Morning Thought

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Multi-month corrections and consolidations during bull cycles can be as challenging as any market conditions. During the trending periods of the bull, unless you are adamant about fighting the tape, it may feel as though you were playing at a fun blackjack table inside the casino, where all of the players win, the drinks flow freely, and a good time is had by one and all. It almost feels as though it is too easy. The dealer and pit boss do not panic. In fact, they congratulate you on your success and chat the whole table up, making sure the cocktail waitress makes multiple visits to your table.

Once the multi-month correction sets in, though, things take a turn for the worse. All of a sudden, the dealer gets hot, and you start catching some unlucky breaks. The cute little ATM machine that was once your blackjack table has now turned into an ugly monster looking to devour your dollar bills. Some of the happy-go-lucky, laid back people at your fun blackjack table start getting frustrated and make bad decisions with their cards that they previously had not made. Others simply walk away and take the money they have left with them.

You, however, choose to stay and play. You know that the table is cold, so you tighten up and play extra conservatively, betting the table minimum and not pushing your luck until the tide turns. To be sure, you still double-down where appropriate and split aces and eights. You take on the challenge of maintaining disciplined play, while everyone else at your table goes”on tilt,” getting drunk and making stupid mistakes with their decisions, out of frustration. If you can survive this tough period with capital and composure intact, then you can get through anything, and you will be that much better for it.