[Edit 8/18/2009 – Since writing this article I have changed from Tim Sykes’ biggest critic to his biggest fan. Please see this article on my new trading blog about how my opinion of Tim Sykes changed.]
Timothy Sykes, the boy wonder who turned $12,000 into $1.65 million while still a teenager, has abandoned his hedge fund Cilantro to re-create his day-trading achievement in full view of the internet on his new blog. Sykes is best described as young, brash, egotistical, and annoying. Of course, an impartial observer would describe me in much the same way. Timmay and I also share the preference for shorting stocks over buying them. But rather than being two peas in a pod, we are polar opposites: Tim is the quintessential short-term trader and I am the archetypal buy-and-hold value investor.
I am not like some people who say that day trading is a crock and that it never works. It can work for some people some of the time. The problem with Tim Sykes is that he encourages others to follow in his footsteps by buying his $297 DVD trading seminar. There are several problems with buying a trading system such as Tim’s:
- Even assuming that some strategy works, if enough people follow that strategy it will cease to work. This is exactly what happened to Richard Dennis, the noted commodities trader, who famously lost tens of millions of dollars in 1988 after his trend-following strategy stopped working. Sykes of course likes trading microcap stocks with relatively thin markets. This means that his system is especially prone to break when too many people start using it.
- Trading takes a lot of time; this is particularly true for Timmay’s day trading and momentum trading. Most people have jobs, and very few people have enough in savings and enough trading talent to make a lot of money trading. So for most people, time learning to trade would be better spent nurturing their career or working a second job.
- Trading any system takes incredible self-restraint and guts. Very few people have the self-control to be able to stick to a system even when it is not making money. This is even harder if a trader buys a system (say, from Tim Sykes), because it is harder to become truly convinced in the system if that trader did not invent it himself or herself.
Traders and investors should steer clear of Sykes’ DVD and his trading system. Those few who could be good traders would likely do better developing their own system rather than following Tim’s. Of course, I find Tim amusing, so I encourage you to read his blog for its amusement value.
Disclosure: I had no connection to any person mentioned at the time I first posted this. Since I first published this post I have bought many of Sykes’ products, successfully used his trading system, and am now an affiliate of his (earning a commission on anyone who buys his DVDs using a link from my site).
I wish you’d actually viewed the DVD or read my book before you ripped on what I’m trying to do. If you had, you’d see:
1. I’ve had plenty of experience with destroying profitable patterns thanks to my big mouth so that now I teach people to play all different angles, especially since my short selling angle isn’t for everyone.
2. Unlike the true frauds out there, I don’t teach my students to just memorize the patterns, no, I want them to understand the variables that align to create those patterns so they can adapt to the inevitable changes.
3. I teach people to focus on the most liquid microcraps and smallcraps out there, crap like COIN and CPST, both of which trade MILLIONS of shares daily, aka plenty of liquidity to go around
4. My best trades come about rarely, I prove day in and day out I trade too much so I teach others to focus only on the most ideal, which usually occur 1-4/month, aka plenty of time to live a normal life while waiting for such opportunities.
5. I could care less what you or anybody else thinks of me, amusing, fine, but I will teach as many people as possible about the entire microcrap niche, going long and short, short-term and long-term…next time do more DD and get your facts straight!
PS I encourage you to purchase my book/DVD and see for yourself, the DVD package (which includes an autographed book) comes with a 60-day money-back guarantee (minus a small restocking fee cuz restocking is a #$*#^@) (good thing there’s only been 2 returns so far, or less than 1% of those sold, aka people are loving it!)
Ouch! You’re tough on Timmay!!!
You know I like Timmay. Sometimes I cringe at what he says/writes…
BUT – I do admire his motivation and his willingness to share his strategy with others. He sells the DVDs – so what? Good for him if he can make money by teaching his strategy. (Heck… I’m now writing a book on fraud investigations so I can make money by teaching others MY methodology.)
I don’t use Tim’s system and I haven’t bought his DVDs because I’m not interested in doing what he does. But I don’t fault him for teaching others. Yes, you’re right… if too many people use his strategy, it totally throws the whole thing out of whack and it won’t work anymore.
But why fault him for that? I like his openness about his trades on his site. And he definitely is entertaining…
My responses to Tim’s points:
1&2. What you are teaching people is still a style of trading. Even if they are not just memorizing patterns, the whole style could conceivably stop working at some point. This was exactly what happened to the trend followers like Richard Dennis in the commodities markets.
3. I traded a couple of the stocks you did, and yeah, there’s millions of shares traded, but they are still not liquid enough for me to day-trade. Anyone with a decent-sized account cannot afford to play your game.
4. The problem is that the trader still needs to find the stocks and opportunities to trade. For example, I am not a frequent trader; yet I spend a lot of time finding the right stocks to short. While it only took me a month to increase my portfolio by 20% with a short position in LSCG, it takes me 20+ hours a week searching for such great opportunities. Most such opportunities do not pan out. My bet is your followers likewise spend a good chunk of time looking for the right patterns.
