When you post 100 things in a few months, there are bound to be some ideas that don’t work out. Let’s see what went wrong in some of my worst ideas shared here this year.
I shared this presidential cycle seasonal pattern where selling usually comes in the summer after a new president from a new party is elected.
This year, the pattern hasn’t worked at all. Is it a sign of a strong market or is this just happening because no real legislation is getting passed? I think the answer is it’s a strong market. Maybe a sell-off happens after a couple reforms pass, but that’s outside of my scope of competence and it’ll show up in the chart if it happens anyways.
In years past, I’ve jumped into market short trades on just a few pieces of data that fit my bias. Instead I did more macro trading (commodities) and enjoyed summer waiting for good setups. Why? Because forcing trades based off your bias is one way you get killed.
SNAP has been the poster child of a flop IPO. I posted a ton about SNAP pre IPO. I was very bullish for 2 main reasons. First, the sentiment was and is so lopsided negatively. Second, i’m bullish on a few things SNAP has going for it. It’s a fun and positive experience as well as a new way to communicate.
One thing I overlooked is how almost all popular IPOs flop in the early stages these days. The incentives line up across the board for these IPOs to be priced at bullshit high levels.
The other thing worth noting is there has not yet been a single technical reason to buy SNAP. Because of this, I haven’t forced myself to own this thing.
If this was earlier in my trading career, I probably would’ve bought this thing for a dumb reason and eaten a 25% loss.
This is another one I’ve written on multiple times. I thought after earnings in January, a 65% or so decline from all time highs was just too much in a solid brand. The idea is yes you want to trade price, but at a certain point sentiment, valuation and conviction in your ideas matters.
Unfortunately I haven’t learned much here. It’s a stock in a downtrend in one of the weakest groups. It’s probably just the wrong kind of stock to use such a strategy in. Obviously such a strategy would work better within stocks in rising long term trends.
The Common Theme
The #1 theme here is it pays to focus on not losing. You’ve got to put yourself in position where, if your ideas are wrong, you lose small. Conviction is not a substitute for risk management.
Trading price is the way to manage risk. Managing risk allows you to keep calm and collected. Keeping collected allows you to see things clearly. Seeing things clearly allows you to capitalize on your best ideas while risking the least. Maximizing your wins and minimizing your losses is how we win the game.
Thanks for reading. Trade ’em well