It was a bit tricky today, with minor rotation out of some momo stocks and into others. The thing about trading high beta stocks is the eventuality that there will be days you will lose money while the market is trending up.
The point of investing is to make money and compound those returns over decades. That is how we make the big money, yes? So, and it goes without saying, your sole purpose is to never blow up, never place yourself in the inextricable position of ruin. How do we accomplish this?
Delete the Wall Street Bets bookmark and stop talking to fucking idiots on Twitter.
In order to ensure market participation you have to be long the stocks working now and your position sizes must be small. I always take a 5% weighting for all positions, meaning a portfolio of mine is 20 stocks. There are times I will up the ante. Last year this time I went 10x BLUE in order to prove a point. But, more or less, 5% weighting is max.
When trading, if you’re not moving in and out of 20 stocks a day, you’re not really trading and not honing your skills. There are days I spin myself to death and trade 70 stocks. Rarely is there a day I trade less than 10. To become good at anything, you need to practice, naturally. And to make sure things are moving quickly — take the profits and the losses fast. I usually book them at 4%, but will permit winners more leniency to the upside because we are in a bull market. I endeavor to make money on the volume of my wins, not the magnitude of them.
Lastly, and I cannot stress this enough: take half your money and place it in a diversified quantitative portfolio or something equal to it that will track the market closely. For morons, buy QQQ and you’ll do fine. As traders, we are prone to burn out and enter in and out of streaks — which makes returns bumpy. Moderate that inevitability by having a large portion of your liquid net worth safely ebbing against the market’s upwards trajectory.
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Literally stayed buying dips since election day and the market still isn’t even overbought yet.
Dow 36000 is finally happening after all these years. Just a whole generation later than that douche thought would.
Do you keep much in fixed income?
I hope to hell he doesn’t, with bond prices near all-time highs
(interest rates at all-time lows).
A reversion to normal rates would mean a loss of half of
his principal – a ten-year bond now selling for $15,000 would
drop to $7500.
Define normal