It is fun to talk about winners.
It has been relatively easy to win over the years as I am an optimist and able to live a life in the sun, on the beach and in the software industry.
So, how is it possible to still be so wrong all the time, most recently during the crash in March of this year?
One reason is, to give myself a bit of a break, investing is hard.
I was well prepared going into the crash/panic, and was writing and podcasting to keep me on a plan ‘not to panic’ and to buy certain stocks at certain levels. I did all that. It is my selling plan that cost me.
One big reason for my mistakes… I was looking at data from the last recession. Tech stock were not spared in the last recession. Charlie shares the data:
I should have been solely focused on price action and I let the wrong data into my analysis. In a world of streaming information and feeds, I did not get quiet enough. I hope to be smarter during the next crisis/panic.
Another mistake was selling all of my March buys of Restoration Hardware, Zillow and Tesla. From my sells in April (great quick gains), the three stocks have risen on average 80 percent over just three months.
The easy answer/solution is to create an algorithm that buys every time I want to sell, but my own risk tolerance would not deal well the volatility and drawdowns and some semblance of peace of mind and sleep matter to me.
A more practical solution is to implement mechanical trailing stops on my positions so I am more disciplined selling winners and allowing myself to own/hold over twenty-five stocks during panics ($VIX over 40 -50). I know how to do this and have started to implement it. Currently I own more than 25 stocks as the rally carries on and have mechanical stops in place on many edge case positions.
The biggest advantage of being a ‘retail’ small investor is you are NOT competing with any index. You are in charge of your time frame and money. You never have to short a stock and you don’t need to own a stock of a company you would not buy for your kids. Keep it simple.