O/T: Cosmo does his 'swan song':
My friends, traders, (and expatriates over on SDII..I know you little weasels are watching...)
Dow Chemical had a nice little run today, strong close. The chart still looks good. Nice pop on a negative earnings surprise today. The pop occurred during the conference call on earnings, and I suspect it had to do with Dow's discussion and disclosure in re asbestos exposure. For disclosures sake, however, I am noting I closed my position at 29.64, 10K shares.
This has more to do with personal reasons then the chart. I have 'earned' back my losses from December, plus an extra 3K. That would be 52K for one months trading. Dow Chem alone has given me 35K in a couple weeks, and I am going to take the money.
There comes a time when each of us needs to re-assess how we spend our time and efforts, and for me, this is that time. I have found that I have been obsessing way too much on trading. While everyone's trading styles are different, what has worked well for me is to hone in on special situations and put in huge % positions. Two back to back homeruns (MDR +SMOP) + RRC in 2000 accounted for 2/3 of my 300% return that year.
There is an old political story about a frog...if you throw him directly in boiling water, he will jump out. If you slowly turn up the heat, you will boil him alive, as he will not notice as the heat turns up.
I have invested for the last ten years, actively the last three. Thanks to some good early choices, I now have ten times the $ I started with in '92. The first year I traded was a wash. The second year, I made 300%! (Thanks everyone from SD!!!) Last year, a push, and this last month, 12%.
I realize that I have let my emotions and my sensibilities get a little bit ahead of myself. When I first started actively trading 3 years ago, my positions were in the 3-5K range. Today, I have been jumping in and out of positions up to 400K. That would be 'out of control'......
Fortunately, with the help of most of you on this board, I have won more than I have lost. But, after wiping out 48K in 4 days in December (not listening to Dabum and shorting the HB's anyway) I gave significant pause and thought to what I've been doing. For psychologies sake, I felt I had to quit while I was ahead.
This month, I have traded back all of that for a net +52K. So, I made back my losses, plus an extra 3K. Therefore, I have met my objective. I am at my all time high. I'm ahead, and it is time to stop.
Three years ago, if you had asked me if I would have 'sniffed' at a 48 thousand dollar loss, or 52 thousand dollar gain, back to back month to month, I would have told you you were crazy. Today, after taking profits, I found myself congratulating myself with an attitude of 'of course!'.... The alarm bells started going off....
There is a certain amount of mental 'self-deception' we must go through to play these high stakes gains. The danger is, that the 'its only paper' attitude, or 'I'll get it back' self-confidence can roll right over the reality that we just may be more lucky than good.
Those who care about me have been suggesting I have gone from 'risk taking' to gambling, and I must concede they are right. I have very smugly been telling myself that 'as long as I am winning 60% for the 40% I lose, and I keep getting 60/40 odds, I am not gambling, just risk taking within statistical parameters.
FWIW, I got my account statement back for last year. I traded close to 5 million dollars in transactions, and made 50K. That would be a 2% return on each net round trip buy/sell. For a beta of +/- 10% on my portfolio at any given time, I figure that I just may not be all that good...more lucky than good. Now, while I smugly remind myself that I significantly beat the major inexes last year, I just have to go back to that figure, and the risk/reward.
And I hear my father quietly sharing with me a story or two of people he knew who, once touched by fast and easy money, could not stop once their luck ran against them. First re-mortgaging the house, debt, ruin, then alchohol to daub the pain, etc....
So, I listen to the sound of the car keys jingling in the background, and I realize it is time to go. It has been enormously exciting, and very rewarding. I never dreamed I would have a net worth exceeding a half million dollars by age 45. To many of you on this thread, that is a small percentage of your net worth. To others, that is an impressive chunk of change. All of you have helped me, and I am grateful.
I will certainly check in from time to time. But, I think I need to take a breather, and let this frog jump out of the hot water of gambling before he gets boiled alive.
Time away from the bouncing numbers on the screen will give me the time to get the common sense back to diversify and invest rather than trade. I'm thinking maybe two or three months. In the meantime, I will be reviewing my options for investing as apposed to trading. Again, I am grateful to all of you for your help, and your cyber-friendship. A number of you I still hope to visit in 'Vegas' some time soon. (speaking of gambling!)
But, I post this more personal of posts, discussing this issues of 'gambling' and self-control, in case any one else is experiencing the same issues. Fortunately, at this point, my story is a positive one, due in no small order to the level of intellect and combined expertise we have shared with each other.
Having gone from 3-5K positions on a 50K portfolio to 400K positions on a 500K portfolio is not mathmatically consistent... I should be playing 30K positions max and have not been. In time, I'm pretty sure I will, again. But for now, I need to cut 'cold turkey', and get a financial planner or another individual involved to slow down impulsive decisions.
What a concept: diversification!
I will be checking in from time to time, as I do enjoy the wit and comraderie here, not to mention some pretty good ideas! But it may be a while....
Best wishes to all,
Cosmo |
