You got that right. Without risk management, you cannot succeed in the stockmarket. It just takes one big whack to put you out of business. Even buy and hold entails huge risks. Take CSCO in 2000 was as high as $100.00, today August 14, 2018 is worth $44.00. So, 18 years later you have lost 56% and still waiting to just breakeven! I know because I had CSCO then, and had 200 shares at a $100 when I started out and lost a good chunk of those monies! I sold out much earlier after that huge loss!
Success stories: From 2K to 430K
- Thread starter Pekelo
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You got that right. Without risk management, you cannot succeed in the stockmarket. It just takes one big whack to put you out of business. Even buy and hold entails huge risks. Take CSCO in 2000 was as high as $100.00, today August 14, 2018 is worth $44.00. So, 18 years later you have lost 56% and still waiting to just breakeven! I know because I had CSCO then, and had 200 shares at a $100 when I started out and lost a good chunk of those monies! I sold out much earlier after that huge loss!
Making $450 on FB puts after the worst single stock decline in history? What was the probability of this happening, and how many losing trades he placed before winning the lottery? Also, what percentage of his account did he risk?
Going forward, who can predict the next time this will happen, the stock and the timing? And if something cannot be traded with reasonable predictability, what exactly it is worth?
People win lottery all the time. Does it mean that buying lottery tickets is a good use of your money?
Playing the lottery isn't 50:50 odds, but I see your point... Sometimes it is all balls what it takes...
Great advice, thank you.A couple of questions:
1. How did you decide to go long on TNDM? At $3.95, it was about to run out of money and the revenue growth was poor when United Health essentially wrote them out of insurance payment by going exclusive with MDT?
2. If you bought at $3.95, and had a strong conviction, why not just let your winner run instead of "Sold and rebought"?
That will be rare as hen's teeth.
Years ago when I was an RIA, my returns were highlighted in the Denver Business Journal. I didn't advertise them myself, but a person I knew at the magazine put together a story that went something like, "Local Adviser Stomps Returns Of Local Mutual Funds".... there were quite a few of them at the time. Got me an "audit for cause*" visit from the SEC. (Passed with flying colors, BTW.)
But... have you noticed that you never see advertised returns? The reason is that any return you advertise has to meet strict requirements. You can't just "cherry pick", you have to tell EVERYTHING and be ready to document it in an audit. And if you have a "break" in track record, you can't use anything before the break. IOW... virtually no adviser wants to or can stand the scrutiny of and SEC audit, so nobody advertises.
*That's the type of audit where they "suspect you might have done something wrong"... including exaggerating returns. They spend days (weeks) in your office, going through every paper, confirmation, bank deposit... EVERYTHING. Not fun!
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