Ep. 321 What Tesla Stock Taught Charles Harris About Trading
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Hello and welcome to another episode of the Investing with IBD podcast. It's Justin Nielsen here, your host, and we're coming to you live at 5 p.m. Eastern, as we always do on Wednesdays. It is May 21st, 2025, and I am pleased to welcome back to our show Charles Harris. He is a good friend of mine. Charles and I, for those that don't know, we used to sit right next to each other 25 years ago, a little bit more than that, maybe. So back in...

I think you came downstairs, was it at the end of 99? Yeah.

It was the beginning of 2000. Beginning of 2000, okay. Beginning of 2000 and for those first six months, we were in next door cubicles. Yeah, you and I were buddies, you know, right next, well, we're still buddies, but of course I was assistant to William O'Neill, the founder of Investors Business Daily, and Charles got brought down initially for special projects, but he was on the portfolio manager track, so...

You know, very shortly after he moved down, he was running money for William O'Neill. And he did that for, well, gosh, you've been doing it since 2000 as a portfolio manager, now senior vice president at O'Neill Global Advisors and involved with a lot of projects. I remember one of the first projects that you and I worked on was, do you remember this, Charles? What was the first project that you and I worked on?

remind me ibd 50 so yeah yeah yeah and and and let me see if you remember what was the one stock that bill said oh you guys did not do a good job oh it was that oil company wasn't it amaretta hess so charles and i of course we're doing you know our first pass at the ibd 50 actually it was the ibd 100 at the time and um

We come up with the stocks that, you know, are holding up the best in what was a terrible bear market after the dot-com crash. And Amaretto Hess is one of the stocks. And he's like, you're telling me you think Amaretto Hess is one of the top 100 companies in the U.S.? And he threw us out of his office.

I think after that, he replaced me with Mike Webster. Right. But you spent years sharing an office with Bill O'Neill and Mike Webster. And again, you learned a lot from that. One of the things that I think we both learned from Bill was using precedence in kind of helping guide you for your decision making. And again, for those that don't know, Charles has

notebook upon notebook of all of these past winners, losers, how to handle them with some very detailed notes. And you pull them out like, oh, here's pullbacks to the 10 day and bounces and you can pull out and just take a look at a lot of those. That door behind me, I can pull out a file and I've got, yeah, they're all notebooks.

Yeah. And then, of course, you and Mike Webster worked on Chart School, which kind of gave people a lot of these precedents for themselves. You want to look at Cup with Handles? Here's the Cup with Handles. We also, you, Mike, and I worked on the Market School Rules, which turned into a beast of a project, but...

really some great stuff came out of that. So again, it's great having you on the show and let's get right into it. Let's talk a little bit about how you come up with, you've been using precedence for a long time and sure, I get it. Now that you've got 25, 30 years of experience trading in the market, you've got a lot of knowledge to pull from. But when you first started, how did you go about like

figuring out precedents and like, hey, here's something, you know, how do you find those things to look at from the past to help guide your decisions for the future? I think that, well, for one thing, when all you're doing all day is looking at charts, you build a memory for certain charts, particularly stocks that you traded or if you use a precedent, like once you use a precedent,

you have a tendency to always go back to the same precedents. So I, for good or for worse. Yeah. But I mean, normally what I do is I'll look for a market precedent and then go back and look for the winners during that timeframe and use those winners as, you know, kind of a model for what I might expect in the current market.

So, for example, I'm using 1998 as a bit of a market precedent for what we just experienced in the first quarter with that really significant downdraft. Not exactly the same. I know that you've, I'm sure, spoken about it on IBD Live, but...

Um, it, it was looking very similar to this, except there was no retest of that second leg down this time around, whereas in 98, you did have that retest.

