Confessions of a serial ex-trader

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DRReaders
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Confessions of a serial ex-trader

Post by DRReaders »

Hi Bogleheads,

I'm new to this forum as a contributor, but have been following and reading along for a few months now. I started off as I'm sure a few people can relate to, investing in individual stocks and companies that I thought had potential and had an upward trajectory in future industries (growth investing). As my interest grew, I started trying to increase my returns and slowly went down the rabbit hole of derivatives until I ended up where Bogleheads abhor, the mosh pit of high risk options trading, day trading, WallStreetBets, and Robinhood. I was one of the lucky ones, I ended up watching my portfolio shoot up due to pure luck and crash and a few months later, managing to get out at even.

From that point my approach to the stock market changed. I tried to educate myself on all things finance and economy related and happened to find out about the FIRE community. From that community I learned a lot, and through it I found the infamous HFEA thread here. After spending several months reading through the forum, I have been fully convinced myself that I wanted to adopt the Boglehead's way of investing.

However, even with the knowledge about finance I've obtained since my insanely high risk days, there is still some part of me that every once in awhile wants to buy a proverbial lottery ticket in the stock market. Does anyone have suggestions or ways that they stop themselves from giving into this urge or "disease" as Mr. Bogle calls it given the history listed above and the fact that my logical side knows it would only cause me to lose money in the long run?
Strifey
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Re: Confessions of a serial ex-trader

Post by Strifey »

The only advice I have is if you do find yourself going down the rabbit hole, at least make sure your only risking 5% of your portfolio at most. I know many people allocate a small portion of their investments to scratch the itch of picking individual stocks; and like many hobbies, addictions, or whatever I can see the appeal. I mean if that's one of your vices there are probably much worse things you can be risking your money on.

Just don't risk 100% of your retirement to do it... and stay away from things that have unlimited risk like shorting... If you're going to risk 5% at least make sure you can only lose 5% at most.
livesoft
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Re: Confessions of a serial ex-trader

Post by livesoft »

Maybe find something else that is risky and satisfies the need for thrill seeking? Motorcycle racing? Solo backpacking? Getting married?
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DRReaders
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Re: Confessions of a serial ex-trader

Post by DRReaders »

Strifey wrote: Thu Jul 29, 2021 6:03 pm The only advice I have is if you do find yourself going down the rabbit hole, at least make sure your only risking 5% of your portfolio at most. I know many people allocate a small portion of their investments to scratch the itch of picking individual stocks; and like many hobbies, addictions, or whatever I can see the appeal. I mean if that's one of your vices there are probably much worse things you can be risking your money on.
Thanks for the input, while I know some people allocate a small portion of their portfolio to do so, I would rather completely avoid doing so as I had the tendency in the past to chase losses.
livesoft wrote: Thu Jul 29, 2021 6:16 pm Maybe find something else that is risky and satisfies the need for thrill seeking? Motorcycle racing? Solo backpacking? Getting married?
Working on the last part so perhaps that will distract me :sharebeer
blueberrypi
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Re: Confessions of a serial ex-trader

Post by blueberrypi »

I buy stock slices through M1 with 5% of my income.
pedalman701
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Re: Confessions of a serial ex-trader

Post by pedalman701 »

livesoft wrote: Thu Jul 29, 2021 6:16 pm Maybe find something else that is risky and satisfies the need for thrill seeking? Motorcycle racing? Solo backpacking? Getting married?
I saw what you did there. Well played, my good man. Well played.
:sharebeer
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deltaneutral83
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Re: Confessions of a serial ex-trader

Post by deltaneutral83 »

The "only use 5% of your assets" never made any sense to me. Tell a drunk to only have one beer and see what happens. Trading single stocks for the short term is nothing more than gambling, I'd rather go to Vegas and at least have some fun. Picking single stocks and holding for 10+ years is investing, but you also have to ask yourself if you know something other large groups who spend 60 hours a week at it with Bloomberg terminals, 3 degrees from MIT, and 11 monitors don't. 98% of the pros can't even pick stocks that outperform indexes after fees and that 98% is conservative over 20 years in a taxable account, more like 99%.

