We Have Met the Enemy, and He is Us
After working for 30 years, we have retirement savings, but we do not have any income from annuities or disabilities or pensions or social security or unemployment.
Basically, we are depleting our savings as we spend money for food, clothing, and shelter, and we are replenishing our savings only if or when we realize capital gains or dividends.
Each day, we lose money in the market or we make money in the market. It is not easy. We are living by our wits, so we are certainly not “living large.”
Recently, I have had a few reasons to review my investment performance, to determine what I do well and what I do poorly and to distinguish what is working from what is not.
It has been helpful to review my market timing, security selection, and entries and exits, and to measure things like average gain, average holding period, and win/loss percentage. Generally, did I buy and sell the right stocks at the right times for the right prices?
I learned that most of my mistakes were not because I did not know better, but because even though I did know better, I bent or broke my own rules.
Most losses came from stocks that I never should have bought or never should have held. Sometimes, I doubled down on stocks that I never should have bought in the first place. Other times, because I was not vigilant, I held on to good stocks that became bad stocks.
I let my pride get the best of me, and I allowed my judgment to override my rules.
Also, I found that I was often too quick to take gains, as well as too slow to take losses. Without time, gains cannot become big gains. With time, losses can become big losses. Unfortunately, fear and greed too often cause us to “cut our flowers and water our weeds.”
Again, I let my pride get the best of me, and I lived with my bad decisions for too long.
As an investor, I am only one bad trade away from a second career as a Walmart greeter, so I cannot ever afford to be too complacent or too confident.
When I think about it, I realize that I could have applied the same lessons in other areas — “Don’t bend or break your own rules” and “Don’t live with your mistakes for too long.”
Good advice. Maybe I can start following my rules and swallowing my pride in the future.