Yeah, so in 98, I'm pulling it up on the chart here for those that maybe are listening to this, which again, you can listen to this podcast on your platform of choice, whether it's Apple, Spotify, what have you. We're going live on YouTube right now. But yeah, I was kind of looking at this. There was this test of the 50-day moving average line back in August of 98. Then, of course, you had another leg down.

here in September. And then it really got ugly as long-term capital management needed the bailout. And that was the ultimate low in October. Of course, I've shared that this was when I was first starting to trade. And there was this follow-through day right here in September. And I went very heavy with my whole

$3,000 or whatever I had at the time. It touched the 200-day moving average line. Then it came down again. And then there was this follow-through day right here on October. And I'm like, oh, you're not going to fool me again. So I waited. And then this thing was off to the races. Yeah. Yeah, it was incredibly powerful. I mean, back in this time frame, I wasn't working for Bill yet. I was still in the research department. But I was trading my own personal account. And

I think I lost like three quarters of my money or at least two thirds of my money in that three month correction. I mean, I had no, all I had done was for the previous year and a half was just make money like, like a lot, you know? And again, and I also started with like 3000 bucks, you know what I mean? And, but yeah, that was like my first experience of a bear market.

And I didn't know anything about this stuff. I mean, I, I was like, yeah, you know, I can, I can trade this. I'm pretty smart. I've been right for, you know, literally a year and a half, you know, everything went right. And, um, yeah, you can get really hurt in a bear market. And that's one thing that, um, and I still tend to get hurt in, in, in corrections because, um,

um i'm always give the market kind of the benefit of the doubt and it takes me like i'm usually the last person to say yeah you know what the market really doesn't look good and i have to say that marcus school did an amazing job of sidestepping the correction yeah this time around i mean it was like literally right near the top you know like the first break of the 50 and um

And I, like usual, overstayed my welcome. It's kind of like you. The benefit of giving the market the benefit of the doubt is that most of the time the market is trending up and the corrections are mild and normal and maybe whatever, 5%, 6%, 7% correction, you don't get shaken out. But the downfall is if you actually are correcting and going into some kind of bear market or intermediate correction...

you can get killed, you know, and lose way too much off the top. So you kind of have to treat every beginning of every correction as this might turn into something much worse. And that's not my strength. Like I'm usually a little bit slow to react. So it's the optimist in you, right? It is. And I guess if I could say, like, if I've learned a few lessons over these past few years, it's,

Don't be so overconfident and just be less extreme, a little bit more moderate on how I approach the market.

So, well, getting back to this precedent. So, okay. So you're, you're looking at 1998 and, you know, it had this, this move up, you know, where it hit the 200 day moving average line reverse and had that another test. And then I'm going to, I'm just going to switch us back to the current market. So, you know, I guess you could kind of look at this as maybe that 200 day test. If you, if you kind of shifted everything over,

Personally, I think a lot of us were looking at this as potentially being the test and we're expecting maybe another leg down and undercutting this. But I was expecting some resistance around that point. But yeah.

We didn't get it, you know? Yeah. I mean, we got a lot of power. It should be mentioned that, again, we did have our follow-through day right here on April 22nd. As a reminder, you know, we start with a rally day and that was here on the NASDAQ. We had a lot of volatility between, you know, the liberation day on August, I mean, April 2nd, the pause in tariffs and a lot of back and forth there. And then, you know,

Here we are, April 22nd. We have the follow through day. And it really I mean, we just kept on clicking off the hurdles, you know. So first it got above the 21 day moving average line and then it got above the 50 day moving average line. And I know one of the things that you kind of pounded the table on about market school is that you really the you know, getting above the 50 day moving average line wasn't enough necessarily for you. You also want to see the 50 day in an uptrend.

which we saw just as this was getting above the 200-day moving average line. So do you still kind of hold that 98 precedent in your mind and just kind of say, oh, it shifted a little bit and this is more like October now? Or are you...