If one (like nearly everyone else) has had their bell rung picking single stocks to invest for the long term for 10+ years years and still has the urge, it isn't a mathematical problem. I think something like 96% of stocks over 20 years don't outperform their index and 92% don't even beat out treasuries (somebody fact check that). If day/swing trading, just know it's gambling and that there's a 90+% chance an institution with smarter people than you are selling what you're buying and vice versa. I guess either way when you are actively jumping in regardless if it's short term or long term, you're running the risk you've just challenged a pro athlete to a game in his selected sport. I've noticed that it really gets rough in rising markets, where if "I'm making a lot of money" then I'm doing well. If you are trading large cap stocks and the S&P does 12% CAGR a year for 5 years, and you do 9%, you're getting drubbed even though your account has swelled. I see a lot of this, people have no idea how to keep score.
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Re: Confessions of a serial ex-trader

Post by nedsaid »

A problem with frequent trading is that what you sell tends to perform better than what you buy to replace. This is a big problem with amateur investors, though professional investors are not immune to this problem. Transaction costs have come down a lot over the years and are not as much of an issue as they used to be, what really kills portfolio performance is incorrect sell/buy decisions.

On this forum, I called this the "Nedsaid effect" as I experienced this myself. At least in the short run, the incorrect sell/buy decisions seemed to outweigh the correct sell/buy decisions by a ratio of 2:1 or even 3:1. A lot of this will correct itself with longer holding periods but if you trade frequently you will likely never recover from the cumulative effect of incorrect sell/buy decisions. The more you trade, the greater the effect.

I got burned over the years and have developed an aversion to trading, I really don't like to rebalance my portfolio but will do it anyway to control the risk of my portfolio.
A fool and his money are good for business.
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DRReaders
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Re: Confessions of a serial ex-trader

Post by DRReaders »

deltaneutral83 wrote: Fri Jul 30, 2021 10:11 am The "only use 5% of your assets" never made any sense to me. Tell a drunk to only have one beer and see what happens.
I have to say I agree, that's why I don't really like the suggestion of just use a little bit of your portfolio to gamble in the stock market. It's easy to get dragged into a downward spiral. That's how casinos' do it, get your foot in the door is their first step. It's easy to think that you'll be the one that can step away when the losses start piling up.

To expand, what are ways to build discipline against individual stock picking without using a small part of your portfolio to do so, especially when you feel the urge to.
MattB
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Re: Confessions of a serial ex-trader

Post by MattB »

I don't always win the battle. (I'm embarking on Hedgefundies adventure beginning next week). But I have found that playing the game of "how much can I invest" seems to work for me. I buy more VTSAX when I need retail therapy and enjoy seeing our account balances go up.
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Re: Confessions of a serial ex-trader

Post by deltaneutral83 »

nedsaid wrote: Fri Jul 30, 2021 10:29 am I got burned over the years and have developed an aversion to trading, I really don't like to rebalance my portfolio but will do it anyway to control the risk of my portfolio.
This sounds like a scenario where mutual funds would work instead of ETF's. Removes that temptation. I tell folks my age all the benefits of ETF's and their mobility but if you have any inkling to trade other than to rebalance or invest leftover cash flow, then that's a hard no.
DRReaders wrote: Fri Jul 30, 2021 2:42 pm
deltaneutral83 wrote: Fri Jul 30, 2021 10:11 am The "only use 5% of your assets" never made any sense to me. Tell a drunk to only have one beer and see what happens.
I have to say I agree, that's why I don't really like the suggestion of just use a little bit of your portfolio to gamble in the stock market. It's easy to get dragged into a downward spiral. That's how casinos' do it, get your foot in the door is their first step. It's easy to think that you'll be the one that can step away when the losses start piling up.

To expand, what are ways to build discipline against individual stock picking without using a small part of your portfolio to do so, especially when you feel the urge to.
To each his own, but ask yourself what you're trying to accomplish by picking stocks? Think about it for a few hours, what is the genuine goal here? To make money(?), well has that worked out? If it hasn't, now it's a hobby, it's an expense, and if you lose a lot of money, a large expense. I like to do fun things when I spend money, not stare at balance sheets and P&L's of companies.

