What did I say? And I think the week is just getting started, as well as the next month, maybe two. Dow makes all-time high (again). Compare that with the Chicken Little News from July and August. Here’s what I blogged while still in the midst of the first leg down. This post about a week later turned out to have been at the precise bottom when I began posting it. By the time I snapped the images in that post, the red bottoming candles all had tails on them — price levels that have not been revisited or breached since. And it’s been up, up, up. And in case you think I’m just a brainless bull, see here, where I got in on the short side for a day (the exact right day, as it turned out).
All in all, it’s been a great couple of months and I think we’ve seen only half of the eventual move before things go back to the sideways grind. This is really what my trading is evolving into. I can sell credit spreads all day long in the sideways grind and pull 10-15% out of the market per month. But the key is to close down that strategy the instant the sideways or slightly tending channel is breached to the top or bottom. That’s the signal of a big move, and that’s when it’s time to get in on the action. Down is best, just like this time. And you ride it both ways.
9% gain on my whole portfolio, today. OK: 8.69%, to be exact.
So, not a bad record, right? I’m bragging to you so that I have the credibility to tell you this: anyone who even hints that he can predict the market or a stock’s direction with any degree of statistical significance greater than random is completely full of shit, and if he wants your money, run.
This game is never about making predictions. It’s about managing money. It’s as simple as gladly taking your small losses quickly, when you think or know you were wrong, and riding your positions for all they’re worth when you think or know you were right. That’s as easy and as hard as it ever is.