One Year in the Books

One year ago today I began a concentrated effort to become a successful stock trader. The market didn't throw me much of a celebration for my first anniversary.


The overall market extended it's decline today, crashing into the close following the 2pm release of the minutes from the last FOMC meeting. If I invest for 50 more years, maybe I'll understand why the market would sell off on the 'news' that inflation is a problem and growth is slowing. Who on planet earth hasn't heard these topics for the past year? That's why it's a fool's errand to try to figure out why the market moves - I spend my time on how it moves and what that means for me.


That brings me to my second frustration. I'm a big fan of Investor's Business Daily and the associated premium services. I read the paper every night. One section I never miss is the 'Big Picture,' which provides a synopsis of the market's action along with a statement of the market's outlook - whether it's in a rally, rally under pressure, or correction. I make my own decisions about the health of the market, but I also rely on the paper as a resource.


In the year I've been investing, I don't ever remember the market outlook going straight from Rally to Correction, but that's exactly what happened today. The column went from an almost too bullish stance straight to an end of the rally. They might be right, but to skip the 'rally under pressure' step almost implies that they were behind the curve on this one. I'm still not sure I agree we're in a correction, the S&P 500 and Nasdaq are still above their 50 dma's and have not even tested them yet. The Dow fell below it's 50 dma, but this index does not represent the health of the overall market well anymore.


Nonetheless, I will go ahead with the defensive playbook. Here's how I plan to handle my portfolio:


(SOL) is off it's highs but still up about 70%. I should be able to ride out a correction if it finds support at the 50 dma. It should, but obviously I don't know if it will. I may sell half of my position to lock in the gains and leave the other half for now.

(SOHU) is up about 14%. This one is trickier. Even if it does find support at the 50 dma, I don't know if it will hit it below my buy point - the 50 dma is still only around $60 and my cost basis is around $69. I may trail a stop up behind this one and just get out. I can always buy back in if it does bounce off the 50 dma.

(GU) is even. I will see how it opens and either lose a couple percent if it opens down or trail a stop up behind it if it opens up. I like the stock but I have no cushion to play with so it's best if I just try to get out of it.

As for the results of my first year trading, I lost about 8% of my capital. Considering that 2 weeks ago I was down 20%, I'll take it.

-Geoff