When It All Falls Apart
The worst lies are the lies we tell ourselves. We live in denial of what we do, even what we think. We do this because we're afraid… Richard Bach
In 1994, when I first started to trade, I went to several trading “gurus.” I asked them to help me, to teach me, to mentor me. Every one of them said "No.” The refusals took various forms, ranging from "I'm retiring soon," to "Come back when you have a Ph.D. in losses and maybe we'll talk." In the interim, I got a Ph.D. in losses, but I never returned to any of them. Call it rejection sensitivity, call it stubbornness or anything you like--I did not go back to the gurus. I learned the hard way: by teaching myself. I made every possible trading mistake, including lousy stock picks, bad execution, not cutting losses, not letting profits run, and not listening to the market.... and on and on.
Have any of you had insomnia-inducing positions that threatened your sleep, that destroyed your relationships and that eroded your self-esteem? I have, and I can tell you right now that holding and hoping is a recipe for disaster, both financially and personally.
S-E-L-L is one of the nicest four letter words you can learn. BUT...if you are already over your head in unrealized losses, when do you sell? What if you do and what if you don't.? These are the types of questions that take us into states of dis-ease. That's DISEASE. Nothing seems to go right, the world looks different somehow, colors are muted, food doesn't taste the same, you find it difficult to smile, you lose your sense of humor, find it increasingly even more difficult to smile, your eyes become more narrow and sad, you are angry and feel horrible. You hide this from your loved ones and then you feel even more guilt and shame. You can't admit that you have done this, that your losses are mounting daily and that you can't get out now because you are down too much.
This is when the lying starts. It's called denial, but it is lying. Your brain tricks you into holding losers. You know some of them: the markets are wrong, they don't see the “real value” in this stock; I know that the story is really good and the markets just don't "get" it; news will be coming out any day or month now and this whole thing will turn around and so it goes. The more you deceive yourself, the more you deceive others. The more you trick yourself by using denial, rationalization, projection and all the other fancy “shrink” terms for lying and not taking personal responsibility, the worse it gets. NOW is the time for each of us to look in the mirror and make the decision to get out of denial and dis-ease and into reality. The truth sets you free, and absolute truth brings absolute freedom.
When it all falls apart, you have two choices: lie in the corner and let them kick you to death as you bleed out--or start bouncing back. First you bounce a little, and then you bounce harder and harder until you are so resilient that no one and nothing can ever stop you again. Life is not about what happens to you. It is about who you are.
There will come a time when you believe everything is finished. That will be the beginning...
Louis L'Amour (Great American Storyteller)
Until Next Time,
Janice Dorn, M.D., Ph.D.
www.thetradingdoctor.com
- Dr. Janice Dorn's blog
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"I made every possible trading mistake, including lousy stock picks, bad execution, not cutting losses, not letting profits run, and not listening to the market.... and on and on."
Hmmm. I thought it was just me. Although I also have a unique talent for buying at the high and selling at the low. :-(
I've been selling both gold and stocks lately to "cut my losses". But one of the problems I face is what to do with the proceeds. I could put them into cash reserve accounts in my IRA, but those are not FDIC insured and my guess is that some of those cash reserves funds are invested in sub-prime mortgages and could become worthless. And if I put on my really pessimistic hat I start wondering if even FDIC insured accounts are safe. Certainly FDIC does not have enough funds to cover massive bank failures. Ok its backed by the full faith and credit of the federal government, but the government is broke too.
A friend of mine who made a lot of money trading has always said that when you are on the wrong side of a big trade you get "skewed," and then unable to make any other good trades until you get over it! Your description is so much more vivid. Have you looked into Ken's posts on gold and commodities? He has been nailing moves in gold to the penny over the past few months.
Have you tried to short Fannie and Freddie? I know someone that has been trying to do it for 8 years! His analysis was right but he misjudged how long the farce could be sustained. I'd love to hear about your attempts if you've tried to do it.
THanks for the interesting posts!
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
"Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear."
-Thomas Jefferson
Nice read. I have just recently got into the markets, and I am eagerly awaiting all the mistakes I will learn from :\