During any 30-day period from 1993 through 2014 the SPY (the Exchange Traded Funds, or ETFs, tracking the S&P 500) closed down 5% or more 11% of the time. I know this obscure fact because for every one of the 5,502 trading days during that period I compared the SPY closing price with the closing price 30 trading days later.
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By my best calculations, going back to my piggy bank years, my personal spending has increased by 10% annually—and my assumption is that I will continue shelling out at this rate well into the future. Sure, I am a spender, but when you really think about it 10% is not crazy.
Anyone who manages their own money should use a multiple strategy approach—a form of diversification, if you will. I personally maintain 4 strategies: buying & holding stocks, investing in real estate, index option credit spread trading, and directional option trading. I find these to be great options for diversification.
The difference between success, failure, and mediocrity on Wall Street is your ability to pick a smart trading or investing strategy and stick to it. Jumping into the market without first carefully defining your strategy is akin to driving a car with a blindfold on—and, likewise, you will crash at some point.
What I mean by a consistent trading strategy is if you build a smart trading strategy and stick to it you are almost certain to make money. I make this claim with such conviction because I assume that you backtest your strategy. That you factor in maximum drawdown periods (times when you lose money). And most critical, that you understand the importance of fidelity to your strategy—because inconsistent strategy is the road to a blown-out account.
Welcome to the inaugural blog post of Stockpeer.com. To find out more about me, Spicer, take a detour and check out the About page. To learn more about Stockpeer, read on.
