Get Comfortable Being Uncomfortable
Can you be comfortable with the thought of being uncomfortable?
I’ve been trading since 1985 and yes, I lost everything in 1987 – young, arrogant and leveraged to the hilt. It was inevitable.
So it’s always been my fear that a repeat of 1987 could occur again.
But that didn’t stop me trading.
Yet the thought of those types of events stop a lot of people. I come across those who do nothing but worry and focus on the worst case scenario.
Don’t be that person. It’s hazardous to your wealth.
Trading is very similar to professional sport. You can’t control all the factors that are influencing the market. All you need to know is that you have an edge over the long term.
It’s also not about the magical trade. It’s about staying in contention. Playing the long game. Not all trades will be perfect – and they don’t need to be.
Fast forward to March 2020 which was as close to a 1987-repeat that I’ve seen in the last 35 years. It came on fast and was violent.
The following chart shows the equity growth of our Trade Long Term Premium Portfolio which just nudged above 80% return for the year.
There’s two important things to take note of here which can greatly enhance your success.
At (1), which was March 1st, the portfolio went to 100% cash. It was not a prediction that COVID was going to destroy the market. Rather the strategy determined the trend was down and took defensive action.
So even though you’re committed to the strategy, doesn’t mean that the strategy is committed to the market. It rides the waves up and attempts to remove itself from the down swings.
And (2) was also an interesting point of time. June 1st. Right in the middle of the US rioting that was creating all sorts of fear. When I announced on Twitter I was going from 100% cash to 100% long, there was considerable push back.
Yes, in this instance it paid off – almost all the gains this year have come in just the last 5-months.
However, what if getting back in had been the wrong thing to do?
Well, the strategy would’ve got me out again. Simple.
I can commit because I know if I’m wrong, the strategy will exit.
As pro golfer Justin Rose said, “You can’t control how other players are playing, what weather conditions are doing or whatever other factors take shape. Just hit the ball.”