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My charting the past few weeks hasn’t been an “A“. There’s no grade high enough. I’m thinking Nobel Prize would be about right. As for my trading, I usually castigate myself mercilessly, but I’d say, oh, a B or B- or thereabouts. Not terrible. It seems like eons ago that, last week, they spoke of “narrow tariffs“. What a bunch of bunk.
Every single position I have is a bearish one. Everything I’ve been talking and writing about is coming true. The market is in a free-fall, and the moment it opens, my portfolio will be worth a lot more.
Having said that, let’s explore what an inveterate screw-up I am, and we’ll begin with Rule 8 from my Trading Rules:
VIII. EMOTIONAL AWARENESS IS YOUR GREATEST ASSET – Feeling super-confident and giddy? You should probably be in all cash. Feeling demoralized, frustrated, and out of synch? You’re probably close to a great entry point.
Let us also examine a comment I made yesterday, which is definitely out of character of what I’ve been saying for a long time:
Well, slip me into a pink taffeta dress and call me Peaches. The market is collapsing, and I’m not NEARLY short enough. Not even close.
Let’s back up a bit. I’ve been feeling rather jerked around by the market this week. So much so that I trimmed the sails quite a bit. Among the four accounts I trade, the allocation levels I’m at are 40%, 56%, 60%, and 65% allocated to live positions. In other words, I’m at about 50% cash.
That was a comforting thought to me when the Prezident lumbered out to the podium and stated that there would be a 10% “baseline” to tariffs, which sent markets around the world exploding higher. After a little while, though, he clumsily pulled out a big poster board like those a kid would use for a science project and which displayed the much, much higher than 10% tariffs, and the markets absolutely vomited all over themselves. My adoration of that 50% cash vanished INSTANTLY. Jesus H. Christ, man!
“Any time you make a bet with the best of it, where the odds are in your favor, you have earned something on that bet, whether you actually win or lose…”
— David Sklansky, The Theory of Poker
Most investors don’t lose money because they lack intelligence. They lose because they mistake outcomes for skill.
A few winning trades, a hot stock tip, or a lucky streak can seduce even the most rational person into thinking they’ve cracked the code. But if you’re serious about trading—especially options—you can’t afford to play that game. You need a strategy where the odds are tilted in your favor, not just this week, but over years of repeated decisions.
(more…)Among my fifteen bearish positions, there are only two blights, each of which is down about 10%. Instead of dumping these, I’ve actually been augmenting them.
The first is the oil/gas producers ETF symbol XOP, which has been stomping higher for weeks, thanks to crude oil’s growing price.