5. While I didn’t want to waste $300 on your DVDs and book, I have read a lot about you and have read your website. I would hope that you, who espouses ‘transparent investment management’, discusses a very similar strategy in your book as you do on your blog.
BTW Tim, thanks for disparaging my ‘crappy little blog’.
Wait, Tim, so LESS THAN 1% (total of 2) people have returned your DVDs. That means that fewer than 200 people bought them. Seriously, that is pretty weak.
Sorry, I meant slightly more than 200, not fewer.
1. Screw all those people with decent sized accounts, they already have tons of opportunities, this is for the little guys!
2. Small companies and their shareholders will ALWAYS hype them up to raise capital and sell at higher prices, the game n ever stops, ALWAYS trading opportunities, no matter what angle you take.
3. My patterns are damn easy to spot, not many stocks up 200% in 1 week. But who cares if you spend time researching, there’s no free money in this biz
4. My book is about how I came to this strange biz model, I made a fortune off suckers, lost a bit of it when I unwittingly became one and now I’m determined to help as many people as possible.
Yah dude, i don’t think u realize how small-time i am, i’m just a guy sitting on a couch trying to get other small traders/investors to learn to play the game so they won’t keep losing and thinking this stuff is random
Tim is such an idiot when you actually read his site you understand. He lost all his money and expect what – to help others lose their money too? Tim makes $$$ off promoting stocks… like what he did as he explains in his book. On message boards, chats, etc. Watch out!
I lose 35% on CYGT when i ignored my “idiotic trading rules”. Wow, I guess the lack of due diligence gene isn’t limited to this blog’s author but to its reader (s?) too
You both have valid trading styles that reflect who you are and what is important to you. Why do you bash each other? I value invest and will often day trade around my postion. The reason I make fun of Value investors is that they use it as excuse to be lazy. They wake up one day and thier account is destroyed then they start to blame the broker/blog writer/newsletter scribe et al.
@Mike – we bash each other because it is fun and is a good mental workout. There are plenty of people who are (or call themselves) value investors who are no good at what they do, just as there are plenty of money-losing daytraders. Those people should just invest in index funds and leave the trading and value investing to those who are more skilled.
Michael, You mention you prefer short sells but you’re a buy and hold value investor. That sounds contradictory, what am I missing?
I buy and hold on both the long and short sides. Long, I look for solid companies that are good values, and I hold them until others recognize the value. Short, I look for the opposite and I remain short until the market recognizes that I am correct. I don’t think it is contradictory, but I guess there are others who do think that ‘value investors’ can’t be short sellers. It is only a label, though.
Blah blah blah … so Tim is annoyed that I have not updated my article. Yeah, I’m making money trading like him now, and I’ll update this article someday.
http://www.timothysykes.com/admin/2008/07/30/uss-now-47-below-yesterdays-timalert-to-short-sell-that-bitch/
Tim is real and I love his style of trading and honesty. I lost a fortune the market as of a few months ago before I even heard of Tim. I have been following Tim for a few months now. I think he is excellent. I am getting a decent amount of money together and I am going to give trading another chance thanks to Tim. I am going to use his techniques.
TIM IS THE MAN…HE CALLS IT AND TELLS IT LIKE IT IS! As for you Michael, that wrote this article…You are an idiot. Your comments are childish.
Michael–you acknowledge that you have lost a fortune in the market; how exactly does this qualify you to opine on my criticisms of Tim’s methods?
Timothy Sykes is a hypocrite.
After I discovered severe corruption at Eurostat, the statistical office of the European Union, I wrote a fully documented message detailing the allegations, which I posted on Timothy Syke’s website.
In a very short time, my message was deleted. When I contacted Sykes, his excuses ran the gamut from “the file size was too large” to “the message doesn’t fit the theme of our website” to “you don’t write good enough”.
Timothy Sykes is not a prophet who exposes “manipulative forces at work in companies, the media, ANALysts, etc.” as he proclaims. Timothy Sykes is a liar who probably works *for* the manipulative forces as a facade of opposition.
If you would like to receive a copy of my message about corruption at Eurostat that includes graphics, please contact me.
Jeffrey W. Bowyer
jbowyer@seznam.cz
Jeff, Tim is primarily a stock trader. Eurostat problems have little to do with stock trading. Find an economics site to post it on or contact a journalist who deals with economics issues. His blog or my blog for that matter is not the right place to post such material.
Sheeet…There is only one life…I will try everything I could that sounds logical to make money that is legal…
“Even assuming that some strategy works, if enough people follow that strategy it will cease to work.”
Couldn’t this be applied to all investing strategies, even buy-and-hold value investing?
