. She said, “You lost eight hundred dollars this year?”, and I said “No I didn’t. That can’t be right”, because all I had thought about were the couple of small wins that we had. I said, “Let me see that!” and I looked at it and sure enough I’d lost eight hundred. I figured that’s something I needed to change quickly or just not do this anymore.

I really started focusing on when to get out and at what point am I wrong when placing a trade, and get out and live to trade another day.

Thomas Dall: The way you do this accountability, how is that? You report every month to your wife that, “so and so are my results?” or how do you do that?

Jeremy Clifford: I do. I give her a report every month of where the general S&P 500 is at and where I’m at. I told her going into the system, I’m probably going to be right only 30% to 40% of the time, and the goal is to be right with larger amounts, and wrong with lesser amounts, and so I’m probably going to have a lot more losses. It was in the past when I’d tell her when I’d had a loss or when I’d had a win, so I told her, because I’m going to have a lot more losses, I’m going to come to you and say, “hey I got stopped out, but it’s going to be a smaller loss.” And so we decided that everyday after I did my numbers I would just tell her, “we had two stops move up today, and no stops were hit”, or “I had one stop hit for a loss of twenty dollars, and two stops were moved up”, or “I had one stop hit for a gain and fifty dollars, and one stop hit for a loss of five dollars”, and I think that’s helped me be accountable towards her and to myself, really looking at it everyday and seeing if this was something that was going to work.

For her, I think it’s just helped her psychologically to know that every time I talk to her, she knows sometimes the market happens and there’s no stops moved up and no stops were hit. Instead of every time I came to her she said it felt like I was telling her that I lost more of our money. At one point she did tell me that “every time you come and say I have to talk to you about my brokerage account, it’s because you’re losing money.” That doesn’t really help me psychologically to think that this is something that I really wanted to pursue, and that it was something that I was going to be good it at, and it was true. This has helped her see that it does even out over the long haul –the whole losing small amounts and gaining larger amounts than you’ve lost, can be profitable. So now it’s just a matter of having better returns.

Thomas Dall: So let me ask you this before we get back to the returns. What would you consider your greatest strengths and your greatest challenges?

Jeremy Clifford: I would say my greatest strength is just being willing to do the research. I know I need to get better at that. To a point, one of my greatest strengths I would say, is being a cynic. That’s probably part of the reason I went to Law school. Reading a book or reading a white paper, and then saying “alright, this sounds great, let me take what this paper is telling me and go and actually test it and see if I can duplicate those results…”, or if it’s something I feel I would feel that I would actually be able to do. Some of these papers are great when they say, “oh you know we had a 50% win rate.”, but you go back and you can kind of see how long their longest losing streak was and you could say, “is that something that I can sit through?” If I can then great, if I can’t then maybe this isn’t the system for me. Really just being a cynic about what I read and testing out for myself.

I’d say one of my weaknesses, that I think I’m getting better at, is just patience. Before I was always impatient, wanting it to just go straight up or I was impatient with the stock because it wasn’t turning around, and I just kept losing more money on it. Now I’m kind of feeling that I get impatient when I put on a trade and it doesn’t really do anything, for a while. Just trying to overcome that and looking at the long term and knowing that I could put on a trade and it could just vacillate between a 1% gain and a 1% loss, for months. Then something might happen that’s a catalyst for it to take off. Really trying to follow that old Jesse Livermore quote where he talks about how he made “more money sitting on his hand.”. That’s kind of where I feel I can make the biggest improvement. It’s just trying to help myself, “sitting on my hands”.

I think that’s where we’re trend following and really just systematic trading of knowing when to get out and having a set point of getting out, has really helped me with that patience. Just knowing the stock hasn’t done anything, but it hasn’t hit my stop yet, so I’m going to stay in it.

Thomas Dall: Patience is really key for trend following right?

Jeremy Clifford: Right. I think having two kids has kind of helped with the patience though. [laughter]

Thomas Dall: [laughter] Yeah, that helps as well. Let me just return to what you said about getting the returns to grow and building your system and income from trading. What do you think it will take you to go to the next step?

Jeremy Clifford: I think part of it might just be that I’m undercapitalized. I just need to probably get more money. I was telling you earlier about the transaction cost and when I follow the rile of only betting 2% or 1% of capital, the transaction cost can really eat into that. Getting more money to trade with is one thing.

I read a couple of trading blogs. Even in the story of the turtles they had two systems. Right now I feel like I have one system that works for me. I talked earlier about adding the system of individual stocks, and I think having individual U.S. stocks along the system with the ETF’s of the world could help even out those returns. You know when Asia is not doing well, but the U.S. market is, and not just having the S&P 500.

