[Lemmo]

I've been actively investing for about 5 years now but have increasingly gotten into a mindset where my value as a person is entirely dependent on how well I've done in the market that day. I lost about 60% of my worth in the 2008 crash, clawed back so I was up 18% over the 2008-2011 period but have taken losses so I am now down 3-4% over the 2008-2012 period. I keep running my old trades through my head, calculating what my net worth would be if I'd avoided my worst trades, etc. This leads to self-loathing and a loss of self-confidence that contaminates other aspects of my life. Does anyone have any tactics for compartamentalizing stock market failures so you can continue to function outside trading hours?

[WesternCancer]

I don't invest (don't have enough money or knowledge) but I do have some general advice to give.

First as someone else in another thread said you haven't lost your money until you sell it.

Secondly dwelling on your losses and what could have been is the easy way out. The only thing you can do to avoid that is analyze what happened and look for indicators or smarter investing options in the future, use your failure to give you a knowledge base for success. Instead of worrying about what you did do, plan what you will do to to become richer and richer.

[SimonRierdon]

As an older guy that has been through ups and downs since the late 70's, all I can tell you is that if you aren't concentrating on certain market sectors, you are going to get hosed. After the dot.com crash, I started to think to myself, "What do people really need and can't do without?" Number one is oil, thirty percent of my portfolio is in the big producers, Exxon Mobil et.al. Nice returns on stock prices and dividends to boot. Next is food producers. Find the ones that don't offend your sensibilities, I refuse to invest in Monsanto for one because I think GMO's are a backside to poison a goodly portion of the population through the food supply. There are however, some good ones out there. Another third is in mining companies, especially metal mining companies. For some reason, these are way undervalued these days and are returning way above inflation in real numbers. Last but not least is physical gold and silver but mostly silver. It's nice to have a chunk of metal in your hand that goes up 4-5$ it seems most weeks. Stay away from traditional equities and especially mutual funds and you should be fine.

[Lemmo]

I'm not that concerned with my investment strategy. I've outperformed the market. I study, consult with experts, etc. These are tough times for everyone. I'm more interested in hearing how regular investors get to a level of stoicism where, say, a loss of 2% of your portfolio on a down day doesn't personally gut you (i.e., how to get to a point where you can take these fluctuations in stride).

[November]

Quote:

how to get to a point where you can take these fluctuations in stride

Accept the fact that trading is a high-risk practice. You're always going to have losses. Even the top performing hedge funds and day traders take pretty big hits every now and then.

The key is to just push through it and realize that loss is a part of the game.

It's the same as girls: you're going to get rejected every now and then.
Don't let those rejections/losses hit your ego. Just keep playing.

[Lemmo]

(03-10-2012 09:10 PM)November Wrote:  

Quote:

how to get to a point where you can take these fluctuations in stride

Accept the fact that trading is a high-risk practice. You're always going to have losses. Even the top performing hedge funds and day traders take pretty big hits every now and then.

The key is to just push through it and realize that loss is a part of the game.

It's the same as girls: you're going to get rejected every now and then.
Don't let those rejections/losses hit your ego. Just keep playing.

My mindset is analogous to oneitis. I just focus on the trade I should have made and the level of wealth I should have had by this point.

[AntiTrace]

protect with stop-loss. If i do get caught up in a losing trade, I keep monitoring other stocks. If I see a good entry point on another, ill sell the losing stock and move in on the new one. Some people say "I havent lost anything untill I sell." Nothing but your dignity I guess. You loss every single possible winning trade you see the second you start waiting to "break even" again on a losing trade.

[Lemmo]

(03-11-2012 12:15 AM)AntiTrace Wrote:  

protect with stop-loss. If i do get caught up in a losing trade, I keep monitoring other stocks. If I see a good entry point on another, ill sell the losing stock and move in on the new one. Some people say "I havent lost anything untill I sell." Nothing but your dignity I guess. You loss every single possible winning trade you see the second you start waiting to "break even" again on a losing trade.

Yeah, I learned this the hard way when I was a novice. I always put in stop orders but am often taking a 3%+ loss before the order is triggered rather than having the discipline to get out after a 1% loss. Plus, I am often trading volatile instruments so, if I set a stop-loss order, the price may shoot below the stop price before my order can be filled at the limit price.

[Rurik]

I would say get out of the stock market.

It's gambling, and you're not helping society by spending your efforts there. It's a zero sum, winner take all system, that produces nothing.

It's sad that so many smart men waste their talents and brains on such pointless activity.

[johnwu]

(03-11-2012 04:01 AM)Rurik Wrote:  

I would say get out of the stock market.

It's gambling, and you're not helping society by spending your efforts there. It's a zero sum, winner take all system, that produces nothing.

