you are the 5%

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You’re at the final part of this VERY brief series on the bell curve…

And you know what the scariest thing is?

You now probably know more than 95% of traders out there on this topic.

If you missed the last part, click here to check it out.

But yes, we’re at the final email in this series.

And probably the most important one.

Because now you understand something that most financial professionals even don’t get…

Markets aren't normally distributed, fat tails are real, and extreme events happen way more often than anyone admits.

But here's the massive caveat…

Knowing this doesn't automatically make you money.

I've seen plenty of people who understand statistics perfectly and still blow up their accounts.

Why?

Because they forget about the human element.

Markets might follow statistical patterns over the long term, but they're driven by human emotions in the short term.

And human emotions don't follow any silly distribution at all.

Take the recent few days’ of price action in oil…

You can see relatively normal distributions in price and then complete ‘normality’ rushes out the door and you have the 6th largest one day drop EVER, a multi sigma event.

Translation: fear and uncertainty matter more than fundamentals when things get mental.

This is why you can't just build a model and expect it to work.

You need to combine statistical understanding with practical psychology.

Here's what actually works:

Use the bell curve for planning, not predicting.

Understand that extreme events will happen roughly 5-10% of the time instead of 0.1%.

Plan accordingly.

Size positions based on fat-tail probabilities, not normal distribution assumptions.

If crashes happen 50x more often than the textbook says, position sizes should reflect that reality and you should aim to be positioned in assets which are anti-fragile BASED on non fundamental related reasoning…

Watch our Trump video for a hint to this.

Expect correlations to break down during stress.

When everyone's panicking, diversification often fails exactly when you need it most.

Concentrated bets are not a bad idea for the individual investor, us.

Risk parity funds have done really, really badly over the last few years for example, while those who have just been long a few large cap tech stops have done seriously well!

Remember that you're human too.

All this statistical knowledge is useless if you panic-sell at the bottom or FOMO-buy at the top.

The Swiss National Bank can hold $160 billion in US tech stocks because they're not checking their portfolio every five minutes having a panic attack.

Most retail investors can't.

You need a process, don’t you? And you probably do not have a repeatable and systematic one right now?

Final thought…

You now understand more about market distributions than 99% of people giving investment advice.

That's genuinely not hyperbole - most financial advisors still use models based on normal distributions because that's what they learned 20 years ago… while also getting subpar returns.

But knowledge without action is just expensive trivia.

The question is, what are you going to do with it?

Are you going to keep your money in cash ISAs, with a crappy financial advisor earning nothing while inflation and fees eat it alive?

Or are you going to use this understanding to build a portfolio that actually accounts for how markets really behave, in a systemised process, leaving you to make maybe one or two decisions per week (seriously, we made 47% last year with zero stress from 10 stock purchases)?

The choice is yours.

But remember - while you've been learning about fat tails and statistical distributions, half a trillion pounds of potential wealth has walked out the door because Brits are too scared to invest from 2013-2023.

And I know lots of you aren’t Brits, but I have to point that message to Brits!

Don't be part of that statistic.

You’ve got two options from here.

Take what you’ve learnt so far in this series and try to figure it out yourself…

We’ll still try and help, but it won’t be everything you truly need.

Or, you can speak with me about joining the Academy by hitting reply and putting ‘Academy’ in the subject line.

The choice is yours.

If it’s the latter, it will be the best decision you made since the last best decision you made which was signing up to this mailing list.