Or do you throw the 98 out and say, oh, this is something else? No, I'm still using 98, even though, you know, we didn't... Either you could shift it or you can say it just didn't have a second undercut. Or maybe you say that this, you know, the pullback after the bottom was, you know, an attempted test of, you know, the lows. But I'm still using it just because I like, you know, this was a time frame of...

you know, the internet explosion. And it kind of coincides with a new secular theme in the AI explosion and database centers and, you know, all the derivatives. And so I feel like we're in like a new technological revolution at this moment, which, you know, 20, what is this, 20 years ago,

We were in a similar – almost what? Almost 30 years ago, we had a similar thing with the internet. So just kind of feel that like enthusiasm in the market feels very similar. I mean we were trading at this time. And that's one of the benefits of having done this for a long period of time is you see these similarities occur.

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Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC. I think it's interesting that you point out this pullback here.

And you might look at this as kind of an element of strength. And I'm talking about the pullback that happened after the huge, you know, 12% day that we had on April 9th. And then you pulled back for about a week and a half. And maybe this is an element of how strong the market was that it didn't undercut. And I'm going to go back to 1999 just as an example, because I remember a

Of course, when I first started working for Bill, it was September of 99. He had just had Charles Schwab as a phenomenal trade that he had. AOL and Schwab were two of his big winners in October of 98 that he picked up. And, you know, 400% in six months on both of them. And one of the things he pointed out to me, because...

when I was initially looking at Charles Schwab, I'm like, what kind of, what kind of ugly pattern is this? You know, he kept on calling it a cup with handle. And I'm like,

The handle was so deep, 27% deep in the handle. I'm like, how is that a handle? And he's like, well, but look, you know, it didn't undercut. And compared to the market that did undercut, Charles Schwab was showing relative strength. And that was a big thing for him. Yeah. And I was looking for, you know, in the current market,

Very few stocks, at least leaders that I've been looking at, didn't undercut with the market. A couple that did hold up on a relative basis a little better are Duolingo. That didn't undercut if you look at the current market. Yeah, I mean, here's the low in March and stayed above that entire time. Right, and KTOS.com.

which is in the defense area. It's another example. I don't know what, you know, what was going to turn out with these, but I'm not trading either of them. It's not yet, but yeah, I think that's one important element to look at. And I was actually looking at Schwab. Of course that is, you know, stuck in my brain because that was one of Bill's, you know, biggest winners during that timeframe. And he, he just killed it.

And Schwab was really, I think, the first stock to break out on the follow-through day. It actually hit a new high on that August 15th. So you're talking about October 15th of 98. Yeah, October 15th of 98. You're 99. There we go. So here you got the high on...

uh, July 28th, 98 at 46, you come down to the low, uh, September 1st, 98, again, a pretty deep, uh, cup at 40%. Yeah. And then as, as you mentioned, uh, there was another high here in Schwab in September at the end of September that formed the handle and then the low, uh, October 8th, um,

I believe the follow-through day was right in here. It was on the 15th. So I think you cleared the handle actually on the 15th. Yeah, so it popped up above it, had a final shakeout, and then closed above that handle on the 15th. Right. So I was looking at – so I was kind of using –

So you asked me how I find precedence. So, you know, using 98 as a market precedent, you know, just given the technicals of the market and the fact that we're both in kind of a technology revolution, you know, internet versus AI. I looked for the stocks in the market that were the first to break out. And this time around, the first to break out was Netflix.

So you put Netflix up on the current market on April 22nd, which was the fall of today. It broke out. So now this one did undercut, but it was pretty mild. I mean, if you look at this. I just have to disclose, I do have a position in Netflix. Okay.

Oh, good for you, Justin. I got in a little later, but yeah, I still have it. Yeah, and it's trending beautifully. And one of the things that I use these precedents for is to see, one, what's their potential? How high can they move up? And of course, this timeframe in the market in the late 90s was...

We've really never seen anything exactly quite like it where things went up. They were insane. But we could see it again with this whole AI. And we have in some respects. Just looking at how powerful NVIDIA was. There's a lot of stocks in the AI database area that have had incredible moves. And they can...

you know, they can repeat or have them again. So, I mean, I have a position in NVIDIA currently. And so when I look at these stocks in the 98 time period, the precedents I'm looking at, they all respected the 20, the 10, mostly the 10 day moving average. And sometimes you would get a breach and the 21 day moving average would be support.

