Exclusive Interview: Charles Kirk from The Kirk Report

Have you ever heard of the investor who grew $2000 into more than $1 million? Meet Charles Kirk. Charles is not your average fast-talking, infomercial-star pitching to sell you his get-rich-quick scam. Rather, Charles is one of the most respected investing and trading bloggers on the web.

Charles is best know for The Kirk Report: a blog which provides readers with a steady flow of excellent tips for becoming a better investor or trader. He works hard to help educate people on how to build a skill set which will benefit them for a lifetime. Rather than promise quick riches, Charles takes pride in being honest when explaining the time and discipline required to become a successful investor. In a business full of charlatans, Charles is a gem.

I sat down with Charles to discuss his ride to millionaire status, his widely-read blog The Kirk Report, what it’s like to be a good-guy on Wall Street, and what it takes to follow in his footsteps …

Damien Hoffman: Charles, we both bailed on a law career. Can you share how you transitioned from law school to stocks and blogging?

Charles Kirk: As a law student my interest in the market grew beyond a part-time hobby. This was back in the roaring mid- to late 1990s which was an ideal time to get started as a trader. For one thing, the great bull market helped me to do well without having any consistent edge or risk management skills. Starting with only $2,000 of cash, I could also trade online for less than $10 per trade which made it feasible to trade on a more active basis. Finally, it also helped that I was bored by my law studies and feared how unhappy I would be as a lawyer. Trading stocks provided for a fun and challenging diversion which I thoroughly enjoyed.

While I was actively trading enough to be considered a full-time trader during law school, it wasn’t until I later earned my law degree in 1999 that I decided to make trading my full-time profession. With a career in law as my “Plan B,” I gave myself two years to prove to myself and my family that trading stocks was a correct career choice. Although there were many ups and downs, fortunately it became clear I made the right decision as my skills and profits increased in the following years. By 2007 my career trading profits surpassed the $1 million dollar mark.

As for blogging, once I graduated from law school and decided to become a full-time trader, I started sharing my thoughts with friends and family through a newsletter which eventually transitioned into The Kirk Report. Back in 2003, there were very few blogs focused exclusively on the market and this provided me with an opportunity to reach out and help others who were going through the same things I had since I started this wonderful journey.

Damien: Your site has been around for a long time and is well respected by nearly every top blogger in the investment space. Can you share why you think you’ve earned the respect of your peers and what’s led to the lasting success of The Kirk Report?

Charles: Although traders have access to a lot of wonderful information and tools today, there is still a lot of bad information and advice — for example, pump & dump schemes, front-running advisories and aggressive or false marketing. Therefore, many people are simply looking for someone they can trust to learn how to do better in the market. Over the years, I think I’ve earned the reputation that I’m honest, I don’t have an agenda or an axe to grind with anyone, the website I’ve created and the content I share within it is useful, and that I’m genuinely interested in helping others succeed more in the market. The Kirk Report is also different than most by not giving advice or stock tips, but rather in creating an educational environment that fosters individual trader development versus guru following. In fact, the mission statement that I created for The Kirk Report from the beginning is something I try to still meet every single day:

“My primary goals for the website are to help the ‘little guy’ investor and to provide food for thought, not blind recommendations. I’ve learned many things the hard way through trial and error and my intent is to share my daily thoughts, analysis, and views — as well as others who I think you should pay attention to. Ultimately, my end goal is for an individual investor who reads The Kirk Report frequently to make much more informed, intelligent, unemotional and therefore, ultimately very successful investment decisions.”

With the addition of this year’s mentorship program, my long-term vision is finally being realized for the website to help others take their own strategies and skills to the next level.

Damien: You’ve definitely done a great job actualizing your mission statement. One thing I’ve also noticed is your premium product does a great job giving a snapshot of the day. Can you explain your framework for analyzing markets and how you settled on this framework?

Charles: My goal every day is to get members to learn how to think about the market in an unemotional way by being fully aware of what has and will likely move the market and why. Most people, as you know, fall in the trap of looking for opinions and advice that confirm their own bias and portfolio positioning. I do the exact opposite by forcing readers to read things that constantly challenge their opinions and positions. For some, this is confusing and frustrating because they’re looking for clear cut and confident “you must do THIS with your money” type of recommendations and analysis. That’s not my approach!

At the end of the day, you and you alone need to know what to do with your money. The opinions and analysis of others are always secondary to your view. My goal is to empower others by exposing them to a number of opinions and strategies so they can develop and expand on their own methods in their own way. They can develop an approach that enables their own skills and personality to work in their favor. Over the years I’ve learned by helping hundreds of other traders that all of us posses the ability to trade and invest well — but to get there we must undertake a long and arduous discovery process that requires constant exposure to new things, analysis, and strategies. That’s what I do every day at The Kirk Report.

Damien: I’ve also found that there are two camps of investors: those who want the framework and skills, and those who want picks and nothing more. Obviously, the investors in the first camp become wealthy, and the others, well, they just chase opinions for a lifetime. Since you pride yourself on helping individual traders with their skills, what mistakes must individual traders avoid in order to drastically improve their chances of success?

Charles: Sorry, but you are not going to become a great trader by avoiding mistakes. This is a game of mistakes and we all learn the most from the mistakes that also hurt us the most. There is no way around that.

Every successful trader I’ve had the pleasure of meeting has the battle scars to show this is a tough way to make a living. It is a true misfortune that so many in this industry try to convince others how easy it is to trade well when there is nothing easy about it. The mistakes that will tend to hurt you the most are also the ones you already know you shouldn’t make but make them anyway. In fact, the times I’ve lost the most money have also been when I have violated one of my very own trading rules. The same rules I’ve developed with years of experience from making the same mistakes.

