I sold rest of my shorts and puts early yesterday morning, hoping the market would at least correct a little to get better exit price. After I sold them all, my heart was sinking to new low. I didn't feel free, I felt numbness and crashing defeat! I checked all my accounts' balance, this only enhanced the "new low" feeling, I just wanted to do something drastically. One reader added great comments in the previous post to share the thoughts and experience.
- For me, the purpose of spending time and energy to research to be a trader is not to meet mutual fund performance or index performance, I can do that by using just a few ETFs with very low costs.
- I want to beat the market and get better results. So yes, I'm far behind the market this year, but I learned a lot. I'll stick to trading and continue to change until I find one or two ways to outperform. Meanwhile, it's not a bad idea to set a portion of total funds in the index ETFs, like SPY,EWA, EWC and EEM, to name a few.
- Don't doubt myself, no matter how many stupid mistakes I made in life.
- I can't change the fact I made stupid mistakes, so I have to change my attitude towards these failures.
- When tiger is in cage, he bows his head and waves his tail, begging for food! Pigs and rabbits are laughing at him and run happily around the cage. But my friends, a tiger is no pig nor rabbit, he can do far better thing in life.
- So don't feel bad to be trapped in a very bad situation.
- Jesse Livermore made a killing in 1907 and was a millionaire. Then he was broke, and actually, in debt.
- Jesse Livermore waited a few years to make a come back. In 1915, he was only loaned to trade 500 shares of stocks, and he waited six weeks before he made a great trade, he knew it's his last trade if he failed. He made a great trade and never looked back. He made over 100 millions later.
- I can't possibly compare myself to Jesse Livermore, I'm not there yet. I had my bright spots in trading, some due to luck and not skill, to be sure.
- But I have a dream!
- I'm not in debt, I still have a decent job and I have money to trade. I'm in far better position than Jesse Livermore in early 1915.
- I can walk away, just invest in SPY and a few international ETFs and not worry about them any more. But I won't do that.
- I know there is far better thing in trading.
- I know there is far better thing in life.
- I experienced countless turns and tribulations, by making lot of money and then giving them right back in 2006 and 2007, I owe it to myself to not give up!
- I wished I could just sit on the market index ETFs after I made some money in early 2007, but I didn't. So don't regret things you did.
- Lot of investors don't know the swing of option price between a small daily movement of the underlined stock; lot of investors don't know by just waiting a few more days, even with underlined stock price moving in your direction, the option price can go much lower; on the other hand, the option can go higher even with stock price moving to the wrong direction; all depends on the volatility and time premium. I experienced these, sometimes feel I was cheated by large operators in the market, but at least I know these.
- These experience is worth nothing if I quit now. But it's a treasure for a trader, assume I learned from it.
- If nothing else, I experienced new low in trading and life, I experienced glory and failure in trading and life.
- I may wait a few more days, a few more weeks and even a few more months, to find a better setup to enter the market again.
- Once you're successful, you can laugh at all these failures and tragedies; but if you fail again and again, then just chew the bitter taste of failure and your own stupidity.
- Don't blame luck, don't blame manipulation, you make your own luck. You calculate all the risks, including unfairness for small traders in the market place.
- Pick yourself up, like a man!
- Don't cry foul, don't complain.
- Don't think you find the magic of trading due to one or two successful trades, you always need to count the unknown, respect the obvious.
- Because it's difficult to trade to make a living, because it's tough to trade, market is less crowded, so that you have your chance to be a successful trader. If it's easy, everyone can do it, you may not find your chance in the market.
- So lucky me, I get my chance.
- Now, use this chance well.
5 comments:
Still, nowhere in your 28 point "mea culpa" do you present any strategy to allocate your investabe assets for growth, income and inflation protection.
The object of investing is to MAKE MONEY. Plain and simple. Whether you call it "trading, or investing" or whether you accomplish a profit in and hour, a week or a year, still requires the proper selection of sectors and risk management of your money.
The most basic of rules is to list all the reasons WHY you made any particular investment and at the same time place a reasonable profit expectation and whether you reach your goal in 1 minute or 1 year - execute the trade. Greed is the killer in all markets. Also, should ANY news come out contrary to any of the reasons that your investment decision was based on, you immediately sell. The point being that your original analysis for that investment was incorrect. Minimizing losses is one of the greatest tools in an over plan for making money in the market. We all have our share of losses but the idea is NEVER to let a loss become a catastrophic event. There will be times when you may take a small loss and then the stock turns around and moves higher (and you feel really stupid), but in the long run you will save many ten's of thousands of dollars, not to mention ulcers watching a bad investment get worse, by cutting your losses off quickly. Never let a profit turn inot a loss. Better to still take a small profit on what you once thought would be a great profit, than see it turn into a loss. Paying taxes on trading profits is GOOD. It means you are making money. Too many people don't take their profits because they don't want to pay the tax. Ridiculous concept.