But, you know, if you look at Schwab back in the 98, 99 time period when Bill was trading it, the 21 day moving average contained the entire move all the way up to the climax top. So that's what I'm looking at now is, you know, I want to see if the stocks that I'm currently trading respect, you know, those moving averages. And if the president holds and they should.

Right. So, yeah, I'm going to go ahead and pull up Schwab again. And the climax was in April of 1999. You know, very classic climax top. I remember Bill telling me, you know, this looked climactic here, but it was too early. So he said, you know, don't don't sell just because of that. But to your point, here's that 21 day moving average line. And it tested it a few times, but but held.

It held, yeah. And in fact, the... Oh, go ahead. I was going to say that even the market, the NASDAQ also held the 21-day moving average for a long period of time. Definitely, it got you out of kind of the, you know, into new highs and, you know, for that first major part of the run. So...

And that's a big part of market school too, right? Is the 21 day moving average. When you're, when you're trending above it. And, um, of course, one of the things we also came up with in market school was the idea of the power trend where you have your 21 day moving average line trending above a 50 day moving average line. That isn't an uptrend. Um, and you know, that, and you're, you're,

you're trending with the lows above the 21 day, that kind of tells you, Hey, you're in kind of a special market environment. And if that can hold, um, you, you want to, you want to treat it differently. Right. Um, so, um,

let's talk a little bit more about, uh, you know, some other precedents as well. Cause I know another one that you sometimes refer to is, uh, or, or did you have any others from this time period that you wanted to kind of look at? I think eBay was another one. Yeah. So, um, the next one, so I kind of put them in categories. So the Schwab was the first to break out and the corollary would be Netflix, which was the first to break out. And then, um,

Another one I was looking at was Cisco. So Cisco at this time was like, you know, a huge winner in the market, you know, for the, you know, it was probably the biggest stock of the 90s, you know, for its entire run.

And just as a reminder, it was about 75,000% from its breakout of a double bottom in 1990 to its top in 2000. But yeah, this is the Cisco chart. But yeah, go ahead. And so if you look at the chart, you can see you had the first, you know, like the pullback and then that ledge and then the second drop.

low was much worse than the market in a sense. Like the market tested the low and had a slight undercut. This was a more dramatic undercut than the NASDAQ. Like if you pull the NASDAQ up, that second low was, you know, you were lower for a day. The Cisco chart is more dramatic than that on that second low. So... Yeah. Yeah.

So full two weeks below that. Yeah. And it was just this, you know, percentage wise was quite a bit worse. So if you look at Cisco today is a very similar look and believe it or not, I actually own Cisco today. I don't think I've owned it since the 90s. Since 2000. But I recently bought it as I think is forming this, this handle and I,

Same kind of thing. You had that dramatic undercut and it's come back up and it's forming something. And, you know, Cisco's been a dead stock for 25 years. Yeah. Pull up a monthly. It's just going to zoom out a little bit. It still hasn't gotten back up to its if I remember correctly, its March peak here was 82. Yeah.

Right here, if I remember correctly. Yeah, 82. Still hasn't gotten there. And I mean, look, Microsoft did the same thing. It took a long time for it to recover, but it finally did because of cloud computing. Yeah, so I'm kind of comparing Cisco to maybe Microsoft or even Oracle, right?

which both had these long, you know, decade plus consolidations after the craziness of the late 90s, but finally came out of it and, you know, resume their uptrends. Cisco's yet to do it, but, you know, they are still, you know, their last report is that their AI data center, you know,

components are, uh, you know, um, are stronger than, than they were. So, you know, they still have that, um, they're still kind of levered to this AI theme, you know, internet, they were all backbone of the internet. Now they're, I think have a, uh, a possibility of, um, being involved in the AI theme. And if you look at a net, which is, um,

probably the leader in that category in that, in networking and in data center, Cisco seems to be just like on an RS basis, a little stronger at the moment. So I don't know, maybe they're going to take a little share. Maybe it'll turn into something. I don't think it'll be as exciting, you know, Cisco being kind of a, you know, it's not the new IPO anymore, but,