I have told members I could create a list of trading rules that would virtually guarantee the success of every person who decided to follow them. But the truth is as humans it is against our nature to follow the rules even those we’ve had to learn the hard way. That’s also what makes all of us so interesting and why the markets are so challenging and constantly engaging. If no one made mistakes, the market would be completely efficient and void of opportunity. Mistakes, by their very nature, create opportunity in the market. Those who can learn how to profit from the mistakes of others as well as to reduce and contain their own are those who succeed. The big mistakes to avoid are trading too frequently & too aggressively without proper risk management skills such as using stops and proper position sizing.

Damien: You trade stocks full-time. What is your advice to someone who aspires to try the same path?

Charles: Trading is very similar to any profession that requires a certain amount of skill: it takes vast amounts of time and dedication to learn. Only liars and crooks who want to sell you easy short cuts, trading advice and alerts, expensive software, etc. will tell you different. In fact, even the brokers are guilty of the same “it is easy, anyone can do it” type of mentality in order to fill their own wallets with your trading commissions. Remember the cute baby who trades at E-trade?

However, to do well over a lengthy period of time in a consistent manner takes a tremendous amount of skill. This can only be acquired through a dedicated, extensive effort. My suggestion for anyone who aspires to do what I’ve done is to spend several years just learning everything they can about the market and exploring different types of trading strategies. The Kirk Report can be helpful in this capacity especially if you take time to read through all of the links and resources I share. During this time I also think it is important to build trading skills by trading in simulated “paper trading” accounts.

Only after you’ve acquired these skills and have proven some measure of consistent success, can you even start to think about trading full-time. By then, it should already be patently obvious if you’ve got what it takes to make it as a full-time trader based on your current and past performance. And, remember, this is not a profession suitable for everyone and that’s OK. Find a career that makes you happy and able to provide for yourself and your family. Trading provides that for some, but certainly not everyone who desires to set out to trade full-time.

Damien: Would you say being away from Wall Street helps you feel more objective and less susceptible to the emotions of the masses?

Charles: I once thought there was a distinct and clear advantage, but I no longer think so. With access to the same real-time information and tools that those on Wall Street use, for good or for ill I am unfortunately impacted by the very same opinions and emotions that traders who work on Wall Street face every single day.

However, because I am an independent trader who trades only my own money instead managing other people’s money, I have a tremendous amount of freedom and flexibility to trade the way I want to at all times. Those on Wall Street who work for others simply don’t have that luxury and that’s to their own detriment as well as their clients.

Charles Kirk in Utah

I’ve been doing this long enough to understand that sometimes it is OK not to trade and be patient while your strategies aren’t working well. There are times, for example, that I will significantly under perform the market and that is to be expected. For example, if I had to meet weekly, monthly or quarterly profit targets irrespective of prevailing market conditions to make others happy with me and my job performance, my trading would suffer because I’d be forced into making emotional “performance anxiety” trades that I wouldn’t otherwise be tempted to consider.

While I set extremely high goals for myself and my trading, I have learned not to let those goals control my trading decisions.

I’ve also learned when I have to be very aggressive in the market and to recognize when market conditions are such that pays the most reward for the least amount of
risk. As you might suspect, those times are exactly when other people are flooding the exit doors and running away from the market. If I had to justify my actions to others during those key market junctures, it would make my job that much more difficult. The market is challenging enough. So, my complete independence allows me to zig while others zag and be able to see and take advantage of opportunities during market panics and bubbles. In that respect, my 100% independence is a true asset.

Damien: Charles, in addition to being a great trader, you are a very nice person. However, most people think they need to be Gordon Gecco to succeed in this business. Can you explain how being a good-guy has worked for you?

Charles: I think the Gecco-mentality is something you see far more in movies than real life. Some of the best people I’ve had the pleasure of meeting are traders.

The truth is that most professional traders have been humbled by the markets enough to know and respect the value of having good Karma and doing things that keep the trading Gods on your side as much as possible. In my experience, the vast majority of traders share a common dream to reach the point of financial independence so that later on in life the assets we acquire in trading will go to help many others after our careers are finished. This is a common goal of many traders who I meet and call close friends. I think it has to do with the fact that as traders we are engaged in a zero sum game. One person wins and the other person losses and most of us don’t have the opportunity to make a significant difference in other people’s lives. But at the end of the day, those of us fortunate to call this our profession clearly recognize that we are indeed very fortunate to be doing something that we truly love and, if we are successful, we also feel obligated to look for ways to give back to others to make this a better world for everyone.

Like most things, the media loves to place all of the attention on the bad apples especially when markets perform poorly and people look for someone to blame for their own mistakes and investment losses. Just look at how much time and focus has been devoted to Bernie Madoff. So, bottom line, I think the perception is flat-out wrong.

Damien: Charles, how do you manage work-life balance with two successful businesses? Is this related to why you do not allow comments on your website?

Charles: Because of the sheer popularity of The Kirk Report, it would be a full-time 24/7 job to monitor and respond to a message board system. That’s simply not possible. My priorities are simple and straightforward: family first, trading second, then the website — in that particular order.

As I have confessed on many occasions in the past, I’ve struggled tremendously in balancing all of these priorities, but I think I’ve finally learned how to do it or at least do it better in recent years. While I devote a lot of time and effort to The Kirk Report and my paying members, I’m still accessible and available when they desire to share views and ask questions. So, at the end of the day, I think I’m doing every thing I can to provide a high-value membership for the price and still help as many people as I can. God willing I hope to continue doing this for a very long time.

Damien: We hope so, too. Charles, thanks for taking the time to chat with me. We wish you continued success as both a trader and industry-leading blogger.

Charles: Thank you for the opportunity, Damien.

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