I looked this year at some of the higher performing stocks, such as Telsa and this system of just buying at a fifty-two week high, you would have captured a huge gain on a stock like Tesla. Obviously you’re still going to have some losses, but those huge outsized gains would have really helped my return –so trying to add that second system into the current system that I have, so that there’s something always going to where I can get those outsized returns.

Thomas Dall: Great. If we widen the perspective a little bit and look into the future, five, ten years from now, where do you see yourself? What’s driving you to continue, and what is your ultimate goal with trading? Why do you keep trading?

Jeremy Clifford: One of the things I’d like to do is really trade for a living. Whether that’s managing money for people or giving to a point where I have enough capital of my own, that I can live off of the returns. I’m not sure that’s going to happen –well just living off of my returns. I’m not sure that will happen in the next five to ten years. I would like to be good enough to go out and manage money for people and be confident in that managing. Right now I’ve talked to a couple of people about the market and they say, “Hey you sound like you know what you’re talking about, have you ever thought about managing money?”, and I’m not sure I have the confidence there yet to say, “Yeah, give me your money, I’ll manage it for you!” I’d like to get to that point where I feel confident enough to where I can say, “Yeah, I can manage your money for you.”

Thomas Dall: Okay. Why? Why do you want to continue trading, except for the money? What kind of lifestyle is it that you want? What are some of the bigger goals in life?

Jeremy Clifford: Trading can be a little lucrative but for me I just really enjoy it. I really enjoy the process of coming up with systems and the money, obviously, one of the reasons that you do trade is to make money –you don’t trade to lose money. I think just the process of trading is a great intellectual pursuit. It’s one of the few things out there where you can just be there. In my mind it’s always been the equivalent of waking up one day and saying, “I’m going to go play basketball in the NBA.”, and of course no NBA team would take me, but in the market you can go and invest, and someone that’s been in this business and owns a hedge fund can be on the other side of that trade from you. It’s kind of amazing that we can do that.

I think trading in and of itself, offers a lot of freedom. There’s always the dream of just living on a beach in San Diego and plugging in the computer once a day and updating my trades, and then going out, playing on the beach, and playing in the ocean for a couple hours. That definitely appeals to me. I think the freedom is what appeals to me. The freedom to be able to work from wherever, and not have to go into an office everyday, and not have to miss my kid’s soccer game or basketball game because I’m working late at the office. That’s more of why I’d like to do it, to have that freedom and be able to enjoy my family. I talked to a lot of people in both finance and outside. Professionals that are just killing themselves working seventy, eighty hours a week and they’re missing their kids growing up. That’s not something that really appeals to me.

Thomas Dall: Great stuff Jeremy. Anything else that I forgot to ask you about, you think?

Jeremy Clifford: Listening back on some of the podcasts, one of the questions that I’ve really tried to analyze about myself is when you ask, “on a scale of one to ten, where do you think you’re at?”

Thomas Dall: Great. So please, answer.

Jeremy Clifford: I would like to say that I’m at probably a five. When I first started trading, one of my friends I talked to –who is a really big can slim guy, he’d actually been the president of a local can slim company for a couple of years. I talked to him about trading and he told me, that if I could make it through the first three or four years, then I’d make it. Those three or four years are the tough years, where you’re going to blow up your account and of course listening to him I was thinking that this was four years ago when I was in my mid twenties thinking, “Yeah, it probably took him three or four years, but it’s not going to take me three or four years. I’m not going to blow up my account. I know how to stop my losses early.”, and of course I didn’t know any of that. I feel like I can say I’m at five because I’ve been through those four years, I’ve blown out my account once, I’ve learned to control my losses now. Alexander Elder talked about the cycle where you’re probably going to be in the negative but you don’t want to be a lot in the negative. Then, you’re going to get to the breakeven point where you’re barely making any money and then, after you’re at that point, that’s when you start to make the money, and I feel like I’m at that point where I’m at the breakeven period. Maybe it will be another year before everything starts to click and I really start to make good returns. I feel like I’m in that middle point of, I’m not blowing up my account anymore and I’m not losing a lot of money, but I’m not quite yet gaining a lot of money. I’m just kind of hovering right there between breakeven and 5% gain.

Thomas Dall: Okay, that’s all I wanted to ask you today. I’ll let you get back to being a daddy.

Jeremy Clifford: Alright.

Thomas Dall: Hey, it was great talking to you, Jeremy. Thanks a lot!

Jeremy Clifford: Yeah it was great talking to you too. I really enjoy the podcasts. Keep up the good work!

Thomas Dall: Alright. So we’ll look forward to what the master has to say about this.

Intro to Part 2:

The Master who listened to our conversation is Nick Radge. Nick is also known as ‘the chartist’. He is the Author of the book, ‘Unholy Grails’, and an EBook about investing in U.S. equities amongst others. His company is trading mainly U.S. and Australian markets. You can find out more about Nick and his company at thechartist.com.au. I hope you enjoy the conversation.

