Editor's Note: Gary B. Smith's column runs exclusively on RealMoney.com; this is a special free look at his column. For a free trial subscription to RealMoney.com, click here. This article was published Dec. 13 on RealMoney.
If you haven't done so already, please see the poll that appeared in
Wednesday's column. If you did read Wednesday's column, you no doubt took the survey, and I thank you.
Thoughts on it all? To be honest, I was surprised at the results: I thought the overall returns would be a bit higher. Clearly there's some pain out there, as two-thirds of the respondents haven't made a dime this year. And within that, 24% of you are down more than 25% this year. Tough stuff, I know.
But here's the good news. I'm convinced everyone out there has the ability to be not down, not flat, but up in a year like this. You see, I liken trading/investing (henceforth, just called trading) ability to golf. The average player these days can't break 90. And it's been that way for about the past 20 years or so. Probably longer.
That doesn't have to be the case because only three things can be stopping you.
- You're totally devoid of any ability. Yes, sadly some people have seemingly no motor skills whatsoever. I suppose when it comes to money, some folks pretty much "just don't get it." But I'd have to assume that applies to only the smallest percentage of
You have the ability, but you don't practice. Oh, there's a lot of that in golf, and for some reason, these folks are always ahead of me when I'm trying to get around quickly!
In trading, though, what constitutes practice? I'd throw reading about different methods into that mix. I'd also include a daily examination of your trades and a write-up of where you went wrong and why. Finally, I also think you need to do a ton of paper trading and trading with small lot sizes to see if new methods can be effective.
As a simple test, ask yourself how many books you read about trading this year. If the answer is fewer than one, you have some work to do.
You practice, but you practice the wrong things. For many of you, this is the nut of the problem. You keep swinging away, but you keep working on things that don't work. Or they work, but you're not flexible enough to include new or different concepts.
As an example, if you went short this year as easily as you went long, I think you could have fared pretty well. If you don't like shorting, then a variety of good market-timers (Jim Rohrbach, for example) could have told you when to stay in and when to stay out.
Options may have helped, and let's not forget about technical analysis, even if you're a die-hard fundy.
I guess my long-winded point is that I feel 99.9% of you have the ability to never have a losing year. Never. The tools are out there, but they require diligence to find and a dedication to implement. But if you're serious about "breaking 90," then you really have no choice. Time to get to work.
Today, a look at the
So, of course, you're asking where I stand on
returns. I never, ever tempt the Trading Gods to strike me down before year-end, but I reveal all about the previous year in a "self-interview," which I normally do in January. Look for it then!
Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes a daily technical analysis column for RealMoney.com and produces a daily premium product for TheStreet.com called
The Chartman's Top Stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback to
Gary B. Smith.