\nWhat should I do?<\/em>
\nI am realizing this short has been making my life miserable since March. I need to watch it every day specially\u00a0because i have Nvidia, Meta and Microsoft as shorts too.<\/em><\/p>\n
Harry talking: As 2023 opened we all thought it would be a down year. I sold falling shares and bought treasuries. My reader, however, went short.<\/p>\n
Then in 2023 this happened. Stocks went up:<\/p>\n
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And this, showing the last two years:<\/p>\n
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Investing has its ups and downs. We have to figure how each of us deal with them.<\/p>\n
What’s your pain threshold? I just drew this PowerPoint. On the left, if the price of your stock falls, it’s sheer agony for you.\u00a0 Probably best for you to be 100% in treasuries. I have friends\u00a0 who didn’t look at the falling market last year or the rising market this year. That was the Ostrich Strategy.<\/p>\n
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I have friends all along the spectrum. If you think the market is cratering but your pain threshold is low, then instead of selling stocks short, you should buy Puts. I have friends who don’t predict the market. They keep investing every month. They call it Dollar Cost Averaging.<\/em> They see a down market not as a way to make money, but a way to buy stocks “on sale.” They believe that in the long run the market rises. It always had.<\/p>\n My psyche is more to the left. I hate for my portfolio to lose and put me into the poor house. When the market fell last year, I sold some shares and bought some treasuries. I didn’t buy puts or sell stocks short. Too hard for me to manage. But my “strategy” did insulate me from the agony of getting poorer every day.<\/p>\n There’s a certain joy in clipping coupons, i.e. seeing dividends from treasuries and funds like JEPI roll in.<\/p>\n In 2023 I’ve made my most money with owning Nvidia. It would have made more money except I sold NVDA at the wrong time (remember that blog?), but fortunately bought all of it back in the following day.<\/p>\n There are rules. The most common is when the stock falls by x% you sell it. The most common “x” is 15%, which I’ve followed. But I have sold quicker — if I saw a bad earnings report or some other\u00a0 quirky reason.<\/p>\n The best talking head (i.e. someone who appears on CNBC, etc) is Josh Brown.<\/p>\n Two days ago he posted a piece:\u00a0 “Today\u2019s market pivots from a funeral to a party as fast as a VFW hall.<\/strong>\u201d<\/p>\n He started with a quote from Barrons writer, Michael Santoli. After the quote, Josh wrote:<\/p>\n What I want you to take away from this exercise (in predicting the market) is the fact that it always goes this way. You can find an old Santoli column (at Barrons) to match virtually any market environment we might experience. His work at Barron\u2019s ended eleven years ago but his impeccable chronicling of the weekly action during his time there still remains relevant for students of stock market history.<\/p>\n And when you go back and read it, you can only come to the following realizations (if you\u2019re being honest with yourself):<\/p>\n 1.\u00a0Stocks and the economy can diverge\u00a0directionally for a long time.<\/p>\n 2.\u00a0Even if I gave you tomorrow\u2019s headlines today, you still would not be able to guess what the impact of all that news would have on prices, sentiment, valuations or the responses of fiscal and monetary policy makers.<\/p>\n 3.\u00a0Markets can pivot from euphoria to terror back to euphoria again\u00a0before you can change your clothes.<\/p>\n 4.\u00a0Even if you know what\u2019s going to happen next, can you really feel confident that you know what will then happen\u00a0next\u00a0next?<\/p>\n 5.\u00a0\u00a0The thing that everyone\u2019s talking about\u00a0is not always the thing that ends up mattering.<\/p>\n 6. Oftentimes,\u00a0the most surprising outcome is the one that happens.<\/p>\n 7. If you haven\u2019t arrived here yet, you will or you will not survive \u2013\u00a0having a framework in place, or a series of rules governing how you will and won\u2019t behave \u2013 is not foolproof by any means and it could mean vast periods of pain, envy or regret. But it\u2019s better than nothing.<\/p>\n 8. Lastly \u2013 and please understand that I have met many of the greatest investors of our time in real life \u2013\u00a0you need some luck. Deep down, all \u201clegendary\u201d investors admit this to themselves. Some of them say it out loud. Right place, right time. Randomly met someone with a great idea. Accidentally stumbled upon the trade of a lifetime.<\/p>\n Today\u2019s market will pivot and so too will tomorrow\u2019s. There is nothing you can do about it other than to be prepared, financially and mentally. Volatility is timeless and wild swings in sentiment are the rule, not the exception. Don\u2019t spend another moment of your time deluded into believing otherwise.<\/p>\n And if you remain unconvinced, go back and do the reading.<\/p>\n
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