The rout in high beta stocks is palpable today, off by 3.3%. We are seeing a slight recovery now, led by $SMCI which is down less than 4% now, up from -11%. I have been nibbling on some stocks here, but have hedges in place and have a portfolio beta of 0.35 with 23% cash.
My intent here is not to make 3 or 4% tomorrow. To achieve such returns would amount to a high level of risk. If you tank another 2% tomorrow, I might draw down 3 or 4% in a high beta portfolio, squandering a significant portion of my +9% gains for 2024. You have to understand the manner in which I operate to understand investment excellence.
Life is long and there will be many days to achieve 3% gains with moderate risk. I am not in a rush to make all of the money now. I have no pressing needs and do not work for anyone but myself. My pacer rabbit is my quant and I am beating it easily.
I could see why a younger man might want to risk more in order to potentially make more and to help finance a lavish lifestyle — the things you were trained to believe what was important in the movies. But the truth is easier to understand and to attain. You have a far greater chance of attaining wealth by the time you’re in your 40s or 50s by simply compounding returns and adding to your investment accounts over the next 20 years than a YOLO trade in options that expire on Friday.
Trade smart and reward yourself later for a long rich history of investment excellence instead of a wild eyed gambit that can only work out of luck.
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