Introduction
In this Q&A, I share how contrarian trading shaped my 50+ years in the markets—from early lessons on not following the masses to why you must love taking a loss. I discuss being a technician at heart, navigating the 2000 and 2008 bear markets, and the best trade I made while recovering from a ski injury.
Trader Talks QnA
What was the most important early lesson you learned about trading?
The most important lesson I learned was to be a contrarian. Don’t follow the masses. People will always try to make you buy or sell something. The contrarian opinion is valuable because at market tops and bottoms, the crowd will fool you—and you won’t be there. That stuck with me from when I was about 21.
What was your first trade and what did it teach you?
My first stock was Motorola at around age 21–22. I bought 50 shares and swing traded it for about a year and a half or two years, doubling or tripling my money. If I had held long term, it split into three companies and I would have made much more. It taught me I was a short-term trader then—I didn’t know any better—but it was a valuable lesson.
What was your experience working through different brokerages and the 2008–2009 crash?
I started at EF Hutton and, without moving desks, went through four firms due to mergers and failures. The last before Wells Fargo was Wachovia. During the 2008–2009 crash, Wachovia went down to a dollar or two and then broke; Wells Fargo took them over. We were on a Greece trip calling home on landlines while the market was swinging hundreds of points daily.
How did you think and act during the 2000 and 2008 bear markets?
In 2000, no one was ready for a bear market, but it started within a few months. 2007–2009 was worse—down 600, 800, 1,000 points often, with brief rallies. The bottom came after Bear Stearns and Lehman Brothers failed. I took a client who had fallen from about $15–16M to $6M to a money manager; he put in the full $6M, which grew to around $28–30M over the next few years. I used money managers sometimes, but I loved trading on my own.
What’s your core risk management philosophy in bear markets?
You’ve got to love a loss. If you can’t love taking a loss, you’re in trouble. Make losses as small as possible, but don’t be afraid to take them. I told my son the same thing. I never feared taking a loss; the good times will be there if you protect yourself.
Can you share a memorable trade you made?
On a ski trip at Steamboat Springs, I fell on a blue run and fractured a rib. In pain and stuck off the slopes, I bought options on the Japanese Nikkei index based on the chart—I’m a technician by nature. Within a week, I made $95,000. Then I took a sailboat trip to the Bahamas with my wife—still hurting, but it was great.
Was taking losses ever difficult for you personally?
Everyone has losses, but I could always take them. I didn’t mind taking them—if you can’t, you’re in the wrong business. I never cried over a mistake. I’ve seen friends who couldn’t take losses—some were in positions they shouldn’t have been and it cost them dearly.
Do you prefer technicals or fundamentals when trading?
Technicals are everything. Fundamentals matter, but I’d rather buy the stock at 30–80 times earnings than the one at nine times with no catalyst. For example, I traded NVIDIA multiple times—wish I’d held from $6—but I always could take a loss when needed.
Any cautionary tales from friends or colleagues?
As a manager, I watched a friend buy puts in Occidental Petroleum. They went against him. He couldn’t take the loss, lost clients, and almost cried daily. I told my son to love a loss—I wish my friend had embraced that. He’s still in the business, but that period was rough. Today, I swing trade and don’t size like I used to—at 91, I don’t need the risk.
Key Trading Insights from Joe Valente
Be contrarian—avoid the masses at extremes. Love taking small losses. Rely on technical analysis, and use money managers when appropriate. In bear markets, protect capital and wait for the bottom to reveal itself. Stay adaptable and never marry positions.
- Contrarian mindset helps you avoid tops and bottoms with the crowd.
- Small, fast losses preserve staying power for big opportunities.
Joe Valente Strategy
I focus on contrarian trading guided by technical analysis. I swing trade, size appropriately, and never hesitate to cut losers. Fundamentals inform, but price action decides.
Contrarian Swing Trading
Avoid consensus at extremes. Use charts to spot shifts in trend and momentum. Enter when the crowd is fearful or complacent, manage risk tightly, and scale with conviction only when technicals confirm.
Joe Valente Tools
I relied on charts and price action as a technician. I used money managers selectively for clients and traded instruments like options on the Nikkei when setups aligned.
- Charts/Technical Analysis – primary decision-making tool
- Options – tactical plays (e.g., Nikkei options)
- Money Managers – for capital allocation in certain cycles
Common Trading Mistakes to Avoid
Don’t follow the crowd. Don’t refuse to take losses. Avoid buying “cheap” on fundamentals alone without a technical reason. Size within your risk tolerance—especially in volatile markets.
- Holding losers because “it’ll come back”
- Buying low P/E stocks without a technical edge
Conclusion
Across decades, contrarian trading, loving small losses, and trusting technicals helped me survive and thrive. Protect capital, act when it counts, and keep learning. Share your biggest takeaway in the comments and subscribe for more trader insights.