Yeah, right.

you know, the, the wild, you know, the wild stocks with all the heat. So I, you know, I don't expect this to move nearly as quick, but, um, we'll see if it can come out of here. So that was, so basically I'm using Cisco as a precedent for Cisco. Um,

And also using Microsoft and Oracle a bit as, you know, long term stocks that were winners in the 90s that resume their uptrends, you know, in the, you know, in the last five or six years. Want to do another one? I can't hear you. Are you muted? Oh, you know what? I did mute myself. I coughed and forgot to unmute myself. Yeah. So what else? What else you got? OK, so go to eBay.

Back in 99? Back in 99. So eBay was a new issue. And again, this is the hot internet stock riding this whole internet wave. And on the follow-through day, which was, again, October 15th, it was just coming off the lows of this little kind of IPO base that it was forming. It kind of looks like a little cup.

if you go maybe go back a few months um and get a little bit closer to the base there we go so kind of built this little two three week cup and it was just coming off you know the lows on the follow-through and if you compare that to today's core weave it's strikingly similar um

So, again, formed a little. It was a little bit longer than the eBay, but kind of on the follow through day was, again, just coming off the bottom. And, you know, once it broke out, it hasn't looked back. Right. And I hesitated on this one. I didn't buy it. And now I'm regretting it. Super powerful. Yeah.

Yeah, I think I bought it in here as it was coming out of this. And then when it closed at the lows of that day, I lost my nerve. Wow. Yeah, so shame on me. So I think eBay can be a good precedent for this one. Of course, eBay really was a rocket ship in the late 90s. Right.

um, you know, I think it quadrupled or something in a really short time. Yeah. It could not only that, but, you know, after, after it had that phenomenal, you know, IPO, um, this was one of the big winners that bill had in 2003. Um, you know, here again, it was one of those as ugly as things were in, um,

You know, in 2002, I'm going to go back actually a little bit more. He was starting to buy this in 2002 when the market, you know, had bottomed. But, you know, it was still kind of doing a lot of retracing, a lot of back and filling. But eBay was already kind of on the move. Yeah, that was another great. Bill really had this uncanny sense for finding the leader. He just was amazing. Yeah.

Did you have another one? Or I also want to make sure we gave ourselves some time for Apple and Tesla. Yeah, I have one more. Okay. So Microsoft back in the 98 time period. Let's go to Microsoft. And basically I kind of look at this one as this is one that just –

The correction was, again, it followed the pattern of the NASDAQ. It wasn't the first to, again, this is a long-term leader at this point. You know, this was a very established company. And kind of it used this to inform me that you don't have to be the first one out of the gate to make money in the market. You know, it didn't, you know, it took another, you know, month, month and a half before it actually broke out.

And it formed these kind of, you know, little, kind of a little, two little handles in a way. Right. And all in all, the correction, you know, wasn't nearly as deep as a lot of the other companies during this timeframe. And if you compare that to CrowdStrike today, which I do have a position in, again, it also, you know, you had a slight undercut similar to Microsoft's.

And you kind of broke out of that kind of little double bottom with handle. And now it's forming another handle. So, you know, right near the all time high. So so I think this can also be, you know, another big winner in this time period. I think the cybersecurity area is is particularly a good area to be in. Right.

with all the AI and data centers and the need to protect your data. And I think that, you know, the leader at the moment is RBRK, which I don't have a position in, but I wish I did. I was just kind of waiting for a pullback and I just... The pullback that's never come. Yeah, the pullback that... This is a position on leaderboard, a full position. And yeah, I...

