Real Talk: Save the thesis for graduate school.


As I write this article, I can’t say I don’t sit here a defeated man.  A weaker man would probably sit here and lie, but I don’t live like that.  I’ve taken my YTD gains from high of 17% back down to 12% during this “I can’t believe it”, “can’t be real, it’ll end tomorrow”, “europe is finished”, “merkel won’t budge!”, “can’t believe it’s not butter” rally.  It was October 2011 that I finally decided to put up real money and get into the market so I guess something like this is to be expected. Even though I’ve been watching the markets/dabbling time to time from 2008 it wasn’t with any real effort.  It was an easy start to say the least as I rode the uptrend to the highs, saw the signs that we were running out of steam and went to cash.   After that, shorting  breakdowns during the correction were simple because we had FOLLOW THROUGH.  Got it? Follow Through! That’s where someone like me went wrong during July.  This is where you need a whole set of different rules because there was no follow through to the upside or the down side. It would be 3 days up & 4 days down, 5 days down &  4 days up, etc.  This tape of tape from June to July calls for hit and run trading where you bat singles and you take the fucking profit.

What can you learn from all of this? Having a thesis or opinion is just too costly.  Although someone might reason with me that it’s the “House’s Money” I don’t know how anyone can take that serious .  That’s exactly what a loser will tell you in my book as a LOSS IS A LOSS.  I can write a book on the reasons why this market shouldn’t be at 1400 with all the headwinds we are facing globally it’s incredible.  That’s precisely the wrong question to ask though and it’s too costly.  Focusing on too much of why instead of what the market was actually doing is how I got thrown off in July.  Constant thoughts about fading each mini rally up only to be slammed as it continued even higher!

Almost two weeks ago I finally realized this was going to get worse before it got better so I decided to back away completely to get better objective view on the market.   After hitting a cold streak and the 50day firmly sloping up I knew it was time to take a break.  I came back late last week, with a different outlook and risk management.  Switching to tiny position sizes just so I could bat in a few runs to get in the game again.  Although there have been a few strikeouts, overall the average is back to where it should be and I’m not holding any stupid thesis about what should happen.

So yes, I’m baffled by it and it seems like we could break this rising channel any day now, but you might go broke fighting it all the way up before you ever get that to happen.  The market could very well go down 500 pts tomorrow and making it seem like the thesis was right all along, but think of what you could’ve saved yourself during all of this as you’re busy playing catch up.  Next time, it’s better you save the thesis for grad school where it won’t hurt you like it does in the market.


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