Since the beginning of 2007, I have spent the majority of my days sitting in front of screens that display blinking lights, price charts, formulas, and numbers. Markets are my passion and I live for the challenge of outperformance. Without that challenge I’m lost, void of the internal fire that allows me to “tap dance to work every day” to borrow a line from the great Warren Buffett.
Recently I saw a member of our finance community tweet that he didn’t feel that it was worth all the grief and hours spent in front of the computer trying to outperform the market. He dropped the cliched “opportunity cost” term on us, suggesting that maybe a 60/40 portfolio would do, which would free up our hours for more leisurely activities. He isn’t cut from the same cloth as I am. Not after a statement like that.
Our industry is plagued with naysayers. You have probably heard some of the following statements uttered if you are an active market participant:
“You can’t forecast the markets.”
“You can’t beat the market.”
“After taxes and net of fees very few outperform over any length of time.”
“About 95% of all traders fail.”
The list goes on.
I agree that trading is one of the most difficult endeavors you will find. It didn’t come easy to me by any means. I lost money of my own, money gifted to me by mentors, and some more of my own. Once I attained a level of mastery in technical trading and began having success, I had a major set back which was 110% my fault. I fell victim to my ego, broke my trading rules, and made money management mistakes out of sheer stubbornness. That was Q4 of 2018, what I refer to today as my final market tuition.
After finding my footing in 2019 all over again, things really began to click. While there were a few inevitable missteps, I learned to become ruthless with respect to cutting losses. I made sure no ego was attached to any stock position, options trade, or futures trade. I made up a lot of what I lost in the final months of 2018.
That brings us to the present. If you have paid any attention to some of the more recent blogs you can sense a trend. If you haven’t I’ll point a couple out you might have wished you took a look at:
NOVEMBER 20th: “The Chase For Performance Is On” Here I highlight rotation into the biotech sector which continued rallying hugely into the end of the year.
NOVEMBER 21st: “Can Solar Stocks Add Some Flare To Your Portfolio Into Year End?” You didn’t even need to pick an individual stock for this one, the TAN Solar ETF ran from $27-32.
DECEMBER 6th: “Strictly For A Trade” In this blog I laid out a position which I am still in. $MAXR – Up a cool 550% in options. I didn’t misplace a decimal.
DECEMBER 8th: “Adding Dynatrace To The Radar” Maybe a picture would help you understand?
The point is not to be boastful of a winning streak. Those come and go. The point is to illustrate how powerful you can become when you persevere and press on when something gets “hard.”
You know what it can mean when you have a razor-sharp skillset like stock selection, using options for leverage, and a first-rate risk management plan?
That can mean never having to work for anyone else again.
That can mean starting a money management business where people entrust their financial future with you and rely on your expertise.
That can mean financial freedom while all those people who told you it was “too hard” sit on Zoom meetings talking bullshit company jargon while they rationalize the importance of their job title.
In the end, we should all strive to do what makes us happy. If you aspire to be a trader and are frustrated because you’ve seen others fail, remember that it doesn’t mean you will. If you have failed once before, it doesn’t mean that you will again.
I promise you that this is a skill worth mastering. And it will save you from a lifetime of Zoom meetings.
Trent J. Smalley, CMT