| | | | Shoot That Prisoner You Can't Afford to Feed
Author: Corey Snyder, Publisher
"I like to starve myself — keeps the fear up..."
- Cpl. Nick Chevotarevich, The Deer Hunter (1978)
Warren Buffett is old...
...And extremely wealthy.
And maybe it's the case that the latter exists largely because of the former.
91 years?
That's plenty of time to make mistakes... recalibrate... and then double down on whatever lessons learned...
But his method of investing and the type of personality that meshes with it are few and far between.
Try looking today's average investor in the eye and tell them to hold on to a stock for several decades…
Without laughing, of course.
Now, let me be clear — I'm not poking fun at "The Oracle of Omaha."
But so often I hear investors who've yet to reach full retirement age stand on his shoulders, talking about patience and value investing "just like Buffett and 'Uncle Charlie.'"
One problem: It's not for everyone.
In fact, by the time it is for someone, decades have already passed.
Even more to the point is a comment my clients used to hear from me (they didn't like it either)...
"It depends on you."
If your investing style is one that doesn't mind holding for a bit and you can exercise a fair amount of both control and patience, everything else is simply the time in between.
But most investors can't handle large drawdowns, nor can they all be lumped into one group…
I get that.
These are also the types of investors I'd tell to think twice before investing like Buffett.
Day and swing traders — even most position traders — wouldn't be caught dead with a drawdown of 50%.
But Buffett would:
"Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."
That sounds insane, right? 50%??
If you were to pick any one book out of the growing pile of investing guides out there, somewhere in it you would be told that your position should have never gotten that far.
"It depends."
And what it depends on can be sorted out by answering two simple questions:
- When do you need the money? - Short term? Retirement? Down payment on a used motorcycle that comes with a helmet? The answer will dictate how serious you are about the money in play.
- What am I willing to lose? - What you're willing to lose invariably defines how confident you are in the trade. Eventually, you're either correct or the market proves you wrong. When and where that is, of course, is entirely based on you.
An example...
In January of this year, I took a position in American Diversified Holdings Corp (OTC:ADHC) at exactly one penny.
My target? Double or nothing.
I didn't care if the company went bankrupt…
After just a little over a week, I was down by close to 40%...
But ten days later I cashed out with a 168% gain.
Would I have held it long term? No way.
In this instance, I was familiar with the environment and willing to wait for payment though.
I knew what I was willing to lose and my timeline.
Of course, it's brutal holding onto trades like this...
You're already playing with fire by putting your money into something you have little to no control over.
But by answering the two questions above, you'll find a certain level of resolve.
You see, when you invest in something, you end up feeding it one of two things…
Patience or frustration.
These will tell you plenty about your investing style and personality.
But it's when you've run out of both that it's time to lay that investment to rest.
As for Buffett? I don't think he'll run out of either...
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| | | | | | | Chris leads off the discussion with an analysis of interest rates and the market using TNX. He goes into detail on how he uses extreme movements in stocks as potential options trade set-ups.
This is a short but just as powerful episode. Events are moving fast, and you need this information right away.
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| | | FINAL PRINTS: The Major Indices Wrap-Up |
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| Index
S&P 500
Dow Jones
NASDAQ
Russell 2000
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| Weekly +/-
-98.44
-471.54
-481.00
-6.44 |
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| % Change
-2.21%
-1.36%
-3.20%
-0.29% |
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| Close
4,357.04
34,326.46
14,566.70
2,241.63
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| % YTD
+16.00%
+12.15%
+13.02%
+13.51%
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| | | MARKET WHISPERS: The Weekend Scoop
- Of the Seed of the Land or of the Coin of the Doge - Don't be alarmed if the tithing plate didn't come down your pew, God now accepts crypto. Congregants of Back Bay Church in Ocean Springs, Mississippi have become the first Southern Baptists to send cryptocurrency as a form of offering. Pastor Adam Bennett said he was influenced by church members as well as the Salvation Army's platform and decided to include crypto as a way of giving. Well, praise the lord and pass the ammunition.
- Pound Sign "CitadelScandal" - Ken Griffin and Citadel Securities haven't made many friends on Twitter since creating an account for the firm with hashtags #KenGriffinLied and #CitadelScandal trending this week, but the market maker is fighting back. Traders circulated reports and screenshots regarding a class-action lawsuit alleging that Citadel and Robinhood (HOOD) conspired to limit trading during the GameStop (GME) and AMC Entertainment (AMC) short squeeze earlier this year. However, Citadel tweeted that they knew nothing of the trade restrictions. The firm also threatened to take legal action against FlySigns Aerial Advertising which was contracted to fly around New York City towing a banner stating, "KEN GRIFFIN LIED UNDER OATH." The apes are really putting that GameStop money to use.
- Merck Just "Murked" the Vaccine Industry - Pharmaceutical giant Merck (MRK) made an announcement Friday that was a tough pill to swallow for COVID-19 vaccine makers. Merck stated that its experimental oral drug could cut deaths and hospitalization in half, according to its most recent sample study and plans to apply for emergency use authorization immediately. Shares of vaccine and treatment-related companies were down on Friday with Moderna (MRNA) and BioNTech (BNTX) both losing close to 5%.
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| | | | | Did you miss Options Coach Chris Hood's landmark event? Chris does a deep dive into his cornerstone strategy that has been paying him every week for years...
Click below to watch now.
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| | | HIT OR MISS: Who's on Deck for Earnings
- Monday, October 4th - Duckhorn Portfolio, Inc. (NAPA), Comtech Telecommunications Corp. (CMTL)
- Tuesday, October 5th - PepsiCo (PEP), Saratoga Investment Corp. (SAR)
- Wednesday, October 6th - Constellation Brands (STZ), Acuity Brands, Inc. (AYI), RPM International Inc. (RPM), Levi Strauss & Co. (LEVI), Resources Connection, Inc. (RGP), IDT Corp. (IDT)
- Thursday, October 7th - Tilray Inc. (TLRY), ConAgra Foods (CAG), Helen of Troy Ltd. (HELE), Lamb Weston Holdings (LW), Accolade, Inc. (ACCD)
- Friday, October 8th - Byrna Technologies Inc. (BYRN)
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| | | Enjoying Dawn Report? Learn something, made some money?SHARE YOUR STORY WITH US OR TELL US HOW TO SERVE YOU BETTER.Let us know at info@rogueinvesting.com |
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| | | | | | | | | | Copyright © 2020 Rogue Investing. All Rights Reserved. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Rogue Investing.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for any trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. By downloading this book your information may be shared with our educational partners. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Rogue Investing.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. An InvestPub Company. |
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| HIGH RISK WARNING Trading foreign exchange, stocks, options, or futures on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade, you should carefully consider your objectives, financial situation, needs and level of experience. RogueInvesting.com provides general advice that does not take into account your objectives, financial situation or needs. The content of this website must not be construed as personal advice. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.You should seek advice from an independent financial advisor. Past performance is not necessarily indicative of future success. |
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