21 I took a serious loss to my personal account by selling YELP and ZNGA, but I am seriously happy to have that monkey off my back.
My mom called me today to thank me again for saving them in the neighborhood of $800k by pulling their 401k’s out of the market and into money markets. Now she wants to pull money out, that will induce a fee, to add to the money I am already managing for them. I see retirement looming on the horizon. She also asked me when I would be able to help my grandparents move out of their townhouse into a condo up in Sacramento. I have been managing their small amount of money, and have made them enough that they can now “go out to dinner on Friday’s and out to brunch on Sunday after church.” This is a seriously big deal for frugal ass old people. Furthermore, now that their mortgage will be less they are giving me more money as well. This is all well and good, but is stressful at the same time. I have most of their stuff invested in high yields, muni’s, and some value small-caps. At least they know I am not going to “Gorman” their money and tell them they were naive.
Something that really bothers me about the west coast is that a lot of tech companies are here, and they don’t like to come to work before 10am. Thus, someone like me, who wakes up the first time at 5:45-6am to see what is going on pre-market is on a completely different schedule. The reason this really bothers me is that my Brazilian Jiu-Jitsu class is from 7-9pm, that is like midnight for me and it is the ONLY time I have during the day where my Fiance and I can relax. Granted I do stay up late to see what is going on in Asia, but it is in a close to vegetative state. Ideally for me class time would be 4pm, which being that I am more on East Coast time, is like my 7pm. This leads me to my next point. I need to start getting my priorities straight, I need to get back to being a well oiled machine, which means eating, (not just eating right, sometimes I am too lazy/busy to eat and just let myself get catabolic), getting back to a strict 6 day training schedule, and figuring out some way to do BJJ. My current weight is 258lbs, my absolute ideal weight is between 245lbs-250lbs, it’ll take about two-three weeks.
I plan to achieve the above through the obvious, taking time to eat, and also managing my stress. The main way I plan to manage stress is through not riding out the volatility anymore, it’s not worth the days it takes off one’s life. From now on if one of my positions drops 10% or more it is getting cut from the team. In the end, sanity is worth far more than proving a thesis is right. Indeud.
P.S. I really need a pic of Rob Stark and/or Jon Snow on here, I’m a Stark.
21 Responses to “Weekend Thoughts of a Young Money Manager”
The OG
Have yet to take my losses on YELP or ZNGA. I keep telling myself, it can’t get any worse right?
Rhino
I’d rather have that horrendous whore out of my book, if we rally I can always buy again.
Berserker
You might want to have a think about scaling in and out of trades… establishing “starter” positions, reassessing your thesis, then developing a full position over time. You can sell out in the same way (provided your original thesis still looks sound). Other money management tricks might work better for you, but being all-out on hard/fixed stops (especially big round numbers – like 10 percent) are tough to live with, especially if you’ve entered a trade at a common technical support/entry area.
Rhino
Yeah, I’m not really a technical dude at all, and I did scale in, it just dropped so fast. The 10% is just a ball park number, it will depend on thesis, position size, etc. I’m just saying that I’d rather cut my losses then ride the stress tsunami.
noodle
Rhino, you sound like a pretty strong dude. Right on.
I feel ya on the time zone thing, tho only 2 hrs diff here. Also I agree about always being able to reenter. Losers can take your time and attention.
Rhino
Yeah man, I wish I would have been looking for new longs/shorts instead of obsessing over what I had in the red.
leftcoasttrader
Trading on the west coast sucks. I was really into scalping futures at one point back in the day and had to wake up extra early to be ready for the pits to open. 4:30am is not a time I enjoy. I’d slam a cup of coffee, pump the gangster rap, be jacked and ready to go before 5 and ready to go back to bed by 8.
So much healthier now that I’m out east.
Rhino
I know man. I wake up, go back to sleep for an hour or so, wake up again etc.
elizamae
It is tough.
I feel like I cannot prepare prior to the open because waking up earlier than 6 just is not happening.
I also feel like I would be able to get a much better grasp on my plans for the day if I wasn’t thrust into the thick of it before I can even drink a cup of coffee.
Looking forward to heading east myself.
fake amish
got some family money in munis also. dumped half a month ago. going with preservation over a yield that can dissapear in a day when the right bearshitter blows up the market with one comment.
Rhino
I really like PMM check it out.
fake amish
a muni fund. those things are scary sometimes. will look into it. thanks.
fake amish
*disappear
elizamae
Try to avoid letting the pressure get to you.
Even if it was said with the best of intentions, your mom asking when you can help your grandparents move is going to provide external stress that will shift your focus from A (beating to market) to B (wanting to make money to help your family).
The thing is, if you take care of A, B will be a byproduct of that effort, but it’s really hard to block out that voice in your head that wants to focus on B, you know?
Good move on bailing with your parents account…I gave the “get the hell out of the water” order 2 weeks ago myself.
P.S. how the hell can someone your size “forget” to eat? I have never experienced that problem…however I forget not to eat all the time.
Rhino
Moving east is def not a possibility for me. Im not worried about helping them move, merely saying its daunting managing what little money they have left at 86 years old. Currently at the gym, I’ve got a couple great stories for you guys later.
elizamae
Gotcha, after rereading I realized that was a bit presumptuous.
Rhino
No worries man, a lot of times on the internet, texts, emails, it’s hard to get “the true meaning.” My fiance says that I stay this big because I drink beer. I ate well today though and just got a 1.25lb halibut filet for us that I am going to grill.
Schadenfreude
The New York open is at 05:30 local time for me and the market closes at 12:00 noon. Because of this, I do all my actual buying and selling based on closing daily price only.