Hah. Don’t even bother READING this article, just skip to the bottom:
Disclosure: I had no connection to any person mentioned at the time I first posted this. Since I first published this post I have bought many of Sykes’ products, successfully used his trading system, and am now an affiliate of his (earning a commission on anyone who buys his DVDs using a link from my site).
In short? This entire article is a waste of time because in the end the author changes his mind.
PS: I think Tim Sykes is cool because his name is Tim, doesn’t matter that he’s a douche, because I’m one too, and if you pussies have a problem with people saying “I’m looking for them to fail,” then the trading business isn’t for you, because the market doesn’t CREATE wealth, it transfers it, and we’re ALL looking for the OTHER GUY to screw up. Tim just says it because he has balls… all Tims do.
This right here. Haha realist shit I’ve read all day. Best “disclosure ” ever.
Tim — I say the same thing at the top. My criticisms of the strategy do still apply (maybe not #1), and I do think blindly following someone else’s trading strategy, no matter how good, is foolish.
If you read into the details Tim Skyes isn’t as great as he sounds, he fakes some of the gains on covestor by not distributing real info on how much he puts in each position etc. Feel free to google his name and read what the real trades/hedge fund managers say about it and why he has never been offered a job on the street. Tim Skyes is barely making over $1 million a year where if he was that good of a trader for a top bank such as Goldman Sachs or J.P. Morgan then he would be raking in over $5-$10 million if not more. Its a fraud scheme and personally I would never recommend reading his blog. Tim is a SCAM!
Stocks on Wall St:
Your comment about Tim faking his gains on Covestor shows you have no clue what you are talking about. Covestor does not report how large a person’s position is in absolute size; it only reports what percentage of an account is invested in each position while ignoring cash. So of course the percentage returns on Covestor are off. That being said, it is perhaps more impressive that had Tim gone all in on each trade (as he only trades one position at a time most of the time) he would be up 100,000%+ and he would not have blown up.
I know the big wall street traders like to look down on small fry day-traders who do not swing $100m+ trades, but most of those traders have little to no talent and only make money because of the advantages of being at the center of everything. Still, so many of those traders blow up … lionizing people simply because they take huge risks with other people’s money seems rather stupid to me.
Lastly, it is stupid to take your other criticisms of Sykes and then talk about him being a fraud and a scam. Being small-time does not make him a scammer … while many of your hero traders on the street are scammers (because so many of them trade on inside information). I can assure you, having bought Sykes products and having made money trading like him, that he is not a fraud.
This thread is great.
The reason Tim is a douche is obvious. He acts as though he fights for the little guy, trying to even the playing field for those who might buy the stock of a crappy company during the pump phase of a pump and dump. “Short instead and makes loads of cash.”
The reality of his system is that he places himself (and his “students”) on the same side as the unscrupulous promoters and fleeces unsuspecting retail investors of thier hard earned money as well. Who do you think buys his short positions?
The guy is a weasel and the kicker is that while he is robbing the uneducated investor, he will happily teach you the error of your ways for the low low cost of his DVD system. What a joke.
Hire yourself a professional advisor and make sure his fee structure is fee based. Then steer clear of this guy and crappy companies altogether.
JT –
The uneducated people who buy the pumps get fleeced no matter what. The short seller, by selling when the stock is high and buying to cover when it is low, makes the pump & dump scam just a little less profitable for the stock promoters. Furthermore, by talking about pump & dumps and how we profit by short selling them, people learn about how much of a scam they are. I have had numerous people tell me that my blog has informed them and they have saved money by avoiding such scams because of me. That is also true for Tim.
Tim,
I think you’re a cool dude. Tell it like it is, don’t care what others think, etc, etc. And what really impresses me is that your for the “Little Guy”.
I see many promotors of systems say they’re for the little guy, but are they? Are you?
I often thought if someone was really for the little guy they would price their product accordingly. I’m not saying your pricing is unfair, but for this “Little Guy” 2grand for a system is a bit much. How about a program where you actually tought the system for around $197.00. Put it on DVD or whatever.
At the end of your instruction the buyer of your system would have an option…Pay for your reseach…monthly, quarterly, OR … this would be the real cool part…offer the service with no out of pocket expence. Instead sign an agreement that would allow you to be paid a % of earnings based on a minium investment of (just for argument sake) say $500.00.
At least the “Little Guy” might really have a chance to get into the market and play the game.
You seem like a smart young man Mr Tim Sykes. I think I would really enjoy following you and your recommendations…if I had the 2g’s. Keep givin em hell young man. Keep givin em hell!
I Like your style
Mickey
Damn I love this $hit…Tim you should sponsor me so i can afford your dvd’s..I;m a tim alerts subscriber and his strategy is good and he is dedicated..Cocky, so what i would be too with 20mill in the bank and sure is shit wouldn’t be helpin piss ants like us become rich…Cheers from Canada