become a better investor
I’m 22 years old and about to graduate and start in banking. I always had a passion for the markets and was able to save $30k for my personal brokerage account. At one point my dad kept telling me to buy a stock and I bought it so he can leave me alone and it ended up losing me $8k and I’ve had a short bias ever since. I’ve been short the market since 2500 s&p (1 month ago) and currently down 35% ytd. how do I get better? anyone have any suggestions on how to improve my psychology? I’m still short and I can’t cover without talking myself out of it.
correct me if i am wrong but can you even trade / have a brokerage account if u are in banking?
I haven’t started yet. Starting in July but you can ETFs and preclear trades
Just to understand...you bought something you didn't understand and lost 26% of your capital just to shut your dad up, and then you got shell shocked from that one trade, so now you are down more than 1/3rd of your initial capital. You are not an investor, I don't even know if wallstreetbets would have you. You should take your money out of the market until you have something of an idea of what's going on - just focus on banking and learning to understand businesses.
I bought a stock for earnings from the advice of my dad (I know, big mistake and I learned my lesson) but I understand the market as much as a 22 year old can and I’m still up overall. I’ve made some good fundamental calls but my problem is that I feel like I can’t be wrong sometimes especially when I short which causes me to to take too long before covering.
Something similar happened to me in 2009, I shorted the bounce and it became extremely hard to cover because i couldnt accept the loss. Your big fear, understandably, is that you will cover the short and the next day the market implodes again. Way to deal with this is to realize the position is screwing up your psychology and keeping you up at night. You need to get out of this position (cover) and take a break for a couple of months until you have put this behind you. Yes, the loss hurts, but thats water under the bridge. You need to compose yourself and you wont get there until you are out of this position. Even if market does implode the day after, it wont feel great, but remind yourself why u exited the position.
Psychology in investing is tricky and always a challenge even after decades of experience. Before putting on a new position, it helps to ask yourself how you will feel and react if it moves 10% against you the next day. Will you add with conviction? Will you crumble? Will FOMO kick in? Going through this exercise helps make better decisions and gives you a point of reference when the live position starts to move and the insecurity kicks in.
I agree - you need to take a break and improve your confidence with small bets to build up your mindset and psychology. After that it is easier to be long biased versus short biased, especially regarding the S&P 500 which history tells you will be up in the long term.
I would also caution you to prioritize data and diligence over psychology as a young investor. Make sure you really know why you believe something. Macro is really hard, especially right now when experts are uncertain what is going to happen over the next several quarters. You can start with corporates where you can do your own diligence or if you love macro try to dig into specific industries and trends.
For personal investing, honestly I agree with the other recommendations and dollar cost average into the S&P over time. Then when you have sufficient capital diversify into other types of investments and develop multiple sources of income.
Mate I'm sure there are far more qualified people on this forum to give you advice regarding investing. I'm not going to delve into your past trades to see why you ended up with massive losses but here are my two cents-
Read up about the markets - sign up for daily newsletters from WSJ, Fortune, The Motley Fool, Morning brew, Robinhood Snacks, etc. which ever you prefer.
Look at different trading and portfolio management strategies not just buying/selling but also straddle, etc.. so learn a little bit about options and other instruments.
Have a strong conviction for investing in certain industry, equity, etc.. but make sure you hold a diversified portfolio learning more towards industries you believe will continue growing. Don't just diversify based on sector make sure you're also holding small-cap and medium-cap stocks alongside large-cap. Heck, if you have time might as well collect and record historicals for stocks/index funds you intend to trade and analyze the volatility and greeks to maintain a low risk profile (given the current environment).
Proactively manage/re-balance your portfolio based on your preferred risk profile/beta. Once onboarding starts, make sure you are complying with your bank policies and trading accordingly you don't wanna unintentionally end up in a Bill Tsai situation (highly unlikely but you never know).
*leaning more towards... you get the idea
Motley Fool is absolute garbage. Robinhood Snacks isn't great either
just buy the S&P 500 or use excel / R and download some historical data from your favorite ETFs and have a well diversified portfolio. They teach in school that very few people can consistently beat the market and you’re better off just buying the S&P 500 (or tracking ETFs such as VOO or SPY... watch out for the expense ratios tho).
So until you learn otherwise, I would just passively invest and not worry about it
i strongly suggest you subscribe the kobessi letter.
https://www.thekobeissiletter.com/subscribe.html
Kobessi he is really good...does the whole macro picture with trade recommendations and flushes out reasoning, along with execution levels. He trades the S&P 500, Gold, Crude Oil, Na Gas, Gold and TBonds. its only $75/month, and he's been killing it recently
Great newsletter I subscribe as well.
go to wallstreetbets and they will teach you the ropes
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