Rebuy Discipline

Many years ago I struggled to get into the big, blue, stock market. Years later, I added a sell discipline to save me from horrifying drops like the ones we saw in 2008. Today I finally recognized a huge flaw in my trading game. I have no rebuy discipline.

A month and a half ago, I read Street Smart Finance’s 5 Rock Star Stocks to Buy for 2012. Coincidentally, I bought and sold 4 of the 5 way too early. Some of my badly timed sells were in the same time period as my Rollover IRA, Great Recession Recovery Nightmare. You can see how far they have come since then. I was trading emotionally, which is never a good thing. Why didn’t I develop a rebuy discipline?

Sell, Sell, Sell

Whenever I sold a stock, it was for a marginal profit or a minimal loss. I was happy as a clam and proud of myself for having pulled off a disciplined sell. Unfortunately, even though at a future date, all signs pointed to the stock I just sold having some legs, I would not re-entering thinking it would negate my great sell or possibly losing money and being wrong twice. Bad Buck!

Head in the Sand

As said stock continued to climb, I looked for other stocks to buy, or ignored the stock market completely. Doing this temporarily numbed the pain of my previous holdings going gangbusters without me. But sadly, all it did was keep me out of top performing stocks that I had the foresight to pick in the first place.

Final Thoughts

I am finally letting go of my stock sell demons. Missed opportunities makes for awesome pity party stories at happy hour, but they won’t help me with my present day investments. After exiting a position, if things start to go the other way, I have to be objective enough to see what went wrong. I can’t just stick my head in the sand. Like everything in life, it would be a shame if I totally ignored a lesson learned. What is that saying? It’s ok to be wrong. But when you are, be wrong small. I minimized my losses before with stop loss orders. Hopefully with my new rebuy discipline; going forward, I can minimize my missed opportunities as well.

Stay Inspired!

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8 Responses

  1. MoneyCone says:

    Buy stocks like you want to own that business.

    If you owned your own business, would you give up just because you had one bad year?

  2. It is such an emotional game. DCA has saved us from making poor decisions time and time again. Congrats on identifying your problem and developing the resolve to solve it.

  3. Your not alone, I made a couple emotionally driven trades the past few years too. Not proud of it but it’s a good lesson on finding out your risk aversion. I usually just have to remind myself why I bought the stock to begin with, if fundamentals are good and nothings changed, just stay the course.

    By the way, nice video – great Simpsons episode!

  4. Everyone’s got a pity story, and I’m no different. I’m chewing on one now where I actually featured a stock on the blog, didn’t buy just yet, and now it’s almost doubled. The agony…..

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