Thomas Dall: You listened to the intro with Jeremy and I would like to hear your immediate impression of his process, his system, his methodology.

Nick Radge: Sure! Well I think Jeremy is in a very good place. I guess there are two kinds of traders out there. You have those people that want to get into the business to make money, and I understand that ultimately that’s what everybody wants to do, but I think there are other drivers. I think there are people that want to get into it just for the sake of money and that’s their sole focus and nothing else.

Then you’ve got other people where I think Jeremy falls in, and that was quite obvious to me that he has an inquisitive mindset, for trading, and the markets. You can tell that by the way the way he talks, and also the fact that he’s research driven, not profit driven. That certainly reminds me of how I started trading back in the eighties. I certainly had no intention of going out there to make money. I just kind of fell into it and it took my interest, and it was an inquisitive mindset. He’s got the same kind of thing, and I think that’s a very important attribute, and I think it’s an important attribute for being successful on any line of business. I think it shows a passion more than a want or a demand to succeed in that area. Obviously, the greater the passion you have, the more effort you’re going to naturally be able to put into it, and I think that will generate some good outcomes at the end of the day when everything lines up.

He comes across as an inquisitive mindset and I think that’s very positive, he’s level headed, he doesn’t have any big expectations or anything like that, he’s very realistic, he’s certainly not in a hurry, and his natural cynical nature as he calls it –from studying Law, I think is also very good. You’ve got to make anything you come across, your own. You’ve got to question, and you’ve got to be the cynic. That’s certainly something that I’ve always done. I will pull apart strategies that I come across, and I will mix and match, and I will throw them on other instruments. I know there’s quite a popular book going around at the moment. I won’t say the authors name, but I’ve taken a copy of that and, you’ve got to disprove those kinds of things. You’ve got to be the natural cynic, and you’ve got to ensure that the strategy or the rules are robust. I think that’s very important, and certainly Jeremy comes across as the kind of guy that is very thorough in doing that.

So, I think he’s done very well so far in the four or five years that he’s been at it. I think those foundations and the philosophy that he’s now garnered is going to stay with him, and that will be beneficial for him in the longer term. So well done Jeremy!

Thomas Dall: Great stuff. You mentioned that he’s not in a hurry, so he’s got the patience to let it play out for him, and wait for his system to work over the long haul. I wanted to just note one thing that he also said.

Where I asked him where his challenge was, he said “patience”, and where do you see that problem coming in for him?

Nick Radge: I guess there’s different levels here that we’re talking about. There’s this want, to make money tomorrow. I think a lot of people expect that the market is easy. They tend to focus on the easy money that’s made out there. You know the stories of people that have made a lot of money, and sometimes that is based on pure luck. That’s natural human want, to focus on that side of things –we all want to be lucky. It’s like buying a lottery ticket. Everyone reads about the guy that wins twenty-five million pounds, but they fail to see the other four hundred and eighty thousand people that lost their money on the bet. That’s the same with golf. You’ve got a Tiger Woods and you’ve got these top line golfers, and what you don’t see is the other twenty-five thousand people slugging it out, sleeping in the back of cars, trying to make some coin out of it.

I think there’s patience in terms of him understanding that ultimately money is going to be made. It’s not going to happen next week, maybe not next month, and maybe not next year… but it’s going to happen eventually. I think that’s a very good starting point for a lot of new traders. I think the goal in your first year is twofold. Not to blow your account up –that’s a significant goal right there. Even Jeremy, I was surprised to hear that he’s blown his account up, and okay that’s fine, I guess we can do that. I think the goal for any new trader right off the bat, in the first year –forget about making money! Forget that. Just try and not blow up. And again, I guess if we use the golf analogy, try and keep the ball on the fairway. Don’t worry about trying to shoot a par or a birdie, or that kind of stuff. Just keep the ball on the fairway and let it unfold from there. I think that’s the first thing with regards to patience.

I know where you’re coming from with patience, and what he mentioned as well, which is slightly different. That’s just allowing the trade to unfold. This is interesting because I have taken notes on this. Let me use the analogy if you’d like. I guess what it comes down to is he can’t control the market. The want or the need to look at prices during the day, is nothing more than you willing the market in your direction. Wanting the market to do what you want it to do, that’s your ego coming out. Okay? Let me me use the analogy here in Australia, “Putting a steak on a barbe”, that’s what we say. If you put a steak on a barbecue or on a grill, you have to wait for it to cook. You can’t just sit there and will it to cook. It’s going to cook when it’s ready to cook, and it’s going to take time. That’s the same kind of thing with trading. You can look at the price as much as you want, it’s not going to make it move. The best thing from my perspective is he’s getting emotional with this. The reason why he’s getting emotional with it is perhaps he’s not quite convinced his strategy is going to work for him. I think that comes back to another point that we’ll get to later on. If you understand that your strategy has a mathematical edge, and that it will work over the long term, then there’s no need to be watching the price every minute and every hour. You’ve just got to let it do what it’s got to do, and the strategy will do what it’s going to do over the longer term. That’s what he has to understand. I don’t think he’s quite got there yet.