It was one of those, I was going to buy it on the same day, but we have our restriction period. And then I got busy and yeah, it just went without me. I mean, just a perfect double bottom and it's really powerful. So I think that this is, you know, in any like a pullback to the 21 day, you know, I would take a stab at it if I, if I could. Yeah.

Now, you kind of mentioned the CrowdStrike example, but then you're also talking about this one being stronger. So how do you make that decision? Would you go for CrowdStrike just because it gives you the opportunity? Or do you say, no, I'm going to be patient and I'm going to wait for the chance in Rubrik? I think they're both possible.

I like CrowdStrike as a stock I have more experience with personally. It's a stock I've traded a lot more. I think it's the actual leader. I think this is the stock leader. I mean, it's acting the most powerfully of all the cyber stocks. But CrowdStrike is more the kind of the fundamental leader. They're a much larger company, much more well-established.

And it's, I think, a little tamer than this. And I don't mind having kind of a more tame stock in my portfolio. So, I mean, if I had if I had I would even own both of these if I could. In fact, I was I did have a position in CYBR, CyberArk.

Which I sold today because it just kind of feels a bit like a laggard compared to those other two. Right. But, yeah, I don't – I'm not –

averse to owning two stocks in the same category rubric and bill o'neill used to do that all the time right and then he would kind of let the market decide which one was the leader and you know if he needed to he'd put more money into the one that was working best yeah in fact that's what i i actually sold this and added to my crowd strike today yeah makes sense

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Let's go and shift gears. Let's talk a little bit about Apple. And I'm going to go back. So this is a different time frame we're going to look at for Apple, because I want to go back to a trade that you did. And I remember because I used to put together a lot of your presentations and stuff.

And I remember you having a great kind of time talking about how Apple in this correction, this consolidation here. I mean, this is the right one, isn't it? Or was it the 2006? No, no, no. You have the right one.

Yeah, okay. I'm just going to go forward a little bit so people can see kind of what happened. You know, there was this double bottom, and I'll be honest, for as much money as Bill made on Apple...

He said it was done here. He's like, yeah, I think we got what we could out of this one and it's done. But of course, the great thing about Bill is he would change his mind and say, well, you know, forget what I said two weeks ago. Now I'm all in on Apple. But was this the one, the period of time? Yeah, that was the one where, if you recall, I remember I did a workshop and I was talking, like I was, that's when I was loaded up with options.

Uh-huh. Going into earnings, if you pull up the daily of that time frame and when it, on that big gap down. Right in here. Yeah, there. You know, where, yeah. That was my options going worthless.

Uh-huh.

seven months, you know, we were up, I was up enormously on it. And I remember Bill, literally, we'd have a conversation every day. And he, every conversation was like, why do you own this doesn't look very good. And so well, you know, I could sell it, he goes, Oh, you do what you want. And I ended up holding it. And it ended up working out fine. And the stock, you know, form this

Cup with Handel and then went on to double again. But I think the lesson here is when you decide to hold through a base, one, it requires an incredible amount of patience and conviction. And you have to be right. I mean, you don't know that you're going to be right until hindsight. You know, you're always dealing with uncertainty in the market. So I think, you know, the lesson was not that I've been abiding by this lesson very well, but I

given that I've held Tesla now for four or five years without doing anything really, is if you sell when the tentacles are breached, you have an opportunity to get into something else. So during this time frame when Apple was basing, if you pull Google up, as Apple started to correct, Google was starting a big run.