This has been a huge advantage to me in my development as a speculator and probably one of the main reasons I haven’t gone bankrupt. It has forced me to expand my time horizon and remove myself from the chaos of the intra-day moves. I might check in on the market in the morning, but all I pay attention to now is the last 15 minutes before the bell.
elizamae
Humm…that’s a very interesting approach. I’d be interested to learn more about that if you felt like sharing.
Schadenfreude
First and foremost, any speculative endevour must fit around your lifestyle and personality. My system will not work for you. I am a firm believer that you have to build your own from the ground up and treat it like a business if you want to succeed. No shortcuts.
For me, I am a father, a husband, a son and a full time employee in a career I enjoy before I am a market speculator.
I have removed all illusions about the marketplace. I don’t aim to make 1000% return on my investment this year. I don’t aim to tell my boss to shove it and daytrade for a living next year. Such goals are unrealistic for me. If I don’t lose money this year, I have beaten 90% of everyone else. If I beat the SPX this year, I am crushing it. Investing and speculating is a marathon, not a sprint. It is not easy. I aim to make a healthy return over time and improve my methods.
I tried to ‘day trade’ or ‘swing trade’ or whatever you want to call it when I was younger. Lever up on margin, watch the 60, 30, 15 minute charts and go for it diving in and out of positions like a wild-man. As Livermore puts it, this is behavior consistent with the ‘get-rich-quick adventurer’. The bad part was I actually made lots of money really fast, and then lost it even faster. Early success probably set me back a few years. That sort of gambling was fun and exciting, much like the ‘Let it Ride’ poker themed game at the New York, New York casino in Las Vegas that I once sat at for 26 hours straight. I ‘put my money to work’ all the time. I didn’t want to ‘miss a good trade’. Overall, I lost vast sums of money and my broker was the only one getting rich. Plus, I was miserable. Checking the pre market at 04:30 AM every day, stressed out, sitting at the computer pouring over non-sense charts all morning, looking endlessly for an edge, a fool proof system or indicator or guru that could show me how. Living soaked in fear and greed everyday is no way to live at all. It is emotionally draining and I clearly didn’t have the mettle for it. Frankly, I don’t know how anyone does it over the long run without either blowing out or burning up. It is one thing if you earn a living on the floor of the exchange or on a trading desk somewhere, I can clearly see how those guys can trade their own accounts with an significant edge. I surely didn’t have one. After a multitude of staggering losses, seminars, books and subscriptions, guru’s, systems, I finally gave it all up and built something that does work for me from the ground up.
For me, I use a mix of trend-following / trend continuation setups (google: 1,2,3 method, 9/30 entry setup or floor trader method for more info to see what I am talking about) price action observation, CANSLIM methodology with options strategies on very liquid, big name popular stocks. Good trends and good trend continuation setups on daily charts don’t come along everyday or even every month, but when they do, it is a high probability trade with defined risk and significant upside. I chose this method because it is the simplest, easiest, most agreeable form of speculation for my personality and lifestyle. I am good at it, and that is what I stick with.
Every trade I enter has been planned for days, or perhaps even weeks. I did my homework,and hopefully covered every possible angle. I have planned my reaction to stock price movement before the stock moves. I have plotted different scenarios and tried to plan how I will react when the stock moves. I never just see a chart pattern and instantly pull the trigger. I want as many variables in my favor as possible and have been waiting and watching.
Entry, add, exit and stops are triggered solely on daily closing price. I refuse to stress out while these stocks swing wildly one way or another every day and try to scalp a few points. I want the big move, the 200 points on AAPL, the 300 points on PCLN, you get the picture. I buy in 1/3rds, adding to winners on further entry signals and confirmation. My position is never more than 15% of my account, so even if I get the dreaded overnight ‘gap-down fever’ on my position, it isn’t a ruinous loss. My stop-loss is right at 3% of my account and trails price as it moves in my favor. I never have had more than 3 positions like this on at once trading this way, more than that is too overwhelming and unnerving for me to handle.
I don’t follow lots of different stocks and different markets and different setups. I don’t use screeners and pour through 50 charts per day. Instead, I focus my efforts on only a few different quality stocks, with big, deep liquid options markets that are high beta and trending. I also watch the SPX, the 10 Year Bond, the USD and the VIX which all provide useful clues about price action. This is all I need to see. I am not a portfolio manager, nor am I a spectacular stock picker, so I don’t try to act like one. I am either long, short or cash. I don’t play long this and short that or ‘hedge’. The market is either trending up, down or sideways and I am either long, short of cash respectively. Luckily, all I need is trend and risk management to win.
I am at the point in my speculation where I am fine tuning and making subtle adjustments to maximize returns. I have a basic strategy built that works for me. I know I can find trends and get on the right side of them for big winners sometimes. I know I can cut losses short and make good returns consistently. My primary concern now is dealing with the destructive emotions of fear and greed that seek to undermine my performance. I focus more on psychology and avoiding falling back into ‘the get-rich-quick adventurer’ mindset. This has been and always will be the biggest struggle for me and most other investors. That is also why I don’t watch anything but the last 15 minutes of trade. I am too easily compelled to action, all too eager to ‘do something’ usually to my detriment if I sit around watching the market all day.
There are a few very good sources of information on the internet that I read consistently. Chessnwine video market wraps are very good, and generally, reiterate what I am seeing. That is what brought me to iBC. Most of the subscriptions out there are great for teaching you someone else’s methods, but I found out the hard way, they probably won’t work for you.
Anyway, hope that helps explain where I am coming from.
Rhino
Agreud