Stock Success: Can You Handle It Cam Newton?

The other day on Colin Cowherd’s sports talk show, they had a great topic. How athletes handle success is even more important than how they handle failure. Their case study was on Cam Newton. Last year he exploded onto the NFL, produced eye popping performances and ran away with Rookie of the Year honors. This year is a totally different story. His team is losing, but he is still carrying on with his immature Superman celebrations. If your team is winning, people tend to look the other way. Now that his team is struggling, he doesn’t know how to respond because he succeeded at all levels of his football career. It will be interesting to see if he can turn it around. I experienced a little of this earlier in the year with my stock market plays.

Money Pros Challenge

Back in April, I made it atop the Money Pros Index Fund Challenge with a 30% return and was in a heated race with JT from Money Mamba. Looking now, JT is still near the top maintaining his 30%, but where had I fallen? I am now in the bottom third with an embarrassing -0.69%. I am losing money and even a normal savings account could outperform me. In fact, if I had just invested in a regular S&P index fund, I would be up 12.45%

Stock Roller Coaster

With my early success, I started to dabble with stocks. I nailed down a 20% return stock and even watched it tumble down without me on bad news and lawsuits. I thought I was Warren Buffett! Can you imagine me striking the Cam Newton Superman pose right about now? Things quickly unraveled like the Carolina Panthers. I jumped into the Facebook IPO. Enough said. A few months later, I even labeled myself as The Worst Stock Trader Ever. How quickly the mighty have fallen.

The final straw? I started chasing a stock. Last quarter my position was sold off because of my 8% sell stop rule. A week later, the company popped over 20% on blow out earnings. A few days later I bit the bullet and jumped back in. I enjoyed a nice quarter as it peaked around 18% above my buy point. Investors freaked out on this quarter’s earnings report and the stock lost 20% in two days. I got stopped out of my position for a 15% loss. I increased my stop loss rule from 8 to 15 percent in the hopes of riding out extra volatility. Sorry Charlie.

Final Thoughts

Eating a healthy dose of humble pie, I am done with stock picking and going into Forex trading. Actually this may be too risky for my blood. Just making sure you were paying attention. My arrogance and greed made me believe I could do better than the S&P. But as I said before I am in the red and would have been better off in a safe, low interest savings account. If that doesn’t wake me up I don’t know what will. Dot com bubble and over 100% returns are finally out of my system. I was trying to do too much and getting negative results. I finally see and respect the value of a 10% return. Looks like I’m headed back into safer, less volatile mutual funds. I’ll leave the stock picking to the pros and I’ll leave the Superman poses to Cam Newton.

How is your stock portfolio doing and how do you plan to improve it next year?

Stay Inspired!
Buck

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15 Responses

  1. Moneycone says:

    You just described the average investor! I remember going through this phase, thinking I was somehow different and can beat the market consistently. Reality was a harsh teacher!

    A stock picking pro is a pro only if he can consistently outperform the market. Getting it right once or twice … a monkey can do it!

    http://www.dailymail.co.uk/news/article-1242575/Lusha-monkey-outperforms-94-Russia-bankers-investment-portfolio.html

    • Buck Inspire says:

      Thanks MC, I’m dumber than a monkey! Haha. I’m thinking most people feel they could outperform a monkey wouldn’t you say? I guess now I know better and humble enough to see why!

  2. Krantcents says:

    Investing is not stock picking. I invest for consistent long term returns. I do not know how to time the market nor would I try. I buy stocks or mutual funds for long term returns. Anything else smacks of gambling.

  3. Arlee Bird says:

    Stock portfolio? I wish I had one, but if I did it would probably be a disaster. You’re doing the right thing by educating yourself. I wish you well with your investments.

  4. “I am done with stock picking and going into Forex trading”
    If you thought you ate a humble dose of pie with stock picking, wait until you overdose on sugar with forex trading. It’s gambling in every sense of the word.

    Good luck!

  5. Sounds like you were doing what causes so many to exit the stock market. When you get behind you try to make up for it. If you believe in the stock then buy more positions on the dip but know the company not the stock. And when you are up make sure you take profits. If you have 1000 shares and are up 20% sell 200 of them. If it goes up you still have 800 more if it falls you can buy more.

  6. Damn Cam Newton. I’m a football neophyte and decided to join in on my fiance’s fantasy football league this year. I looked at Cam Newton’s impressive performance last year, not realizing he was a rookie and last year could have been a fluke, and drafted him as my quarter back. I am so very sorry now.

    As for stocks, I stick to funds and stocks that will be long term investments. No more falling for the Cam Newtons of the world. You show me consistently solid performance over a long period of time if you want my investment dollars!

    • Buck Inspire says:

      Sorry to hear about your fantasy football flub. Who would have guessed? Solid and consistent sounds like a winning combo to me. It’s easy to fall for the Cam Newtons of the world, but for stocks, substance trumps style!

  7. Cam Newton and Michelle Wie have the exact same problem- they never learned how to lose. They never figured out how to come from behind, to get themselves up after a fall. And when they finally got to the big stage, they fell, and stayed down.
    Just like in all aspects of life, with investing, learning how to lose, and how to respond productively to that loss is a hugely important lesson. Because in the end, it’s not about losing once or twice, its about how you respond to losing that will determine whether your’re a long term success or a “remember who”.

  1. November 11, 2012

    […] Inspire @ Buck Inspire writes Stock Success: Can You Handle It Cam Newton? – See how early stock success can come back to get you. Just ask Cam […]

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