It's sad that so many smart men waste their talents and brains on such pointless activity.

You should only have in the market what you are willing to completely lose.

Your problem is that you only have the stock market as your main focus. Add a project or two, and you'll be better off.

As long as you can handle it, the more things you've got going on, the better. Things don't always work out, which is why its good to have multiple options.

Also, unless you are a day trader, I wouldn't be obsessing about your day to day performance.

[Lemmo]

(03-11-2012 04:25 AM)johnwu Wrote:  

(03-11-2012 04:01 AM)Rurik Wrote:  

I would say get out of the stock market.

It's gambling, and you're not helping society by spending your efforts there. It's a zero sum, winner take all system, that produces nothing.

It's sad that so many smart men waste their talents and brains on such pointless activity.

You should only have in the market what you are willing to completely lose.

Your problem is that you only have the stock market as your main focus. Add a project or two, and you'll be better off.

As long as you can handle it, the more things you've got going on, the better. Things don't always work out, which is why its good to have multiple options.

Also, unless you are a day trader, I wouldn't be obsessing about your day to day performance.

Agreed. This really only became a problem for me after I was laid off.

[Kitsune]

I know a guy who trades a lot of money on the market (I don't personally so take my secondhand account for what it's worth)

He says you have to detach from it being actual money and see it as a points system like on a computer game.

Obviously if you need that money to live its hard to do that, so I understand your problem.

[Tigre]

(03-11-2012 04:25 AM)johnwu Wrote:  

You should only have in the market what you are willing to completely lose.

Your problem is that you only have the stock market as your main focus. Add a project or two, and you'll be better off.

As long as you can handle it, the more things you've got going on, the better. Things don't always work out, which is why its good to have multiple options.

Also, unless you are a day trader, I wouldn't be obsessing about your day to day performance.

This was good advice.

You didn't mention your investing style. I'm going to read between the lines and guess it's closer to buy and hold. Not day trading.

Part of it is just patience. Waiting for prevailing market conditions to improve, waiting for your company to deliver underlying results. If you're checking your portfolio hourly, you'll feel things are not moving as quick as you'd like.

I once read that a historically successful group of stock market investors was farmers. They were used to waiting with the seasons for outcomes. Some of these guys only ever made it to the city once or twice a year to review their portfolio and transact. Patience was what paid dividends for them. They weren't looking for reasons to second guess their decisions.

You probably feel that things are completely under your control, and that your results depend entirely on the quality of your decisions. So you get frustrated that things are not optimal and not happening faster. But a lot of short term results are just randomness. If you understand what a signal-to-noise ratio is -- some portion of the day to day results you observe is signal. The rest is noise.

[Bad Hussar]

Are you an investor or a trader? Do you have a leveraged account? leverage is a bitch. Either you're on top of the world or at the centre of hell.

Anyway, if you have a trader mentality the book "Trading in the Zone" by Mark Douglas may help. Didn't really do anything for me, but lots of traders like his approach to the psycholgy of trading. Can probably be boiled down to the Budhist principle of non-attachment, which he explains how to achieve when trading.

[Lemmo]

(03-12-2012 03:04 PM)Bad Hussar Wrote:  

Are you an investor or a trader? Do you have a leveraged account? leverage is a bitch. Either you're on top of the world or at the centre of hell.

Anyway, if you have a trader mentality the book "Trading in the Zone" by Mark Douglas may help. Didn't really do anything for me, but lots of traders like his approach to the psycholgy of trading. Can probably be boiled down to the Budhist principle of non-attachment, which he explains how to achieve when trading.

Actually, I day trade highly leveraged ETFs. I will probably switch to less volatile, less time intensive instruments. It is hard to give up on what has worked in the past but I'm learning to be a bit more fleet of foot when it comes to switching investment products.

[iknowexactly]

(03-12-2012 10:40 PM)Lemmo Wrote:  

[quote='Bad Hussar' pid='177479' dateline='1331582673']


Actually, I day trade highly leveraged ETFs. I will probably switch to less volatile, less time intensive instruments. It is hard to give up on what has worked in the past but I'm learning to be a bit more fleet of foot when it comes to switching investment products.

leveraged etf's have high overhead, so there's a "dealer cut" coming out of your money.

If you don't want to lose money, google " dividend aristocrats";
stocks that have increased dividends for 25 years straight through all ups and downs

[rozayINTL]

You should have around 10% in gold, 15% in bonds, 25% in international/emerging markets (ETFs/mutual funds/select companies), and the rest in US equities broken into large/small caps and value/growth.

Think long term. The historical average return of roughly 10% year over year for 50 years translates into a lot of gains if you're playing with real money. That historical average also takes into account the great depression/dot com bubble, and all the boom periods in between - losing 60% in a year? Nothing's new.