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Trading in the Big Leagues


The mechanics of the swing are more important than the results of the at bat.

Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also What's Your Price Target?

"Hit me again Ike, and this time put some STANK on it! --Fletcher Reede, Liar Liar

Old school Minyans know I'm nothing if not honest--in good times and bad, hot streaks and cold, up tapes and down, our process is constant. Win, lose or draw, we toss the ball back on the mound, jog back to the dugout and get ready for the next inning.

I share this as a context for this discussion, which is the "half step slow" I've felt since early March, after publicly opining that a "monster move" was coming to the upside (potentially to S&P 1000) and that I would add 25% of my long-term bucket at S&P 600. We never got there, of course, but my stylistic approach (buy dips to sell blips) allowed me to participate in spates and I've learned never to lament when the bottom line is green.

Of course, the travails of life and death put everything on hold in mid-March when I traveled to Orlando. I have no regrets about that--none--as I pride myself on certain tenets and being a true friend during a time of need is at the top of the list. That did, however, coincide with a meaty leg higher for the market and one that I didn't participate in. Again, always honest.

More recently, I've been balancing a hectic travel schedule with a few massive Minyan initiatives, all of which are consistent with the long-term growth of our community. I learned long ago that if you're not 100% focused on your risk, you're at a natural disadvantage as your counter-party surely is. I'm not making excuses--that's never been my bag--I'm simply sharing what's happening on this side of the screen.

Of course, as shared last week, I had a game plan in place that would have been one of the snazzier trades in recent memory but I got wagon wheeled by Wells Fargo (WFC). Not only did its positive pre-announcement preclude me from setting up long exposure consistent with the reverse dandruff we've been focused on (in the BKX), it caught me with a small short position in Apple (AAPL) (although I clawed back some of those seeds yesterday).

Finally, late yesterday as I noodled the Intel (INTC) chart and the "low ball" expectations, I purchased some lottery tickets in the Mother Chip. It was a "throwaway" position but that doesn't excuse the blind bet, particularly when I shared it for the benefit of ye faithful. I take my name and word quite seriously in these parts as I know others monitor my process.

What's the point of all this? Simple--the importance of "know thyself." There have been times I've seen the seams on the ball as it approached the plate (Old School Minyans will remember a particularly long roll of the dice in 2000-2001) and others when my swing seems to have a serious hitch.

When that latter matter comes to bear--and it does for all traders, at times--it's incumbent on us not to press and let it pass. Trying to make up for lost ground and bad trades with a big swing is a recipe for disaster. It's entirely alright to admit it's hard out there but completely inexcusable to pretend it's not.

That's why we continue to preach the importance of financial staying power and why I share this tale. Nobody is smarter than the market but if we're disciplined, aware and continually operate through the lens of risk management, we'll find our way to easier days and better trades.

As always, I hope this finds you well.


In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.
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