So, you know, I could have deployed my capital elsewhere and then come back to Apple when the base was formed and, you know, avoided all that heartache and, you know, and all that stress of holding through, you know, a base. And so, you know, when Tesla went on that three year break,

Well, and I just want to add that one of the things that you kind of hammered home in the presentation was that, you know, you were saying that this kind of took a few years off your life. Yeah. The stress and everything. And, you know, would you say that that's

partially having to do with position size. You know, does it make sense to, I mean, it's one thing to hold through a base, but holding through with size now, I don't know, because you always have to have in the back of your mind, what if you're wrong? You know, and you've got that kind of size. That's so true, Justin. Yeah, position size is everything. And I think one of the lessons I've learned over the, you know,

even these past, you know, four or five years is you don't have to be all or none. I mean, I've always kind of traded extremes. And like, if I, if I believe in something, I'd have a, you know, enormous position, you know, much more than, you know, 20 or 30%, you know, I can go much higher than that. And so, uh, if you're wrong, you can really hurt yourself. So, um,

I remember back in this timeframe with Apple, uh, you know, in my personal account, there was one point in here, I had all my money in Apple, everything. And, um, if I had held the whole thing during the entire run, you know, it'd be worth like $70 million now. But, um, but these, um,

It's really not possible, I think, to do so when you've got that much money on the line. And if you're going through a deep base, you're going to get hurt. There's just no reason, you know, to put yourself in that position. So...

Look, as a reminder, you know, we went through Cisco before, and even though it topped in 2000, it's not like Cisco was like a lot of these Internet companies that went out of business. Cisco had a thriving business for the last 25 years. You know, they've still been one of the leaders, you know, in no uncertain terms in a lot of different areas.

But their stock just, you know, never had that glory that it did. Totally. And that is the, you know, we've been talking a lot about precedents today. And another that's kind of another lesson that I've learned is that you don't want to put too much faith in a precedent. You know, they might look the same, but they're not the same.

And so you want to use them as a way of kind of measuring is your current stock that you're trading, is it working? Is it holding to the precedent? And once it starts to, you know, shift away from that history, you need to kind of give up on it and say, okay, you know, it served its purpose up to now. And now it doesn't, you know, it doesn't work as opposed to just stick with it.

You know, I was using Apple as a precedent for Tesla and they're not the same thing. Apple never went through, once the Apple move began in 2004 or so, right? And it, you know, went on this 20 year plus run.

It never went through a period where it went on a three-year consolidation. I mean, Apple had some big corrections, but not like even the 2008 bear market, it didn't correct as much as Tesla did over the past few years. So it just didn't work the same way. So you can't have too much faith.

in a precedent. I mean, that said, I still have a large position in Tesla, particularly in my non-margin accounts, which I'm just holding. I haven't sold in, I guess it's been about four years since 2000. In 2020, I traded Tesla very, very actively, made a ton of money.

And the tax bill was so extreme that I decided I'm going to really either shoot for long term capital gains or just try to hold the stock. But I didn't know what I was in for. I really didn't realize. And in my margin account, I really got killed there.

Right. Holding Tesla. So, you know. Well, and there again, I think you've shared, you've got some great YouTube videos and some people actually mentioned this, that your YouTube videos on psychology and everything. I mean, a lot of it came down to position size again, right? It was getting overloaded in margin accounts, a very different situation than what you were dealing with in your non-margin accounts. Yeah, definitely. And

And yeah, I mean, then that said, you know, when Tesla hit its high back in late 2024, you know, when it finally came out of that three-year consolidation and hit a new high up close to 500, you know, those accounts where I held, you know, where I wasn't on margin were at all-time highs.

um for the portion i was in with tesla but my margin account where i lost so much during that three-year period because i just had too much and i wasn't selling uh and i was forced to sell those are still nowhere near their highs so yeah i think you know when you enter a bear market

regardless of the conviction you have in a stock or how well you've done, if you're going to hold through a base or hold a long-term stock, you can't do it on margin. You just can't. It's not bright. You put yourself in a position where you no longer have control, where you can get called away.

