Sink or Swim

What a terrible week! I don't remember having this kind of week in a long time. For sure, this correction opened a lot of eyes, including mine. If you come to think of it though, we're not yet dead, so to speak. We're just wounded. It hurts to see profits vanish and some, turn into losses. I, myself, made several very expensive mistakes. I wasn't very careful either so I guess I had it coming. I wouldn't say it was for naught though. 

This week was a déjà vu moment. During May 2010, I remember almost the same thing happened. I lost a lot of paper profits on EDC and RLC then. Why? Because I thought it can do better than it was performing then. Had I been able to wait a little longer, I would have been right but there was a conflict with my threshold for losses and my holding period. See, I can hold a stock for several months as long as it is going up or moving sideways at best. When the correction turns out to be deeper than anticipated, I only get to realize (or is it acknowledge?) it when it approaches my cost. Sometimes, I even turn a blind eye, thinking "I can wait forever" (Haha! Just a song we sing in the office. But seriously, I mean to say, "I can wait it out.")  I realized that I can't, so I sold at a loss. As it turns out, the market bottomed near my selling price. It may have dipped a bit but I certainly got the exhaustion levels. It was then that I decided to shorten my holding period. I did well. I was up and down for the year then, but I was able to turn a consistent positive return with my short-term trades. It was still a bit frustrating though when prices head higher after I've sold. Not immediately but had I held on longer, I could have been able to ride that wave. There goes the position trader in me talking. So, during mid-October, I decided to make my holding period longer again. It's as if the market is telling me not to because here we are again with the market correcting deeper than anticipated. In fact, I lost more this time around. I need to fix this...I'm fixing this! I can't allow it to happen for a third time. 

We all had a bad week. But as they say, we learn more in a bad market than in a good one. It's also in the attitude. Given a bad situation, what will you do: sink or swim?

I'll swim every time.

BTW, good luck on tomorrow's fight, Pacman! :)