And by losing money, I mean you are competent enough to measure your results accurately against the benchmark(s) for the stocks you're picking. If you've been picking stocks for say 8 years and you've "made money" have you picked at least 25 stocks and have you beaten the benchmarks you're up against?
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Re: Confessions of a serial ex-trader

Post by nedsaid »

deltaneutral83 wrote: Fri Jul 30, 2021 3:18 pm
nedsaid wrote: Fri Jul 30, 2021 10:29 am I got burned over the years and have developed an aversion to trading, I really don't like to rebalance my portfolio but will do it anyway to control the risk of my portfolio.
This sounds like a scenario where mutual funds would work instead of ETF's. Removes that temptation. I tell folks my age all the benefits of ETF's and their mobility but if you have any inkling to trade other than to rebalance or invest leftover cash flow, then that's a hard no.
DRReaders wrote: Fri Jul 30, 2021 2:42 pm
deltaneutral83 wrote: Fri Jul 30, 2021 10:11 am The "only use 5% of your assets" never made any sense to me. Tell a drunk to only have one beer and see what happens.
I have to say I agree, that's why I don't really like the suggestion of just use a little bit of your portfolio to gamble in the stock market. It's easy to get dragged into a downward spiral. That's how casinos' do it, get your foot in the door is their first step. It's easy to think that you'll be the one that can step away when the losses start piling up.

To expand, what are ways to build discipline against individual stock picking without using a small part of your portfolio to do so, especially when you feel the urge to.
To each his own, but ask yourself what you're trying to accomplish by picking stocks? Think about it for a few hours, what is the genuine goal here? To make money(?), well has that worked out? If it hasn't, now it's a hobby, it's an expense, and if you lose a lot of money, a large expense. I like to do fun things when I spend money, not stare at balance sheets and P&L's of companies.

And by losing money, I mean you are competent enough to measure your results accurately against the benchmark(s) for the stocks you're picking. If you've been picking stocks for say 8 years and you've "made money" have you picked at least 25 stocks and have you beaten the benchmarks you're up against?
Most of my experience with incorrect sell/buy decisions is with individual stocks but this concept works with mutual funds and ETFs as well. The buy decision is relatively easy to make relative to the sell decision. A lot of this has to do with longer term trends in the market such as Growth vs. Value, Large vs. Small, U.S. vs. International. We see one part of the market outperform the other for years at a time and later market leadership will change.

A lot of the incorrect sell/buy decisions is giving up on an investment or a strategy right before it starts doing well again, sort of buying high and selling low. Humans tend to buy investments after they have already done well and tend to sell after they have disappointed. Performance chasing is what many investors do and then wonder why their investment results are disappointing.
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Re: Confessions of a serial ex-trader

Post by Northern Flicker »

DRReaders wrote: However, even with the knowledge about finance I've obtained since my insanely high risk days, there is still some part of me that every once in awhile wants to buy a proverbial lottery ticket in the stock market. Does anyone have suggestions or ways that they stop themselves from giving into this urge or "disease" as Mr. Bogle calls it given the history listed above and the fact that my logical side knows it would only cause me to lose money in the long run?
My suggestion is to find a less expensive hobby than trying to find the next multibagger lottery ticket stock.
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Re: Confessions of a serial ex-trader

Post by KFBR392 »

"Complete abstinence is easier than perfect moderation."
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Re: Confessions of a serial ex-trader

Post by retiredjg »

DRReaders wrote: Fri Jul 30, 2021 2:42 pm To expand, what are ways to build discipline against individual stock picking without using a small part of your portfolio to do so, especially when you feel the urge to.
If you have trouble controlling the urges, you should hire someone else to do this work for you.

The only advisor group I suggest is Vanguard's Person Advisor Service because they are the only ones who do not have a financial incentive to put you in anything other than low cost index funds. And their advisory fee is quite low (0.3%).

Of course, you will still have to manage your own work plan (401k maybe) but these don't usually offer many opportunities for day trading, etc.
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Re: Confessions of a serial ex-trader

Post by GoldenFinch »

If you lose a ton of money doing risky things with your money in the stock market, you will cure yourself of temptation.




I have a few kids. I tell them all about the Boglehead way. Two listen and take the advice. One wants to learn from his own brilliance. Another is in middle school with a piggy bank and currently reading my copy of The Psychology of Money by Morgan Housel.

The two Bogleheads (both in their early 20s) have amassed 120k and 63k by working and saving in index funds. The one learning by experience, Robinhood and personal brilliance (also in early 20s) has approximately 30.00. The 12 year old has 114.00.

