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“I consider myself conservative from an investing perspective.” (Proceeds to do the least conservative thing imaginable. ) Perhaps this fellow needs to see a

“I consider myself conservative from an investing perspective.” (Proceeds to do the least conservative thing imaginable. ) Perhaps this fellow needs to see a therapist regarding staggering levels of cognitive dissonance. Heck, he could pick a stranger on a park bench and ask if A) this strategy seems conservative or perhaps B) the riskiest strategy imaginable. I don’t think I could come up with a riskier plan if I tried. I don’t think any random person would describe it as careful or conservative. Also he should never open a trading account again and block /r/wallstreetbets or whatever stock meme central is these days.

closetohome 5y ago
A conservative investor who doesn't believe in passive/index investing. If he'd bought BABA stock outright instead of optioning it, he'd have $200,000 right now instead of $0.
cik2e 5y ago
Trading is not investing, which this guy completely does not understand. He says that he still doesn't believe in diversification and that it's not the answer. The answer to what? If we're talking about building a long-term portfolio, it's the best answer we've come up with to-date. On the other hand, almost by definition, you don't diversify in trading. Yes, you can have a variety of open positions but each one is an individual bet and must be viewed as such. Selling off a diversified portfolio is not recommended in a market downturn but sticking to a bad trade is a recipe for disaster. The crucial lesson here is setting a stop-loss for every trade and abiding by it no matter what. Market Wizards: Interviews with Top Traders by Jack Schwager, considered a classic, focuses on the psychology of trading. At the end of the book, the author reflects on the one thing that all of his subjects had in common. Every one of them experienced a massive loss, sometimes several, early in their careers. And every one of them came back with the discipline to cut future losses at predetermined thresholds. From personal experience, it's also crucial to lock in profits. You need to set a reasonable sell-down schedule that won't leave you with the urge to claw your face apart if you miss the chance to sell. I recall reading that missed opportunities tend to haunt traders much more than losses. This was certainly true for me and part of the reason why I decided to get out of trading altogether. I ended up with a tidy profit but it still hurts to think about the life-changing amount that I missed out on. If I had followed a system and banked half or two thirds of the life-changing amount, I am pretty sure I would have had no regrets. That's because I never got hung up on taking an acceptable loss on a position that would have eventually turned a profit. Just like in poker, it's easy to absolve yourself of blame, when you are following a good strategy. But at the end of the day, one has to understand that trading is gambling. And you don't gamble with more than you can stand to lose. I've learned that gambling is not for me and so I no longer trade.
geoduck14 5y ago
>I consider myself conservative from an investing perspective May be he actually is conservative. May be it is his (historically) safe nature that made him bad at understanding risk in other areas. As an analogy: I'm good at assessing risk while driving. Highway speeds are less safe than residential roads, backseat is safer than front seat, etc. Well, let's do something different, let's go skydiving. I have NO risk profile to assess skydiving. My conservative background doesn't prepare me for this - so I screw it up.

closetohome 5y ago

A conservative investor who doesn't believe in passive/index investing. If he'd bought BABA stock outright instead of optioning it, he'd have $200,000 right now instead of $0.

cik2e 5y ago

Trading is not investing, which this guy completely does not understand. He says that he still doesn't believe in diversification and that it's not the answer. The answer to what? If we're talking about building a long-term portfolio, it's the best answer we've come up with to-date. On the other hand, almost by definition, you don't diversify in trading. Yes, you can have a variety of open positions but each one is an individual bet and must be viewed as such. Selling off a diversified portfolio is not recommended in a market downturn but sticking to a bad trade is a recipe for disaster. The crucial lesson here is setting a stop-loss for every trade and abiding by it no matter what. Market Wizards: Interviews with Top Traders by Jack Schwager, considered a classic, focuses on the psychology of trading. At the end of the book, the author reflects on the one thing that all of his subjects had in common. Every one of them experienced a massive loss, sometimes several, early in their careers. And every one of them came back with the discipline to cut future losses at predetermined thresholds. From personal experience, it's also crucial to lock in profits. You need to set a reasonable sell-down schedule that won't leave you with the urge to claw your face apart if you miss the chance to sell. I recall reading that missed opportunities tend to haunt traders much more than losses. This was certainly true for me and part of the reason why I decided to get out of trading altogether. I ended up with a tidy profit but it still hurts to think about the life-changing amount that I missed out on. If I had followed a system and banked half or two thirds of the life-changing amount, I am pretty sure I would have had no regrets. That's because I never got hung up on taking an acceptable loss on a position that would have eventually turned a profit. Just like in poker, it's easy to absolve yourself of blame, when you are following a good strategy. But at the end of the day, one has to understand that trading is gambling. And you don't gamble with more than you can stand to lose. I've learned that gambling is not for me and so I no longer trade.

geoduck14 5y ago

>I consider myself conservative from an investing perspective May be he actually is conservative. May be it is his (historically) safe nature that made him bad at understanding risk in other areas. As an analogy: I'm good at assessing risk while driving. Highway speeds are less safe than residential roads, backseat is safer than front seat, etc. Well, let's do something different, let's go skydiving. I have NO risk profile to assess skydiving. My conservative background doesn't prepare me for this - so I screw it up.