Make your own path

It’s been now close to three years since I started actively participating in the stock markets. I started with a few share purchases in the summer of 2019. Then learned a bit about options. And it snowballed from there.

During that time I have been involved in the deep but swift crash of COVID 2020 March, euphoric recovery of 2020 and into 2021, and then initially slow bleeding of 2021 growth stocks — bleeding that has accelerated. And finally, right now I am riding in what could be the beginning of major indexes bear of 2022. Not a bad time to get some valuable lessons. I have been surviving it so far, but also aware that I can’t get complacent. Victories have been the result of preparation and luck.

The biggest lessons I learned so far:

• The way that the public categorizes “a stock market” is very different from reality. The space is just so vast. You hear stuff like “markets are at record highs” but what does that mean? There are many “markets” underneath. When I would hear how amazing markets are doing in 2021, I would scratch my head and wonder what are they talking about? Only a very small percentage of stocks were doing well, the rest were either floundering or dropping like rocks. Of course, the media mostly just looks at S&P and NASDAQ, so to them what those indexes are doing is what the “market” is doing. Never mind that NASDAQ is highly overweight with 5–6 stocks so what they do is what mostly the index will do. There is so much diversity underneath. With time you start to separate large caps, from mid-caps, from small caps. Growth from value. Commodities, funds. Options. And I still haven’t gotten into currencies, bonds, and I am sure there are more that I am missing. The field is VAST.
• Popular media is your enemy. The never-ending news cycles and extreme behavior they encourage are a poison to your mind. If you trade based on the news that general media provides you, you will go broke. Must be ignored. Poison to your mind and poison to your knowledge. Ignore ignore ignore. One exception to this is that if you want to gauge euphoria or fear levels, then venturing into what shitty media journos are writing is a good way to pick those levels up and adjust your strategy if necessary.
• Lessons learned and knowledge acquired is very fluid. If you are constantly learning, you will end up adjusting your thinking and your actions. Nothing is set in stone although a few truths emerge here and there that stand the test of time. It’s a very dynamic and fast-moving environment.
• There are tons of educational materials out there to study. If you buy into the media narrative that the market participation is a game for the rich to pray on the poor: the media has fed you that lie and has failed you once again.
  There has never been an easier time to find materials to teach you how to participate. The only thing you need is a search engine and dedication. Those that make it on their own make it not because they have some unique gift or money but they dedicated their time to the craft and stayed the course through the ups and downs.
  Keep your expectations low: don’t shoot to become a millionaire overnight, start with modest goals (I am talking about $100 profit per month type of goals) and build on top of them. If you put in the time and learn and take action — you will make it.
• Having said that, this game is very hard. The biggest thing I underestimated before getting into trading is how hard this endevour is. It’s so hard if you want to consistently make money or even consistently survive. Just to survive for any meaningful amount of time while being invested is so damn hard.
  The areas I operate are growth companies and their stocks have been under big declines since February of 2021. No one wants to admit that because there was a good spike/run from May to August, but in general, February of 2021 was the recent top. Soon it’s going to be a full year of meandering downwards. I can’t express to you how many episodes of truly depressing commentary I have seen in the social forums (more on the forums and communities below) during this time. People are parting ways with real money, huge amounts of cash. People that have bet their savings on the 2020 euphoric rise and did not get out on time. The pain is real and the majority of the time it’s hidden. When things are going well you will see screenshots and chatter from the “stock experts”. When the pain comes, the only thing you see is silence. So, if you don’t want to put in the work OR time, it might not end up well. It’s why some of the smartest people I know always recommend just passive index funds.
  If you are not going to put in a lot of effort into this, then you need to put in the time. The stock markets, at least up to now, have always been rising, so the time in the markets matters.
• Related to the number of educational materials available, there are a huge number of online investor communities that are available that can help. Through my progression in trading, I started mostly on my own, then started to look at communities. Found a few that I thought were amazing, and joined them. With their guidance made some really good profits. But then with time, I think I have outgrown them. I have limited my participation and membership significantly in any kind of investing forums. Especially chats and posts from other members. They can be very poisonous and misinforming. So be aware. I think if you are starting out, some sort of stock picking service that also teaches you what they are looking at (ie not just dropping picks on your lap but also trying to educate you or share more details about their process) is worth your time.
• Last and most important: as you grow in knowledge, seek your own path. Find and define what works for you, then get really good at it, and keep on performing with what works — for you. There are millions of ways to make money in the market and one person could be saying that “buying and holding is THE WAY”, and the other person might be arguing that technical-based swing trading is THE WAY, and on and on. “Do this, then do that”. That’s all good and great, evaluate those discussions and seek the information but at some point, you have to pick one or a few ways that work for you and master them. Build your own path.

2022 is not starting out pretty. But I guess there are always dark clouds either above or on the horizon. The best we can do is worry about what we can control, take action — even if sometimes that means doing nothing — and adapt when needed to move forward.

Hope you all have a great 2022.