Some lessons I learned (or relearned) the last few weeks:
1) Keep more dry powder available than you think you need. There's always a sale somewhere.
2) Watch both index and individual stock technicals when opportunistically allocating or removing funds to maximize value.
1) Keep more dry powder available than you think you need. There's always a sale somewhere.
2) Watch both index and individual stock technicals when opportunistically allocating or removing funds to maximize value.
3) When one feels certain about an opportunity, that may be when it is appropriate to be the least certain. Always double check: technicals, valuation, investment thesis, and allocate methodically. Any position can lose value, but sales are a good thing if cash is available!
4) Keep a shopping list, and keep capital set aside to buy some of the stocks on that list if they reach your price objective. No FOMO, though. Disciplined and opportunistic purchasing during drawdowns is deal.
5) Similarly, keep a sell list. Set price targets for positions.
5) Similarly, keep a sell list. Set price targets for positions.
6) Selling covered calls during euphoric times can help to raise some cash.
7) For each new position taken on, set maximum downside risk. Whether that risk management is achieved through a normal stop, a trailing stop, hedging positions by buying puts/selling calls or otherwise.
7) For each new position taken on, set maximum downside risk. Whether that risk management is achieved through a normal stop, a trailing stop, hedging positions by buying puts/selling calls or otherwise.
8) Everyone has their own view of the market, and their own style of investing/trading. These styles reflect one's own personal strengths and weaknesses. Strengths should be built on, weaknesses should be identified and worked through.
9) Often the market "feels" the best when it is actually the most risky, and "feels" the worst when it is the least risky. That is to say, extreme greed tends to lead to sell-offs and extreme fear tends to end them. Technicals often confirm the market bias, especially RSI & BB.
typo: deal = ideal
10) Remove emotion from investing/trading. It does one no favors. I've been relatively successful about this, but there are certainly days where it is more challenging than others. However, I am using those days to identify what those emotional triggers are so I can work on them.
11) When a plan doesn't work, there's no shame in exiting and moving on. There is, however, shame in turning a trade in to an "investment" because it went upside down. That not only encourages bad behavior, but it also induces an opportunity cost that is another form of loss.
12) Always be humble. Or else the market will humble you. It is a wonderful teacher, but we must be prepared to learn. After all, we all pay the tuition to attend the school of hard knocks in stocks!
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