Shanghai Stock Exchange

Closing Out a Bad Month

Securities trading has been a major part of my life for the better part of the past 10 years. At times, it has been my sole bread and butter, helping me fund some crazy investments, ideas, projects, and adventures. The downside is the roller-coaster ride of emotions that comes with money, as one’s performance, like anything else, is defined by peaks and valleys. Naturally, the goal is to maximize the good times while minimizing the bad.

August was by far my worst performing month of this year. Although my long-term portfolio fared well, gaining actually as I took some new positions in stocks at prices lower than today, my short-term trading account took a hit, to the tune of about $30k. That didn’t happen all at once, but through a series of emotionally fueled trades that snowballed in the wrong direction. In other words, should I have sat around all day in my pajamas for the past month, eating bon-bons, I would have been better off financially today.

Some might read this and think “well, this guy obviously doesn’t know what the fuck he’s doing”, and I would not fault you for thinking so, and in fact, would encourage criticism. This may come as a surprise to many as it is much more pleasing to be on the receiving end of a compliment than chastised. To me, I view it as a way to stay motivated for there is nothing more satisfying than disproving critics via egregious wins at a later date.

It’s funny how most people don’t talk about their losses because it hurts them to think about it but will not hesitate to tell stories on how they ‘nailed it’ when times were good. They think it softens their character, as we all strive to boast that perfect track record in whatever it is we do that is important to us. I wear my losses proudly in whatever I do because that is the only way I learn- getting knocked down so I can climb higher with a belt of new experiences. With a little bit of patience and a few well executed crazy ideas I will be back where I left off.

Reflecting on what I did wrong, for the most part it was over-activity. Summer months tend to be slow and an ideal time to stay away from the markets and just add to long term holdings as stocks languish. It is tempting to try to force short term trades, especially coming through a fast paced spring season in a bull market. I’ve made this mistake before, and will probably make it again, because my character is flawed with impatience. It is always frustrating to have an idea, test it out and fail, only to see it pan out as how you planned shortly after – something we all experience regularly in all areas of our lives.

The key is emotional detachment. How? Well we all do it in our own ways. What’s worked for me recently, along with intensely scrutinizing errors, is meditation. Albeit just starting, I find that taking 3-5 minutes out of the day every morning to be in a completely relaxed state makes me less prone to make rushed decisions. We’ll see what that makes of me in 6 months from now. I am certain that I will make the same mistakes as I am naturally impatient but just as certain that I can limit the repercussions.