With over 7500 Twitter followers and one of the first inductees to the StockTwits Premium network, Joe is one of the most popular technical traders out there.  I have been following him since he managed his own personal blog at blogspot.upsidetrader.com and watched him transform his blog into the premium site it is today.  What you really should know about him is that he did not become popular because of luck.  He did not become popular because of his savvy marketing skills.  He became popular because he possesses a skill that many find valuable.

In this interview, he shared some of key concepts we should grasp in order to gain an edge as an investor.  This is truly an awesome interview, so I hope you enjoy.

“So Joe, your background in investment career is clearly distinguished. How did it all get started? Even before you started your investment career with major firms like Smith Barney, Bear Stearns, and Lehman Brothers, what led you to your particular career?”

I started my Wall St career while in my senior year in college.  My school was literally one train stop from Wall St.  A friend arranged an interview mid semester at Bear Stearns as an intern; I got the job and immediately changed my schedule to evening classes so I could work during the day at Bear. The partner I worked for at Bear was a former partner at Lehman, and his stories blew me away.  I knew from the minute I got on the elevator that this was what I wanted for my life’s work.

“Can you tell us a bit about your blogging journey? Starting from a simple Blogger hosted blog to now a StockTwits featured premium service, has this always been your vision? Why did you start the blog?”

I started my blog on January 1, 2008. It started as a labor of love, and it was truly a work in progress. I just wanted a journal so to speak, something to describe my trades and opinions, and I felt like this kept me more honest with myself and accountable to others. I always liked the pressure of being judged by performance, and I knew people were watching and reading the blog. I also felt like it was a way for me to give back and educate, disgusted with the non-value adding financial media. I described and still describe my blog as “my calling to task of the financial media”.

I was very short in the beginning stages of the crash and all the way through, mainly the financials and materials. The de-leveraging of the market was an easy thing to piggyback on the short side in my view, and yet the media continued to tell people to buy, calling multiple bottoms along the way. Turns out they were wrong everyday, and they hurt people on a daily basis.

Sell side analysts, who never think outside the box, are rarely capable of original thoughts (herd mentality) in my opinion. They would reiterate buys on stocks, even while Rome was burning. Folks who were following my blog did well, and I felt like a voice for the little guy who tried to steer them as best as I could from the conventional wisdom and the herd mentality of the market.

“How did you find StockTwits and what’s your take on the concept? You clearly enjoy it given your involvement with the site, but love to hear more of your thoughts on this.”

I love StockTwits and I am truly passionate about the whole concept. I discovered Twitter about a year ago by accident. My blog readers were asking for a way for me to be more real-time. So I originally pasted the twitter code to my blog for real time updates there, and soon after the readers just started following me on Twitter for the day trade type ideas. Then they read my blog pre-open and in the evening thereafter. Twitter essentially took over as my micro-blogging tool.

Around this time I was approached by Howard Lindzon, the co-founder of StockTwits. I had been reading Howard’s blog for quite a while, so I knew who he was but had never met him. We had dinner in New York one evening, and I decided to move my blog over to the StockTwits community. It basically was a larger scale way for me to communicate to the readers. I’m still irreverent and skeptical of the media and always will be, so it allowed me to give more people what I view as the “real deal” about the markets.

We call StockTwits the “Human Ticker”, and I love that. It’s so apropos. I’ve met so many cool people on the stream: some of the best technical and swing traders, hedge fund dudes, writers, great bloggers, macro thinkers; it’s all there at my fingertips. I don’t think anyone expected the volume of positive coverage we have received, and I truly believe it’s still only the first inning for StockTwits.

“I believe your trading is primarily based on technical analysis. What is it about TA that works for you?” & “Do you have an argument against why fundamentals won’t be as effective as the technical aspect of trading?”

My trading is technically based. I like to say people lie, charts don’t. I am dead against buy and hold investing, and the fundamentalists that I have met in my life are basically clueless. They look at a balance sheet and make a call. When they’re wrong they hide and use “hope” as their new strategy. Hope isn’t a strategy and denial isn’t just a river in Egypt. Value player are worse. How do you find “value” at Dow Jones 14,000? Give me a break. Many thought they could, and they are now unemployed.

After a while, charting in technical analysis becomes nothing more than pattern recognition. I know which patterns usually work and which ones don’t, both from the long and short side. Don’t get me wrong, I have very strong macro views and believe it or not, that has helped me greatly in looking for set ups on a technical basis. I like to think that I think macro, but trade micro.

“What is your strategy on screening your next plays and determining the entry/exit points?”

I don’t screen like many traders do. I can’t get much
simpler. I look at three things:

1. The Market – is it in an uptrend, downtrend or neutral?

2. Sector – which groups look strong or vulnerable? Are
materials exploding off a weak dollar? Are the financials running higher from
good news or a short squeeze? Is money flow going into technology?

3. Individual Stock – after some due diligence on the first
two, I drill down into individual names to short or get long.

My entries are chosen in various ways, but I use the daily
charts to find the final candidate and wait for breakouts and breakdowns. I buy
strength and short weakness, the charts tell me everything.

“So you’re launching a hedge fund soon. You’ve managed one before. Why start again? Can you tell us a bit about it? What’s the scale?”

Yes, we’ve launched our new hedge fund Desert Shores Capital LP a couple of weeks ago. Todd Stottlemyre is my friend and is the other co-founder. It’s a long/short fund, and we are really looking forward to the
challenge. Todd is a phenomenal trader and we both caught the bug around the  same time to launch a fund. I ran a a successful fund from 2000 to 2004, at which point I sold my stake and decided to just trade my own money. I missed being at war with the market on a daily basis in an official capacity. Our plan
is to grow to $100 million over the next year. I’m glad I’m back.

“Lastly, what advice would you give to the current investors in today’s market? (Other than sign up to your premium service and gain great insights everyday, of course)”

The best advice I can give an investor in today’s markets is to block out the noise. Turn the TV off while you trade. You don’t need it. Anything that comes cross in the tube, for the most part, is rarely actionable and is old news, just regurgitated noise.  How can breaking news happen 12 times a day on the same subject?

Perfect ONE  strategy. Just because you had a bad week, don’t jump to a “better” approach. There are hundreds of strategies that work successfully for hundreds of traders. Don’t be the guy that keeps  switching. Be the guy that masters one strategy. If you don’t you are doomed.

This market will tax your patience. If you are wrong on a trade, don’t “revenge trade” the next name.

Trade small in a choppy market and sell your losers fast, and NEVER average down.

Avoid the pundits.  If they were any good, they would have there own money in the game.

It’s meaningless to listen to analysts; they are usually wrong. Many are young, very green and
never lived through or traded a bull or bear market. Traders make money, analysts and economists talk about it.

Joe,  thanks for the time and your thoughts.  This is certainly helpful to many who strive to reflect your accomplishments.  Best of luck in your newly formed hedge fund.