Gold, silver, and the miners were up yesterday, although the miners didn’t have as big a day as I would’ve liked. No matter. Today is always another day.

In fact, if things keep going the way they’re going, we’ll see the highest-ever monthly and quarterly closes for gold and silver today. That’s not a sign of bearish behavior, to say the least. The algos will almost certainly jump on that bit of information to stack more ingots.

This morning, I read my friend and colleague Enrique Abeyta’s latest article titled “The Trading Secret Every Blackjack Pro Knows.” I recommend it to you highly. And it has inspired me to take a break from the charts for a day to address the mental side of trading.

So I’ll save the charts for tomorrow’s monthly asset class report. Because if your trading or retirement account is up as much as mine is, you may be thinking things like, “When do I get off this train?” Or “how much is enough?”

Let’s enlist some of the world’s greatest investors and traders to help us answer those questions.

Charlie Munger

“Invert. Always invert.”

Charlie Munger was Warren Buffett’s right-hand man at Berkshire Hathaway for what seemed like forever. But it was Munger’s urging that led Buffett to stop buying cheap companies and to buy good companies at reasonable prices. Like figuring out Larry David was the true genius behind Seinfeld after watching a few episodes of Curb Your Enthusiasm, Charlie Munger was the intellectual power behind Buffett’s throne.

Instead of thinking about what you can do, start thinking about the things you need to avoid. (Taking big losses would be at the top of my list.) Here’s Charlie explaining this concept himself, using it when he was a weather forecaster in the Air Force during World War II (bolds mine).

I invert all the time. I was a weather forecaster when I was in the Air Corps, and how did I handle my new assignment as a weather forecaster in the Air Force? A lot like being a doctor who reads X-rays. It's pretty solitary. You're in the hangar in the middle of the night, drawing weather maps, and you're clearing pilots. But you're not very much interfacing with a bunch of your fellow men, so I figured out the minute I was actually making weather forecasts for real pilots. I said, “How can I kill these pilots?” Now, that's not the question that most people would ask. But I want to know what the easiest way to kill them would be, so I could avoid it. And so I thought it through in reverse, that way, and I finally figured it out. I said there are only two ways I'm ever going to. I'm going to get him to icing his plane can't handle, and that will kill him. Or I'm going to get him someplace to run out of gas before he can land because all the airports are sucked in, and I just was fanatic about avoiding those two hazards.

Figure out what you don’t want to do, and then be fanatical about not doing it.

Ray Dalio

“You can scratch the car, but you can’t total the car.”

Ray Dalio founded and ran Bridgewater Associates for decades before stepping down recently. For a long time, Bridgewater was the largest hedge fund in the world as measured by assets under management (AUM).

“Pain plus reflection equals progress.” Dalio emphasizes the importance of allowing yourself and, if applicable, employees to make mistakes and use them as learning opportunities. Dalio discusses how he remembers his mistakes more than his successes, as he has learned a great deal from them.

I know how difficult this is to do with your own money in your own trading account. But you really have no choice in the matter anyway. Think of those losses as the tuition fees you pay to learn the craft of trading. I paid a lot of tuition fees in my life. Though, of course, I wish the cost were less, I’m happy I learned.

Ed Seykota

“The trend is your friend except at the end when it bends.”

Ed Seykota is a private trader who allegedly turned $5,000 into $15 million in 12 years, a feat thought impossible at the time. He’s a legend among trend-following traders. These traders ride their winners for as long as possible and cut their losing trades as quickly as they can.

His point is to hang onto winners until you know the trend has reversed. If you note, in the unofficial Rude portfolio, we’ve hung on to most of our trades for a year now. (In this bull market for metals, we haven’t had to cut too many trades.)

It’s essential to maintain your composure, especially when the market becomes volatile.

George Soros

“It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.”

Before he was a lunatic left-wing activist funding destruction all over the planet, George Soros was simply the greatest trader who ever lived. And this quote is the most important thing he ever uttered. Too many people would rather understand the market than use it to make money. Soros was all about the money.

He’s the only trader I’m aware of to break a central bank and inadvertently create the prime services industry in the process. To this day, you can’t mention his name around the Bank of England. As a bonus, the trade led to the UK's exit from the Exchange Rate Mechanism, a precursor to the euro.

Risk management is at the heart of making money. Risk too much and lose, and you'll blow up your account. Risk too little and win, and the victory is hollow. Soros knew when to pile into trades and when to take money off the table. No one has ever done it better.

Print out his quote and put it somewhere so you read it every day of your trading life.

Stanley Druckenmiller

"I like putting all my eggs in one basket and then watching the basket very carefully."

If you watched the Soros video from the above section, you’d have noticed a young Stan Druckenmiller, who was George Soros’s right-hand man during the Bank of England trade. (Another Soros lieutenant was the current U.S. Secretary of the Treasury, Scott Bessent.)

I love that Druckenmiller doesn’t preach the diversification dogma that keeps so many investors from making the kind of returns they should.

The entire Rude portfolio is in the miners, and I couldn’t be happier with the performance. If we kept some in other equities, crypto, or, heaven forbid, bonds, we’d be the poorer for it.

But we need to watch it carefully, lest we miss our profitable exit opportunity.

Wrap Up with Clint Eastwood

“If you want a guarantee, buy a toaster.”

Ok, just one famous actor is on the list. Eastwood is here to remind us that nothing in life is guaranteed and that we need to take the good with the bad.

But never, ever lost your faith.

Mistakes are a learning opportunity. Managing risk is a learned process. Staying with the trend takes practice. Watching your portfolio every day develops discipline. And piling into good trades when they’re ready to pop develops assertion.

It’s all worth it in the end.

Good hunting and good luck!