Thoughts of a mechanical engineer turned programmer turned statistical investor. Here to save you from making mistakes I made at the beginning of my investing career.

Weekly summary May 6

Well this was a whipper snapper of a week. Honestly if I hadn’t checked in I wouldn’t have even realized it, as overall the nasdaq was down just 1.5%, but the whipsaw was a bit unnerving:

nasdaq week performance

I’ll get the weekly recap out of the way, because I would like to write about some other stuff this time: my portfolio lost 4%, nasdaq lost 1.5%… The reason for the underperformance is because I hold an outsized bullish position in AMZN which lost this week another 4%. I still like AMZN as a company, I’m still confident in the position, and since I rolled the position (details here), nothing even expires this month so theres nothing to do but watch and wait.

In terms of trades, I did nothing other than trading AMZN, details linked above.

Over Monday Tue Wed my portfolio went up ~$20k, which was the day I adjusted the AMZN spread because I was suddenly worried the market would fly up and I would miss out on a ton of potential gains from buying low. Little did I know, Thursday and Friday would reverse all those gains (and then some). 

And this really spotlights a couple of things:

  1. Its so impossible to know what will happen in the market. I could have taken some profits off the table on Wed when the nasdaq shot up 3% (and my portfolio gained 4%), but then I would have sat out on much more potential gains if the market had continued on its upward trajectory.
  2. Over trading! When I check in on my portfolio often, I have a tendency to just make trades. And its usually not necessary. On Wednesday towards the end of the session I saw the market going up, I figured, shit maybe it will continue, better do something. In retrospect, it may have been smarter to just leave the AMZN position as is instead of rolling it out a month. And this is a pitfall I fall into often, so I’m putting it in writing hoping this will help me improve. Good investing is boring. Its opening high probability positions and waiting for them to make money. Its (usually) counter productive to be glued to the markets, refreshing throughout the day. Patience is key. And here are 2 anecdotes:
    1. Its little known that Warren Buffet and Charlie Munger had a third partner in the beginning of their careers, Rick Guerin, who was just as smart as them, but in a hurry. Long story short, no one talks about Rick anymore.
    2. Fidelity did an internal audit to determine which type of investors received the best returns between 2003 and 2013. They found 2 types: accounts whose owners had died, and those who forgot they had accounts.

In order to be able to set and forget your positions, it is important to have strong conviction in your positions and not feel like you’re gambling. If you feel like you’re gambling, as soon as there is a small gain, you want to take it off the table. If you have conviction, you will feel more comfortable leaving it to make more money. And if the stock/market goes against you, you feel comfortable leaving it, rolling it, or doubling down into a better position, which will make more money. And thats how I currently feel about my positions.

All that remains for this post is for me to snapshot my portfolio to have a record of how this shitty week ended:

If anyone is interested I would be happy to do a portfolio review next week where I go over and explain the positions, just put it in the comments 🙂 or anything else, I would love to hear your take on these times, your investment strategy, and how its working out.

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