Last week I posted my personal challenge of stocks versus an ETF. In actuality, I had held positions for a few weeks. To review, my stocks were AAPL, CMG, and PCLN. My ETF was QLD. In this short time span, stocks were outpacing the ETF with 6% gains to 3%. However, the stocks nice pop was carried by one single stock, AAPL at 11%. The other two were struggling at the time. Like I said, this challenge will go on for a year, but I thought it was an interesting early look. This news was miniscule compared to what happened last week.
Gaddafi Gags The Markets
With tension mounting in Libya, world markets tumbled. INO.com trend analysis signals sent me to the sidelines, running for cover. My position in CMG still had strength, but a midday swoon took me out as my 8% stop loss was hit. I exited QLD the following day as the markets looked done for. Interesting thing happened; the markets rebounded.
Tale of the Tape
AAPL: -87.40, down 4.87%
CMG: -104.00, down 8.13%
PCLN: -91.20, down 5.05%
QLD: -209.49, down 4.23%
Both sides of the challenge suffered losses, but the ETF suffered less. So at this moment, the ETF is outperforming my stock picks. Interesting, looks like the jury is still out. We’ll see what happens after a year. Side note, during this time I added ROSE to my watchlist after reading BeatingTheIndex’s post on The Alberta Bakken Oil Play. Due to the situation in Libya and skyrocketing oil, ROSE is now up about 13%.
ARE YOU ON CRACK?
I know, you must be thinking. “Buck, let me get this straight. Your entire portfolio is in the red. The stock you didn’t pick is up 13%. The market recovered, leaving you in the dust. You say these are your best trades ever? What gives?!?!” For years, the market played with me like a puppet. Two bubble bursts, one flash crash, one very serious margin call, several nervous breakdowns, numerous negative world events, and tons of earning disappointments.
I’m Finally Free
Last week, although my portfolio was in the red, Libya was deteriorating, oil spiking, and my readers have full view of my “failings”; I was in complete control. I was finally free. I finally detached my emotions from the market. In the past, I would be writhing in agony. “I lost my hard earned money! I can’t retire properly! I look like a fool! You have no business trading! Don’t quit your day job!” Besides the negative inner chatter, I would try to overcompensate for the losses and make more trades or chase my lost paper gains. This usually ended in even more losses, sending me spiraling even further! I think you get the picture. Although I took some losses, these trades really are my best trades ever.
I am currently out of the market and will quickly reassess what to do next as the challenge continues. Hindsight is 20/20, but perhaps my signal of hitting the sidelines was premature. However with all the current world news headlines, at the time, it really looked like we were finished. It’s back to the drawing board. Don’t get the wrong idea. I am not looking to give investment advice as there are tons of more savvy investors than me.
What I am doing is trying to make myself a better trader by first dealing with my emotions and being accountable to my readers. If you are struggling with the markets, doing your due diligence on the companies you follow is important. But don’t forget the most critical component in trading stocks, yourself.
What’s your best investing advice?