I personally think the Boglehead way is smart. Just imagine - you could skip the losing money part and get right to the good stuff. :happy
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Re: Confessions of a serial ex-trader

Post by DRReaders »

GoldenFinch wrote: Fri Jul 30, 2021 5:15 pm If you lose a ton of money doing risky things with your money in the stock market, you will cure yourself of temptation.

I have a few kids. I tell them all about the Boglehead way. Two listen and take the advice. One wants to learn from his own brilliance. Another is in middle school with a piggy bank and currently reading my copy of The Psychology of Money by Morgan Housel.

The two Bogleheads (both in their early 20s) have amassed 120k and 63k by working and saving in index funds. The one learning by experience, Robinhood and personal brilliance (also in early 20s) has approximately 30.00. The 12 year old has 114.00.

I personally think the Boglehead way is smart. Just imagine - you could skip the losing money part and get right to the good stuff. :happy
It certainly puts it into perspective, the funds saved during a person's early 20s is worth a lot more than the money later on. When I think back to my high risk trading days it makes me :oops:
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Re: Confessions of a serial ex-trader

Post by DRReaders »

retiredjg wrote: Fri Jul 30, 2021 4:32 pm If you have trouble controlling the urges, you should hire someone else to do this work for you.

The only advisor group I suggest is Vanguard's Person Advisor Service because they are the only ones who do not have a financial incentive to put you in anything other than low cost index funds. And their advisory fee is quite low (0.3%).

Of course, you will still have to manage your own work plan (401k maybe) but these don't usually offer many opportunities for day trading, etc.
I agree that this might be a solution, any additional fees/expenses coming out makes me hesitant though, perhaps 0.3% is worth the peace of mind.
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Re: Confessions of a serial ex-trader

Post by retiredjg »

DRReaders wrote: Fri Jul 30, 2021 5:36 pm I agree that this might be a solution, any additional fees/expenses coming out makes me hesitant though, perhaps 0.3% is worth the peace of mind.
Yes, in a sense, you would be paying for peace of mind. But the cost of the service would almost certainly be less than what you will lose if you continue doing what you have been doing.

If this is a pattern you have had difficulty moving away from, you owe it to yourself to hire someone else do this for you.
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Re: Confessions of a serial ex-trader

Post by teuton33 »

nedsaid wrote: Fri Jul 30, 2021 10:29 am A problem with frequent trading is that what you sell tends to perform better than what you buy to replace. This is a big problem with amateur investors, though professional investors are not immune to this problem. Transaction costs have come down a lot over the years and are not as much of an issue as they used to be, what really kills portfolio performance is incorrect sell/buy decisions.

On this forum, I called this the "Nedsaid effect" as I experienced this myself. At least in the short run, the incorrect sell/buy decisions seemed to outweigh the correct sell/buy decisions by a ratio of 2:1 or even 3:1. A lot of this will correct itself with longer holding periods but if you trade frequently you will likely never recover from the cumulative effect of incorrect sell/buy decisions. The more you trade, the greater the effect.

I got burned over the years and have developed an aversion to trading, I really don't like to rebalance my portfolio but will do it anyway to control the risk of my portfolio.
I’m not buying this. If you were truly able to consistently pick the loser among 2 stocks then that is no different from being able to time the market. Someone could use your loser picking skills and do the inverse and become rich.
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Re: Confessions of a serial ex-trader

Post by Williams57 »

DRReaders wrote: Fri Jul 30, 2021 2:42 pm
deltaneutral83 wrote: Fri Jul 30, 2021 10:11 am The "only use 5% of your assets" never made any sense to me. Tell a drunk to only have one beer and see what happens.
I have to say I agree, that's why I don't really like the suggestion of just use a little bit of your portfolio to gamble in the stock market. It's easy to get dragged into a downward spiral. That's how casinos' do it, get your foot in the door is their first step. It's easy to think that you'll be the one that can step away when the losses start piling up.