I guess it’s the cook in the kitchen waiting for the soup to boil. It’s going to take time. Watching it is not going to help. That’s certainly an issue that I’ve had in the past and I think you eventually get to a point where –and I can see Jeremy is going down that track now. The actual trading equation is very, very small, or the part of the equation. The actual trading is very, very small. The bigger picture is not so much doing the day to day trading, it’s the research and allowing the strategy to unfold.

I remember back in the late nineties I use to run a hedge fund with a partner of mine. He thought running a hedge fund was all about buying and selling, and that’s what it was all about. You know, doing the cowboy thing, you came out of a dealing room with a big bank and you’d buy and sell and buy and sell, and that’s what he thought it was all about –but it’s not. Once you’ve got a strategy, once you understand the strategy is going to work, and it’s got a mathematical edge, then you’ve just got to let it go. There’s nothing more to be done. Your time is taken by continuous research in the scope of a hedge fund, for example. The name of the game is not about trading –it’s about raising money. So from a personal standpoint, with regard to Jeremy’s actions at the moment, I think what he’s got to understand, and where he’s going is just to step back, understand that your strategy is going to work, and then just let it do what it’s going to do. Spend your time doing other things like research, and that kind of stuff.

I mentioned recently on a private trading forum that I don’t read any financial books anymore. That’s part of me stepping away from the market. I don’t need it. I do enough research –not saying I know everything, but I know enough to know that what I’ve got is going to see me through. That’s not to say that I don’t want to learn anymore, but I do that learning via my own research. I can’t spend every minute of everyday reading about the markets. I know some people are like that and that’s fine, but you’ve got to learn to step away.

Me personally, I read a lot of fiction. I go fishing five days a week. That’s me stepping away from the market. That’s an area that Jeremy will get to, and I think he’s understanding that he’s just going to let the system do what it’s got to do. His interests now are ongoing research, which he’s certainly doing, and that will give him the patience. I think that’s an important part of it coming through there.

Thomas Dall: Good stuff. So, in order to get comfortable with one system and gain this trust, you’d recommend doing research and trying to step away from the market as soon as possible instead of doing what I think many people will do in that situation, to constantly change the method and constantly modifying the system because they don’t really trust it. That’s what you’re saying right?

Nick Radge: I think it’s a natural human trait. I think it’s the way that we are brought up right from the word go, that is something is not working, you’ve got to try harder –that’s fine. Sitting there staring at a screen all day is not going to help your cause. You can’t make prices move. You can’t will them to move up or down. It’s not going to help. The market’s going to do what the market’s going to do.

The first thing you’ve got to have is obviously, knowledge. I think that has to be strong knowledge that your strategy has a positive expectancy. I think that’s key. Then another –well certainly something that I’ve done, and I’m not sure how many other people do this but I’ve spent a lot of my research time studying the track records of the great traders. Those track records are freely available around the place and by studying the track records and the performance records of all these great traders, and all sorts of varied traders, you come to appreciate what is going to be required in the journey of trading.

A lot of people come to this game and they think that trading is making money every day, every week, every month and every year. For some people that may well be the case, but for the rest of us who are just common people in the street trying to make a go of it, that’s not the case. You’re going to have losing trades, you’re going to have losing days, you’re going to have losing weeks, losing months and yes, you will have losing years. If Warren Buffett has a losing year, why the hell shouldn’t you? That’s what it comes down to.

I think first and foremost, you’ve got to have a strategy that has a mathematical edge. You have to understand that. Then you just have to let it play out. Certain types of strategies the edge will play out a lot quicker than other types of strategies. For example, trend following tends to be a little bit more sporadic because it doesn’t do that many trades per year, depending on the kind of strategy you have. To get the edge, your trade frequency is a little bit slower than someone who perhaps day trades or uses a five minute chart. The edge will take a little bit longer to come out, and that can be very frustrating for people. I certainly have clients that find it very frustrating to be a trend follower because sometimes they have to sit there for three months, four months, sometimes six months, and sometimes longer –depending on what they’re trading for the trends to start to occur. That’s normal for trend following. That’s why if you go back and you look at all the great trend follows, who’ve got thirty, forty year track records, you can see that, “Hey, it’s happened to these guys!”, and they are managing hundreds and hundreds of millions of dollars, sometimes billions of dollars, so therefore it should happen to me. If that doesn’t sit well or bode well with your personality, then trend following is not the way to go. You’ve got to look at some kind of a strategy that has a higher trade frequency that might be trend following on smaller timeframe, for example, which introduces other issues.

