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.
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?