To expand, what are ways to build discipline against individual stock picking without using a small part of your portfolio to do so, especially when you feel the urge to.
It works for me, ~2% are in single stocks. Not speculative, just individual stocks. I am not sure if it will ever outperform VT/VTI/VOO. For me it's fun. You have to agree with yourself and promise yourself that you will only play with a certain amount, not any more than that.
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Re: Confessions of a serial ex-trader

Post by nedsaid »

teuton33 wrote: Fri Jul 30, 2021 6:50 pm
nedsaid wrote: Fri Jul 30, 2021 10:29 am A problem with frequent trading is that what you sell tends to perform better than what you buy to replace. This is a big problem with amateur investors, though professional investors are not immune to this problem. Transaction costs have come down a lot over the years and are not as much of an issue as they used to be, what really kills portfolio performance is incorrect sell/buy decisions.

On this forum, I called this the "Nedsaid effect" as I experienced this myself. At least in the short run, the incorrect sell/buy decisions seemed to outweigh the correct sell/buy decisions by a ratio of 2:1 or even 3:1. A lot of this will correct itself with longer holding periods but if you trade frequently you will likely never recover from the cumulative effect of incorrect sell/buy decisions. The more you trade, the greater the effect.

I got burned over the years and have developed an aversion to trading, I really don't like to rebalance my portfolio but will do it anyway to control the risk of my portfolio.
I’m not buying this. If you were truly able to consistently pick the loser among 2 stocks then that is no different from being able to time the market. Someone could use your loser picking skills and do the inverse and become rich.
Huh? I was not deliberately trying to pick loser stocks, otherwise I would have shorted them and not been in a long position. Another explanation for what I experienced is that my stocks were Value oriented, Value is associated with negative momentum, which means that quite often Value stocks will continue to go down in price for a while after you buy them. I also said that long holding periods corrects a lot of this.

A good example was that I switched Oracle stock for Microsoft stock. Oracle had been a great stock for me and had a great run but I had opportunity to switch to Microsoft which was a far cheaper stock. Oracle continued to do well after I sold it and Microsoft languished for about 7 years after that. After my broker called and suggested that I sell my Microsoft, I told him no, that I wanted to hang on to the stock. Not long after, Steve Ballmer retired and a new CEO came aboard and the company started to respond. After that it become one of the best investments that I had ever made. The value was there, the company needed a catalyst which was a new CEO. So yet another lesson was learned to let your winners run, as long as the prospects going forward are good. A Value orientation also requires patience.

So you can say what you want, I have real life investing experience to back up my statements. I read Larry Swedroe's comments on research about individuals trying to pick their own stocks. In short the research said three things: individuals didn't do a good job picking stocks, when they sold the stocks they sold tended to outperform what they bought to replace, individuals doing this underperform the market by about 4 percent a year. Over many years, I have pretty much tracked the Vanguard Value Index, I have trailed the market a bit because Value has been underperforming since 2009.

It takes a lot of time and thought to compose a good post, it takes only seconds to make a flippant comment.
A fool and his money are good for business.
teuton33
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Re: Confessions of a serial ex-trader

Post by teuton33 »

nedsaid wrote: Fri Jul 30, 2021 7:59 pm
teuton33 wrote: Fri Jul 30, 2021 6:50 pm
nedsaid wrote: Fri Jul 30, 2021 10:29 am A problem with frequent trading is that what you sell tends to perform better than what you buy to replace. This is a big problem with amateur investors, though professional investors are not immune to this problem. Transaction costs have come down a lot over the years and are not as much of an issue as they used to be, what really kills portfolio performance is incorrect sell/buy decisions.

On this forum, I called this the "Nedsaid effect" as I experienced this myself. At least in the short run, the incorrect sell/buy decisions seemed to outweigh the correct sell/buy decisions by a ratio of 2:1 or even 3:1. A lot of this will correct itself with longer holding periods but if you trade frequently you will likely never recover from the cumulative effect of incorrect sell/buy decisions. The more you trade, the greater the effect.

I got burned over the years and have developed an aversion to trading, I really don't like to rebalance my portfolio but will do it anyway to control the risk of my portfolio.
I’m not buying this. If you were truly able to consistently pick the loser among 2 stocks then that is no different from being able to time the market. Someone could use your loser picking skills and do the inverse and become rich.
Huh? I was not deliberately trying to pick loser stocks, otherwise I would have shorted them and not been in a long position. Another explanation for what I experienced is that my stocks were Value oriented, Value is associated with negative momentum, which means that quite often Value stocks will continue to go down in price for a while after you buy them. I also said that long holding periods corrects a lot of this.