Ideally your edge is a significant part of the trade frequency, so to make that edge move along faster you’ve got to increase your trade frequency somehow. So for those people who struggle with trend following, i.e. they want a lot more consistency, you have to move your strategy down time frames or you have to change your strategy to more short term swing trading types. So that’s what I would suggest.

Thomas Dall: Great stuff. I think he’s a trend follower and it seems that he has found his method. He was also talking about perhaps getting some more systems in place. What is your take on that? How do you roll out more systems once you have one that you are sort of confident with? How do you add more? Is it a good idea to add more?

Nick Radge: It’s absolutely a good idea to add more systems. Absolutely. You’re going to look at some of the more well known trend followers around the place. They run multiple systems, and they’re not all trend following systems. I know there are certain proponents of trend following that says you’ve got to do that and nothing else. But the truth of the matter is, if you go and have a look, especially in the modern day –that might have been the case thirty years ago, twenty years ago. In the modern day today, you’ll find that a lot of these CTA’s and hedge funds, they run multiple systems. Okay, they’ll call themselves a trend follower but just go and have a look at Salem Abrahams’ website. They run three or four or five systems. Yes, their core system might be trend following but they’ve got counter trend systems, they’ve got mean reversion systems, they’ve got short term momentum systems, and the whole idea from their perspective is to smooth the equity curve and create more consistency.

Let’s come back to Jeremy because again, this is something that I’ve written in my notes here, Thomas. What he was talking bout was adding U.S. stocks. He says he’s trading commodity ETF’s and that’s great. He’s up about 3% this year and that’s fine. Here’s the thing, the U.S. stock market has had one of the biggest ball runs in its history, this year. I think it’s only only dipped once by more than 5% the whole year, and it’s been an absolute blinder at 26%. You cannot afford to miss those kinds of years when they come along because they can be make or break type of years. Especially when you’ve got quite a dynamic trend following system, because you should be able to blow the index completely out of the water. It’s these big years that come along ever so often that can really make and break you.

To give you an idea, the part of the Australian market that I trade at the moment has been very difficult over the last twelve months. It’s actually down 2%, over the last twelve months. So it’s been a very choppy, difficult trading range. Back in 2008, I remember we made 170% return for the year, and that’s what you need. When those years come along, trading is easy, and you’ve got to put the foot down and make everything you can out of it. You’ve got to trade hard, and you’ve got to make it really work for you when those years come along. It’s been one of those years in the U.S. market. We run three portfolios in the U.S. market and they’re all well ahead of the index. I think our discretionary portfolio was up 60% or something. We could have probably gone, in hindsight, harder at it.

My point is that, I think he’s on the right direction about adding individual U.S. stocks. I think that is the right thing to do. I would say that is a part of his current strategy, it’s not a new strategy. It’s just a different universe that he would apply his strategy to. The reason why you want to trade individual stocks as opposed to an index ETF, is because individual stocks tend to have a very higher beater than the market. In other words, they’re going to move a lot further than the market itself. He mentioned Tesla. I don’t know what that stock is up this year but it’s just gone gangbusters and that’s what I’m talking about.

So what he wants to do is stay with the commodities by all means. If you think that’s a comfortable way to go and your backtesting results are giving you reasonable returns on that, and it’s showing some low correlation to equity returns –that’s good, stay with that. However, being the same strategy and adding a universe of individual stocks themselves –now as a rule of thumb because he was asking about trying to find those stocks that are going to outperform the market.

At the end of the day you’re really not going to know that ahead of time. I know there are people that say they pick up on that kind of stuff of, and maybe they can, but for the average person in the street like me or for that matter, Jeremy, we’re not going to know in due course what they are going to be. As a rule of thumb, lower cap stocks tend to show a lot more volatility. Don’t confuse volatility with risk. You need volatility to make returns and therefore the higher volatility stocks, out in the Russell 3000 and that kind of stuff, you’re going to find those big strong trends that come along.

I would suggest to Jeremy that he allocate a portion of his portfolio to trading individual stocks. Use the same strategy, and that way when you get these big years come in the stock market –and they will continue to happen, you will really hammer it home with a good return when the time comes. I think that’s very important, and that will make a big difference to his bottom line. That’s the first thing I would suggest.

The second thing I would suggest, and it certainly has a caveat with it, which is another point we come to with regards to capital. Adding another strategy, a diversified and a completely different type of strategy, will be beneficial because it will smooth the equity curve. Again, let me use an example that I personally use. My main trend following strategy is the Australian market. Specifically, the small cap stocks on the Australian market because over the longer term, that is showing where the bigger returns are. Taking a long term view, I allocate one portfolio to trend following in that small cap sector and I just let the cards fall where they may, and see where it leads me. But, by the same token I take another part of my capital and I trade S&P 500 stocks on a short term mean reversion strategy. So trend following, I’m trading Australian stocks, I’m buying breakouts and my average hold is six to eight months. In my other portfolio, I’m trading U.S. stocks, I’m trading large caps, I’m using a mean reversion strategy –so I’m buying the dip, I’m not buying the breakout, and my average hold period is three days. So it’s completely and totally different to the trend following strategy. The only similarity is I’m trading stocks, and that’s fine.

