I was buying dinner at ABC market just now at around 5:30 pm.
Just as I was about to cross the road to take the bus home, the sky suddenly opened up like those monsoon rain!?
And its still shining brightly with sunlight piercing through the rain!!!
Idiot!
So I walked back to have my Chendol to wait the rain out.
I knew from experience, the rain although heavy, will not last long.
True enough, the rained petered out even before I finished my Chendol.
I wish I had that level of confidence when it comes to my trading though...
Ever got shaken out of a perfectly good position because the market have one of those weird and unexplained counter-trend moves against us?
Very frustrating right?
I'm a coward.
I prefer to get stopped-out.
See the price retrace.
Sheepishly get back into the same position I had before.
Sometimes at an even worst entry price than before @$%^$#@!!O
What to do?
If the rain didn't stop like what I expected, I can always have another bowl of ice kacang (sugar rush and brain freeze).
I'm still dry.
But in trading...
No way I'll let a paper cut turn gangrenous!
I noticed some retail traders do the opposite.
Who's afraid of some rain?
Just dash and run like mad. Its only water!
For trading, they are not afraid to let a short term trading position turn into a long term investment!?
Stocks always go up right?
Don't worry.
We are "investing" for the long term.
Remember Warren Buffett said if you can't stomach a 50% loss you should not be in stocks?
Wait.
Have you noticed retail "investors" looking to breakeven one day are often good at parroting wise investing quotes?
If stocks don't go always go up; never mind. Yearly dividends collected will slowly add and always go up! :-)
ReplyDeleteCW,
DeleteYou snake oil you!
LOL!
Smol,
ReplyDeleteFor traders & systematic investors, following one's system is non-negotiable. Whether that be trailing stops, profit stops, buy-and-hold when company fundamentals still intact, or bite-on-a-stick-and-buy-more-when-blood-in-the-streets.
Problem starts when investors begin to modify or invent rules and reasons on-the-fly, usually when prices are dropping like a rock.
Retail will also parrot ... Rule #1: Don't lose money. Rule #2: Refer to rule #1. LOL.
Basically what dear old Warren meant is be aware (beware) of what you're buying.
There's a difference between a temporary -50% drawdown versus a permanent -50% loss (or -100% loss). Dividends or no. ;)
And even if drawdowns are "temporary" (1 month? 2 years?), your daily expenses (and big expenditures or emergencies) are not. So (1) keep some dry powder / emergency funds, and (2) be aware of valuations that you're paying.
It isn't any surprise that the only stock WB deemed "cheap" enough to buy in the 2nd Quarter was his own company stock, buying US$6B worth. But not enough to offset his cash-gushing businesses which ballooned his cash pile into an eye-watering US$144B.
And Warren's been busy selling in the face of continuous all-time-highs in the last few months. Harvesting...
WB joins Uncle8888 with the good problem of "rotting cash" lol.
Spur,
DeleteYou blasphemous you!
How dare you suggest Warren Buffett got sell stocks!?
LOL!
I just love it when Warren said derivatives were weapons of mass destruction, when he himself has made millions off them.
And his quick in, quick out dabble in gold mining shares when we all know his view on the barbarous relic of a pet rock...
Warren is a bit like CW, not afraid to do a bit of trading on the side when the opportunity presents ;)
I'm a hybrid.
Entries, I'm discretionary.
Exits, I'm systematic.
If we keep changing or makeup rules (moving the goal posts like big daddy) in our trading/investing, stop saying little lies to ourselves...
Just admit we do not have a system.
Or any Method when it comes to the 3 Ms...