I am basically a bear on the market but I don't fight the tape. I'm bearish for many reasons. The simple explaination is high consumer debt and personal bankruptcy rate, real estate price collapse, The Fed creating money at the rate of 14% annually whichis the main cause of our true rate of inflation close to 12% for most AMERICANS. The ever increasing trade deficit and Federal debt , all of which can never be repaid.
My current thrust in investing since year 2000 has been a mix of Canadian Oil Trusts, which throw off a net average of 11% annual dividends plus an average 5% annual capital gains and it is also a playon the Candian Dollar which is up 50% over the past 3 years vs the US Dollar. When I was a teenager back in the 1950's we had to pay $1.05 US to buy $1 Canadian. Being that Canada and Australia as well are rich in minerals, oil and timber - their currency will eventually go to par or higher against the US dollar.
Precious metals (gold, silver and uranium stocks) is the ideal investment for inflation hedge investments. Despite the great bullmarket in thesre stocks over the past 5 years, we are still (IMHO) in the early stages of a tremendous bull market in commodities. The simplest investment is via a no load precious metals mutual fund like TGLDX. I'm in it since $12. It is now $56. Trading individual gold stocks is another matter and can be quite volatile. But I do trade in AEM, GG, SA, IVN, SSRI and several other junior mining stocks.
The reason I choose Canadian Oils for income is for several quite obvious reasons. World production from ALL the major oil fields has been declining for the last several years, despite what the Saudis say. No new oil refineries have been built in over 30 years and evenif they could find new oil field, they can't refine it fast enough. World usage of oil keeps rising because of the nearly 3 Billion people in India and China. It makes no difference what we might do to conserve oil in America, the demand from China alone will swallow up most of the available all. And they will pay any price to get it. Most people are unaware that in China, with 1 1/2 Billion people, there are less than 10 millions cars. They are first expanding their domestic auto manufacturing, and even though many cars willbe only 2 cylinders, the one thing those millions of cars they will build will need is OIL. Each year 20 million Chinese farmers migrate to the urban areas which requires China to build or expand an area the size of New York City every year. That is why China consumes 80% of the worlds cement, 50-60% of steel, copper zinc etc. And their constant demand for oil.
Oil Tanker shipping companies are also another good source of income paying stocks. As well as Internation Bond Funds that invest in NON-US debt obligations.
I only use the bear ETF's like QID and DXD etc as portfolio insurance - but as you well know, there is no money to be made being short the market these days.
Always take profits. I always sell 1/3 - 1/2 my positions on any rallies and let the rest ride. If the market goes up, I still have 1/2 my assets working for me. If they go down, I have to cash to get back in, if I choose. But it is always better to average "UP" in a stock, then to average "down".
Learn to cut your losses and the profits will take care of themselves.
hlgold
(portfoliomanager@ comcast.net)
P.S. I retired at age 51 in 1992 and moved to Sarasota, Fl from NYC. Devoting my time to exclusively managing our own assets, I now have 15 consecutives years of profits, averaging nearly 19% annual growth. And all because I continually take profits and just don't get greedy. A wise man taught me that "Less is more" in this life.
P.S. _ Jesse Livermore died broke, having committed suicide at a hotel in NYC in 1940. He left a note to his wife that "things were bad with him and that he was a failure".
So let's not glorify the concept and exhileration that "one" may think they get from being a trader. Fortunes can change overnight. There is sometimes little differnce between being a trader and merely being a speculator. And Bull markets,like we are experiencing now, do have a habit of "making geniuses even out of idiots". We'll see how they fare when the markets are not so bullish.
hlgold. I forgot to sign my last post.
Really enjoyed higold's post. Wish I could learn to cut my losses; I have an emotional hurdle (stupid) in that regard. I lost a lot on DXD, got out, made back 60% on various trades, then couldn't seem to stop myself from getting back into DXD in the midst of last week's rally. Will there be resistance at 14,000?--I know, who knows? Higold, how do you feel about the Yen? Seems to me that it might be as good an investment as the Loonie was a few years ago...
Michael, I don't want to monopolize Simple Trades web site so you can ask me your questions in future at my e-mail of:
portfoliomanager@comcast.net
I have no opinion on the Yen other than that they are debasing their currency even faster than the US is debasing its currency. I like playing the Canadian Oil and income stocks because they payin Canadian currency and then it it converted in US dollars for us American shareholders. Net effectis that as the
loonie" rises, I get more dollars deposited into my accounts as a result. 50% of my profits in the Canadian Oil Royalty Trusts came from share price appreciation and 50% came from the rise in the loonie. Naturally, this is all predicated on spot oil staying strong. we have the hurricane season yet to come and any geopolitical events in the middle east will also help propel spot oilprices. Not to mention refinery shutdowns, for various reasons, as well. Not a bad place to be for the next few years for a certain percentage of ones' assets.
HLGOLD
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