So that’s what I’m talking about when I talk about adding an extra strategy. I think eventually that should be his goal to venture down that path. What will occur is it will smooth the equity curve –as I said, my Australian strategy this year has been flat, but we’re up about 23% in the U.S. strategy. Just on that 23% I know some people are saying, “Well that’s not particularly good because the market is up 6%.”. We’ve only employed 13% of our money to actually generate that return. So we’ve hardly used any capital to generate a market return, and that’s the way we like to do it. There’s better ways out there, we could have geared it up and used a lot more of our capital and outperformed but that’s just the way that strategy operates. So that gives you a diversification, and that’s potentially an area that he should travel down eventually.

Thomas Dall: He mentions that he has a small account and that he’s undercapitalized. I guess trend following is a good choice there. Are there any pitfalls you see? Something you should be aware of when extending his strategies and systems using a small account?

Nick Radge: I think this is a pretty key component for any new trader because I definitely, and strongly believe a lot of traders fail at this game because they are undercapitalized, full stop. It has nothing to do with the strategy. It has nothing to do with trend following, short term, swing trading, scalping, mean reversion, whatever. At the end of the day any kind of trading has drag via commission, so you have to work backwards.

Let’s assume, and I don’t know because he didn’t give too much away. Let’s assume that his trend following strategy makes fifty transactions a year –let’s just assume that. So that’s fifty buys, fifty sells, that’s a hundred transactions a year. Now I don’t know what kind of commission rate he will pay but let’s assume he pays ten dollars per transaction. On that note he’s paying a thousand dollar commission. Now, if he’s got a ten thousand dollar account, he’s going to have to making 10% just to break even –and 10% is too much drag. If his account is smaller than that, let’s say its five thousand dollars, he’s going to have to be making 20% just to breakeven. I’m not talking about strategy, I’m just talking about the mathematics of the transactional drag, that’s all I’m talking about. I don’t care how good your strategy is, if you’ve got to make 20% to breakeven, you’re pushing it up the hill.

I’ve come across people who are actively trading, who need to make 40% just to breakeven. I haven’t even thought about that. I would say to Jeremy to work out what your commission drag is. If your commission drag is more than 5%, you’ve got to make a choice. You’ve either got to increase your capital, or you’ve got to decrease the commission rate you’re paying, or a combination of those. Or you have to stop until you have enough capital. There is no point proceeding in this game if you’ve got to make 20% just to breakeven. It’s a ridiculous thing to do. It certainly sounds by some of the numbers that he’s throwing around, that his capital is small. He did mention his capital was small. Throwing numbers around like a fifty dollar profit here and two dollar loss there, suggests to me that his capital is very small and I would strongly suggest you do the sums to work out your drag. If that drag is more than 5%, you’ve got to act. You’ve got to stop trading, you’ve got to add more capital, you’ve got to get your commission drag down. Trading is hard as it is, you’ve got to make it as easy as possible, and there are things you can do.

It surprises me how many people cannot be bothered to change brokers, even though a change of broker you can cut your commission cost by up to 70%. It’s very easily done but people just can’t be bothered to do it. That says to me that you’re not really interested in taking the game. They’re playing around the fringes. If you want to take it seriously –and trading is hard enough as it is, you’ve got to put everything in your favor. That means getting that commission drag down, which you can control. It may be that you’ve got to change brokers, and yes that may mean a bit of a hassle and a bit of hard work. At the end of the day it’s going to be worth it because it tends to make the difference between a success and a failure.

The other suggestion is capital. If he doesn’t have enough capital, he’s either got to save some more capital or he has to get an injection. I don’t like saying going and borrowing money but if he truly believes that he’s got a strategy that is worthy, then potentially he can approach maybe some family members and do some kind of a deal with them. Show them the numbers, tell them about the risks, tell them they’re going to take all the downside, and he wants to take 20% of the outside or something like that –I don’t know. There are ways and means around it but regardless, if you don’t have enough capital, you shouldn’t be trading. The market’s always going to be there so it’s a matter of being patient in that respect, till you’re in a better position to actually be able to make it mathematically possible to make money.

Thomas Dall: Good stuff. Certainly something to think about. Let’s go back to some of the other things that we talked about in his interview. I liked a lot of what he was doing with the personal accountability to his wife and to himself. Can you talk about that perhaps? Is that a good idea?… I guess it is.

