Stay in the game (And don’t forget today’s chat at 2pm EST)
Well, another near panicky open has again subsided into something more gentle and we’ve likely washed out yet more of the weaker-handed longs with these repeated 1-2% intraday down swoons. I’m still waiting for something a little scarier/harder to buy before I get agressive again. And if I miss the bottom without having loaded up again? That’s okay, it’s not about catching the next bottom — it’s all about making sure I maximize my gains and minimize my risks to safely and slowly but surely continue to grow.
Do you know anybody who’s still at an all-time high in their portfolio right now? Do you remember when I asked you why you would possibly expect to always be at an all-time high in your portfolio? See, as I’ve preached many times before, we will all have drawdowns (a “drawdown” is a hedge fund term which means a pullback from the highest point your portfolio has ever reached) and every bull and bear, long and short I know is in the midst of a drawdown right now. Did you think this was an easy business? Did you think I had a magic bullet to avoid all drawdowns and to continually, nearly every day and every week and every month, push our portfolios to new all-time highs?
Most of you have been with me for a long-time now, either years or at least months, and you know that such expectations are impossible to reach in real life with real money. It’s these times when it gets hard that truly separates the good traders from the bad traders. Bull and bears will both make money at various times — but only if you can maintain your discipline and not allow your emotions and unrealistic expectations to drive you to make mistakes.
I had a friend who was daytrading some money he inherited a few months ago — despite having a subscription to TradingWithCody.com, he was trying to game intraday moves in Apple, the SPY and other high beta stocks. He’s already out of the game. And a college kid who was a subscriber recently sent me a tragic explanation of why he was having to cancel his subscription subscription to TradingWithCody and exiting the stock market for a while after blowing himself up by getting overleveraged in a single stock (Green Mountain — a stock I’ve repeatedly warned against and told you guys is probably a great short…it was down 50% in one day last week).
These are real-life stories and they are tragic. I wrote the college kid back telling him to keep his head up and know that the money he blew in his greedy trading strategies right now should simply be written off as one of the most important educations he’ll get in his life and that with all the money and savings he will make for the rest of his life he knows now exactly what not to do.
On the other hand, I’ve been getting some great and inspiring emails from a lot of you subscribers who have learned to become more patient and more balanced in your trading and investing. Additionally, the very reason I give soldiers and police officers complimentary subscriptions to TradingWithCody.com when they ask is because I’ve met so many hard-working public servants over the years who have been blown up by penny stock scammers and momentum-chasing chart-reading newsletters that I quickly learned how it’s professional traders and Wall Street veterans aren’t the only ones who get swept up in greed and fear. And the good news is that I’ve heard from several police offices and soldiers who have talked about how important it’s been to have some of the investment and trading perspectives that they’re getting here.
The point of all this is that, yes, this is a hard business and that we’ll all be challenged by the markets. Stay in the game.
And don’t forget about this week’s Live Q&A with me at 2pm EST at http://tradingwithcody.com/chat.
