Year Two Review

Somehow I missed my two year anniversary of my re-dedication to trading. May 27th marked the end of my second year. In short, I'm very pleased with the progress made in my second year when compared with my first.

I should clarify my definition of progress. I'm not as concerned about percentages and dollars as I am with improving the way I trade and the system I trade with. As it turns out, when I improve the latter the former follows right along in place - as expected.

From a quantifiable standpoint I did meet my goal of beating the S&P 500 after taxes and cost of investing materials. Not by a lot, but I beat it. I will now update this goal and work to beat the return I get on my IRA mutual fund portfolio. This portfolio represents the best return I can get with a passive account, and therefore if I outperform that I am money ahead. I don't have a timetable on reaching this goal, and do not expect to do so by the end of year three. However, I should be well on my way and improving my system and results continuously.

I was thinking over the past week about some of the things I have learned during the past year or two:

• It's a marathon, not a sprint - most of my mistakes have been a result of attempts to get rich quickly
• It's easier not to lose capital than it is to make it back - my first year I created a deficit for myself, and it may take another year or two just to break even
• All the hours of study and research really do pay off over time - I didn't see immediate results from the time I put in, but eventually all the information I've accumulated has begun to converge
• Keep an open mind and be willing to listen - anyone can teach me something useful if I'm willing to listen
• It's the system that matters, not the stock picking - this is not an ego trip - If I succeed it will be from discipline, not because I'm a great stock picker

Where I've improved:

• Documentation - I'm getting better about maintaining my watchlist - this is very necessary for constant improvement, I should be able to determine which patterns have been most successful for me (and least) along with other details on stocks I've purchased or passed on
• Chart Reading - I don't follow strict CAN SLIM guidelines for chart reading, and that's fine - I've used what I've learned from CAN SLIM and other readings to consistently identify chart patterns that have worked for me so far this year
• System Building - I've begun carefully documenting my buy, sell, and position sizing rules
• Discipline - I've made an effort to stick to my rules

Where I need continued improvement:

• All of the above - I don't think I'll ever feel that I'm so expert on any aspect of investing that I cannot improve
• More that I don't know yet - A lot of the lessons I've learned have been in hindsight - who knows what else I'll realize I could be doing better

While this is by no means an exhaustive study of my past year trading, I enjoy marking the time passed and thinking about about where I've been and where I am now. Without question this blog has been instrumental in my progress, and I look forward to maintaining it for years to come.