Nick Radge: He makes a valid point. It is his money and it is his wife’s money, and she has a right to know what’s going on. I would suggest that he has to provide her with more statistical data to start with so that she is comfortable and she understands what he’s doing. She has to understand how he’s getting his positive expectancy and how that unfolds. Once she understands that then I think they’re in a much better position to move forward. I don’t believe discussing with her about every single trade on any given day is the right way to go about it. I certainly think that maybe, if he gets himself into some kind of a hole that he is nervous about, that he discusses it with her. Otherwise he should just report to her on a monthly basis.

I don’t think it’s going to do any of them any good to micromanage. I don’t think that’s going to help, at all. It’s going to make him nervous, it’s going to make him watch the screen more, watch price action more. I think he’s got to step back and start from laying a good foundation, explaining to his wife how it’s going to work, what the downside is, and what the worst case scenario is. If there is a worst case scenario at some stage, that there’s going to be a 15% drawdown, then she has to accept that before he even gets going. If she can’t accept that there’s no point telling her half way through the drawdown. It might get to a 15% and she goes, “Well, let’s not do this anymore.”, and all of a sudden the strategy turns around and goes gangbusters. They both have to be willing to accept what’s going to happen, and let it happen. It’s one thing I tell all my clients.

At some stage, this draw down will happen. I don’t know whether it’s going to happen next week, next month, next year or in five years… but it’s going to happen and you’ve got to be prepared to take it. There is an effect called the Lake Wobegon effect that I talk about, and basically it means that people tend to overestimate what they’re capable of doing. For example, 90% of Australian men think they’re better than average drivers. Mathematically, that just can’t be the case. With the sake with trading, I see it in two things. First of all, I see people believe they are a lot better than what they actually are. They tend to say “if he can make 10% then I can make 20%”, and I think the most important attribute here is the ability to travel the journey if you’d like. For example, let’s say he does his backtesting and let’s say his backtesting shows that there is a chance of a 15% drawdown at some stage. He might say, and his wife might say, “Hey, that’s no problem. We can handle that!” Well let me tell you, a lot of people think they can handle that. My view is if you have that, that’s what you can handle. Or the other way around, double it and see if you can handle it. For example, I believe the average person can handle a 20% drawdown, and I think most people can withstand a 20% drawdown. Once they go beyond 20% they start being doubtful of the strategy regardless of what the backtesting says. What I tend to say with the Lake Wobegon effect is, once you get to half that you start to question. So let’s say his strategy has a 15% drawdown. His wife will start questioning that at 7.5%. So you’ve got to be accepting of what can go wrong, and you have to accept that it’s going to happen. Its not, “Oh, it’s not going to happen to me because I’m special.”, it will happen! And it has to happen. So accept that it’s going to happen and when it does happen say, “Hey! There we go!”, that’s part and parcel of the journey.

It’s like travelling across any major city and not wanting to stop at a traffic light –that’s just stupid. It’s going to happen. You accept that it’s going to happen, you stop at the red light, when it turns green you get on with the journey. Same thing happens when we’re trading, and when we hit some kind of a hurdle. Whether it be a drawdown of some degree or a string of losing trades, or even spinning the wheels. It’s part of the process. So I would suggest first and foremost that they both sit down, they discuss the strategy, the results, the drawdowns, they focus on what can go wrong, because that’s going to be the sticking point when it comes down to it. Potentially what they can do is they can maybe sign an agreement that they’ve discussed this. They’ve discussed that there’s going to be a 15% drawdown.

To give you an example, my wife made me sign an agreement that I will stick to my trend following strategy and that portfolio, and do nothing else with that money. That’s actually a signed agreement that we put together. So I think that’s a good thing, and once that is done then he can report to her on a monthly basis, or he should definitely report to her when things get a little bit tricky and he starts to self doubt, that will happen. On a trade to trade, day to day basis, I think that’s overkill. I think that will just put undue pressure on him, and it really detracts from what the strategy is trying to do. The strategy is not going to be perfect on a day to day basis. As I said earlier on, your edge takes time to unfold. So there’s no point looking at it on a day to day basis when your edge might take six months to come through. So sure, he has a responsibility to speak with her and communicate with her, but not everyday and not every trade.

I would suggest, and this is from my personal opinion, that as time goes on she will require that less and less as she becomes more comfortable. She will also know when he’s going through a bad period of time – my wife certainly does. She knows when things are tough and we’ll have a chat about it and whatever else. She intuitively can feel that things are going rough, or things aren’t going well. She doesn’t doubt, and she doesn’t do anything either. She just parrots what I’ve always said to my clients, “Next 1000 trades. Stay with the system, it’s going to happen to you”, and sometimes you need those reassuring words. You don’t want someone in your ear everyday saying “Oh, why this a losing trade? Why is that a winning trade?”. I’m not saying she’s like that in any way shape or form but I think that the requirement to report on a daily basis simply puts too much undue stress, and micromanages positions to the extent that it may be detrimental to the bigger picture.