Where you put too much pressure on yourself, where you're, you know, you can't handle the pressure. I mean, everyone has a breaking point. Um, and the smartest way not to, to, to, you know, concede is just don't put yourself in that position to begin with. So, um,

And, you know, just to kind of wrap up our discussion here again, because I think this has been very useful, you know, to kind of see how you use precedence, giving some examples. And I want to address one question from from our live YouTube station here. You know, someone was saying like, OK, checking old precedence is one thing. But how do you get that conviction back?

that a stock could possibly make such big moves at the present. And I guess maybe this is a correlation of how much does it have to correlate in terms of the strong fundamentals, the life-changing technology that it might be providing, as well as the technical action. Yeah. So

The precedents look the same, you know, technically, but you can't really have a lot of conviction just based on a chart. And I always try to hit the point when I'm on IBD Live or various interviews is it really is the can slim part of it, you know, the earnings and the story and the profitability and their impact.

you know, if the, their moat that, uh, you know, where they're the leader and, and, um, can't be challenged easily. That's what really matters. Uh, and if you look at those precedents that we talked about in the late nineties, like the eBay and the Cisco and Microsoft, um, and, and Schwab at the time, I mean, those, those all had fundamentals. Right. And they all were, um,

They all have the fundamental factors that Bill would insist on. And so, yeah, you can't just base it on the chart and on the technicals. You can't have conviction that way. And I almost never will buy a stock just because of the chart. I have to know what the company does. I have to understand it.

at least understand it enough to know why it's special. I might not understand how it works, you know, if it's a tech stock or really get into the weeds, you know, in that type of stuff. But if I know the problem they're addressing and why it's superior, then I can get behind that. You know, Bill would...

Bill wouldn't know everything about the technology part of it, but he would know this is special because it addresses this problem in a better way than everyone else. It helps the company save money in this way or helps the company be more efficient or it's just a new way of looking at something. I think the end in CanSlim is probably the most critical part

thing to look at that, that just that story. And Bill was, you know, Bill would say, you know, you should be able to explain why it's special in one or two sentences. Yeah. So that that's good enough for me as well. But I do need to understand that in, in order to have conviction, it, you know, you need to know why,

while you're buying it. So yeah, chart alone is definitely not enough. Well, Charles, I really appreciate you coming on and sharing your knowledge in this regard. Because again, for people that

You know, don't know. You just have so much precedence study that you've already put in. And again, I think people need to realize that sometimes that means you've even traced out, OK, it did this for this many days, this percentage, then it did this, you know. And so, yeah, I mean, sometimes I would actually take the chart and like I'd have two charts up.

And I just line them up and look at it and see, you know, how, how closely did it work? And, you know, I would say, you know, some of my biggest trades have been based on, on good precedents that I've, I've found, but where I've gone wrong in the past is sticking to it when, when they no longer work. Yeah. So you really need the kind of the discipline and,

To admit that, you know, it served its purpose up to a point and then it's and when it's no longer working, you know, back away, you know, having too much hubris or overconfidence will kill you in the market over the long term. So you've got to be careful with that.

Great place to end. Thank you so much, Charles. Really appreciate it. We'll get together soon. Congratulations on, again, how well your children are doing. Oh, yeah. Daughter. Marriages in the works and touring in a band. By the way, my daughter already had your son's band in her playlist. Oh, very cool. What was it? Biba Doobie? Biba Doobie.

Be the doobie. Yeah. So yeah, my daughter has some of her songs in a playlist. So it was awesome that your son was playing at Coachella. That's a big deal. And congratulations on all that. It's awesome. I appreciate it. Thanks, Jess. Okay. And thanks for coming on. All right. Thanks for having me. Talk to you soon.

Okay, that's going to wrap it up for us this week. Please join us next week. Speaking of a music aficionado, we're going to have Joe Fahmy on. He just knows so many music people, people in the industry. And of course, he knows markets. So it's going to be great to talk to Joe.

Get his thoughts on the market, and I'm sure we'll have some great lessons with his typical sense of humor that he brings to things. So please join us for a stat next week. We're going to be live at 5 p.m. Eastern as we are every Wednesday. We'll see you then. Take care, everybody. Discover what's driving the fastest-growing cities in the U.S. with Empowering American Cities, a collaboration between Fifth Third Bank and the Kenan Institute of Private Enterprise.

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