I gave back a lot of profits this month and I’m glad the month is over, if only that also guaranteed my losses were done. Actually I feel pretty good about my holdings right now and still expect to finish the year up nicely. For the first time since I started this blog, a major index is beating me (the Dow ($DJI), by about a 1/2 percent). If I annualized my losses for this month, I’d finish the year down 78%. Interestingly, that’s not my worst month or even top five from the past 10 years. As expected September 2001 was my worst, but I had a bad streak in 2002 that smacked me worse than this month and I recovered greatly after that as I plan to again. I’ve learned a lot through some of my poor moves and will try not to repeat my mistakes. I have a lot more money invested now than I did five years ago, but also have a lot more confidence.
I’ve had a series of bad trades that partly were caused by emotions in my investing which I was doing a good job of keeping in check when I had more time in front of my computer. I feel like I’m moving back in the right direction (emotionally and literally). I was so hectic this month I didn’t even get around to making a deposit during January. I’ll use the cop-out that luck wasn’t on my side either. I sold calls within a few minutes of the near term bottom and bought some of those back near the near term top. That’s bad luck and emotions together that equal just bad trading/investing. Avoiding those types of moves and sticking to a solid simple trading plan will get me back up.
As ugly as it is to be down $11,000 in one month, I’m up about $6,000 from my intraday low last week. That’s the silver lining I’m clinging to. That and a lot of time value left on my outstanding options will keep me confident that my worst days are over.
Here’s the summary of where I stand now:
· Current Account Value: Ameritrade: $78,662.57, Quicken $78,787.01
· 12 month Return: 1.14%
· Annualized since 4/8/07 (blog’s beginning): -1.02%
· No Deposits in January
Index returns:
· 1 year S&P Return: -3.29%
· 1 year Dow Jones Return: 1.66%
· 1 year NASDAQ Return: -4.07%
· 1 year Russell 2000: -11.78%
Great to see a detailed personal journal on investing.
But, how about futures options? This market is so bendable with uncertain times, and the potential rewards are through the roof. Also, I would think this would be a good time for some explorative short selling on the NASDAQ.
I haven’t explored options on futures. I’m tapped out on time as it is. Maybe when I can cut back on work again I’ll give it look.
Futures options are more complicated since it is hard to take delivery. To avoid that, you either need to trade something cash settled or roll the future. It’s all a little too confusing for me since the underlying is so tricky. The price for carrying a commodity is higher than the cost of carrying stock (i.e. interest rates) and you get weird effects like Backwardation or Contango.
I tend to trade stocks that are levered to futures rather than the futures. For example, OXY instead of CL futures.
Given the stream of bad news, putting on some shorts might be interesting. Shorting XHB might be interesting too.