Thomas Dall: Very good advice there. That’s great, Nick. Yeah you said you had quite some notes as well. I’ve been jumping all around here so let’s get back to you. Anything else that you want to add to this that I haven’t asked you about already?

Nick Radge: No. Well actually that’s quite funny because you’ve hit five out of five of exactly what I’ve written down there.

Commission drag I think is a serious issue that needs to be addressed right here, right now. If he wants to contact me directly and talk it through or whatever, that’s fine. The other thing that really wasn’t discussed a great deal is how he’s doing his backtesting. I think it’s important that is done correctly. I understand you’re still in the learning process and that’s good. So commission drag right from the word go, I think is important.

Doing the backtesting and the simulations, and the Monte Carlo Simulations, and understanding and putting the strategy through its pacers to see what happens. I’d be interested to see what software he’s using, what data he’s using, is he using D listed data? or has he got survivorship bias issues in there? How far back has he gone? A lot of ETF’s haven’t been around for that so I would be interested in understanding that kind of stuff.

Stock data is a little bit different. You can get stock data going back a long time, and you can test it through different market cycles and that kind of stuff. So there are two key things I would say with regard to strategy. Go with what you’ve got, so long as you’re happy with the returns and what’s going on. Add individual stocks to the strategy to benefit from years like this that come along. It really is easy money in years like this and as much as I’d like every year to be like this, it’s not going to be. So when you get the easy years like this you’ve got to really put your foot down because those years won’t make up for spinning the wheels in another year. Chances are after a good year like this you’re going to get some kind of a mean reversion –I’m not saying a market that will collapse. What I’m saying is a market that might move sideways for twelve months. If you haven’t put in the big yards in a year like this then the following year when it’s flat you’re going to find it difficult, and that will be two years in a row.

One of my clients, his first year trading I think he made a 48% or 49% on his first year. It was a good year, it was an easy year, and then he had a couple of difficult years following on from that. It all helps at the end of the day.

Thomas Dall: Absolutely. Backtesting you said, it’s important to do it correctly. Do you have some recommended reading or resources that you could go to?

Nick Radge: Well backtesting, he’s using a systematic approach. I assume it’s a mechanical approach, meaning that the rules can be coded into a computer. There’s rule based trading and there’s rule based trading where those rules can be hardcoded into a computer –either or. Obviously if it’s rule based it can’t be coded. Then, I think he’s just got to go back and check that he’s not using any of his own biases or anything like that in it. If it can be hardcoded I’m not sure what software package he’s using. Personally I use AmiBroker. You’ve got Wealth Labs, you’ve got TradingBlock, you’ve got TradeStation – there’s all sorts of different software programs out there. Just become proficient in one, and just make sure the processes that you are using are robust. No optimization, by all means backtesting, forward test, but just understand why your strategy makes money. Obviously he gets that now with trend following. I think trend following is the easiest way to understand. You cut your losses, you let your profits run, and that’s how you create a positive expectancy. So if he’s got anymore complex things in there, just make sure he’s got no postdictive errors or survivorship issues, liquidity issues, those kinds of things. I’ve seen a trading system advertised that just the biggest postdictive error I’ve ever seen in my life. It was so obvious to me that there was something wrong, and that’s what happens. It’s the old, “it’s too good to be true”, there’s got to be something wrong with it.

Jeremey has the mindset of being a cynic, so he’s going to disprove that anyway. So I’m quite confident that what he’s doing is probably accurate enough to be worthy to be trading in the real money.

The one thing I will say about backtesting, and one thing we will always do and have always done is to run simulations along our real time trading. If you get a divergence in the results in any kind of the stats you’ve got to ask the question as to why, and I’m talking significant divergence. If you’re on your strategy for a year and it’s done fifty-eight trades, and your backtesting says you should have done fifty-nine, well that’s okay. If your backtesting says you should have done a hundred and twenty-seven and you’ve done sixteen, well you’ve obviously got a significant problem somewhere. That’s what we always do, we do the simulation side by side, date to date, in the same universe. We constantly are comparing, seeing if there’s any divergences or anything like that. So that’s something to keep in mind.

Thomas Dall: Good stuff. Alright, I think we covered a lot of ground here Nick. That’s great.

Nick Radge: Good. Well I hope he keeps going the way he’s going. He’s certainly traveling down the right road, and it’s just a matter of time. He’s just got a couple of little checks to do there and I think longer term he’ll be fine. So I look forward to hearing about his successes in the future.

Thomas Dall: Alright, so do I. Nick, it’s been a pleasure to talk to you today. Thank you very much.

Nick Radge: No problems. Thanks Thomas, thanks for having me.