A good example was that I switched Oracle stock for Microsoft stock. Oracle had been a great stock for me and had a great run but I had opportunity to switch to Microsoft which was a far cheaper stock. Oracle continued to do well after I sold it and Microsoft languished for about 7 years after that. After my broker called and suggested that I sell my Microsoft, I told him no, that I wanted to hang on to the stock. Not long after, Steve Ballmer retired and a new CEO came aboard and the company started to respond. After that it become one of the best investments that I had ever made. The value was there, the company needed a catalyst which was a new CEO. So yet another lesson was learned to let your winners run, as long as the prospects going forward are good. A Value orientation also requires patience.

So you can say what you want, I have real life investing experience to back up my statements. I read Larry Swedroe's comments on research about individuals trying to pick their own stocks. In short the research said three things: individuals didn't do a good job picking stocks, when they sold the stocks they sold tended to outperform what they bought to replace, individuals doing this underperform the market by about 4 percent a year. Over many years, I have pretty much tracked the Vanguard Value Index, I have trailed the market a bit because Value has been underperforming since 2009.

It takes a lot of time and thought to compose a good post, it takes only seconds to make a flippant comment.
Ok I believe you. Next time you have an urge to swap stocks. Please let me know as I’ll use your claimed 66% rate of picking the future loser as a guide for my own decision making.
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Re: Confessions of a serial ex-trader

Post by DTalos »

DRReaders wrote: Thu Jul 29, 2021 5:54 pm Hi Bogleheads,

I'm new to this forum as a contributor, but have been following and reading along for a few months now. I started off as I'm sure a few people can relate to, investing in individual stocks and companies that I thought had potential and had an upward trajectory in future industries (growth investing). As my interest grew, I started trying to increase my returns and slowly went down the rabbit hole of derivatives until I ended up where Bogleheads abhor, the mosh pit of high risk options trading, day trading, WallStreetBets, and Robinhood. I was one of the lucky ones, I ended up watching my portfolio shoot up due to pure luck and crash and a few months later, managing to get out at even.

From that point my approach to the stock market changed. I tried to educate myself on all things finance and economy related and happened to find out about the FIRE community. From that community I learned a lot, and through it I found the infamous HFEA thread here. After spending several months reading through the forum, I have been fully convinced myself that I wanted to adopt the Boglehead's way of investing.

However, even with the knowledge about finance I've obtained since my insanely high risk days, there is still some part of me that every once in awhile wants to buy a proverbial lottery ticket in the stock market. Does anyone have suggestions or ways that they stop themselves from giving into this urge or "disease" as Mr. Bogle calls it given the history listed above and the fact that my logical side knows it would only cause me to lose money in the long run?

Thank you for sharing your experiences. How did you manage the stress of day trading, figuring out when to sell a stock, and the anguish of when a stock plunges in value? Do you have a high tolerance for stress? I am personally not interested in engaging in the behavior described in the first paragraph of your post, but I can imagine there are also negative physical, emotional and mental effects of participating in the meme craze, day trading or a one-stock portfolio that are often overlooked and underreported.
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Re: Confessions of a serial ex-trader

Post by 4nursebee »

If you call yourself an ex trader then I think you will go back to this pattern. You lack the intellectual honesty to call yourself a gambler. You did not put in the work of a real trader, you followed the crowd into the casino and did what everybody else did.
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Re: Confessions of a serial ex-trader

Post by beyou »

You sound young. When I was in my 30s I too gambled on individual stocks (never options). I traded during a bubble that I realized was unsustainable and got out completely, fortunately ahead before a crash.

I addition to my lucky prediction I also realized I had more to gain working on career skills to earn more $. Time spent on day trading did not as easily translate to more wealth as having a better paying career. Take classes,
look for a better job, get promoted in your current job. All those take time and effort, and time better spent (more profitable) than day trading. Also paying off debt is a sure thing even if not wildly profitable. Increased income, reduced debt and spending are the easy ways to become wealthier compared to gambling (which seems easier but is not).
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Re: Confessions of a serial ex-trader

Post by chris319 »

I own several individual stocks. They keep me interested and motivated. However, my stock holdings comprise 1.14% of my investment portfolio, much less than the suggested 5%. A typical stock position is 0.3 - 0.4% of my portfolio.

My stock positions are all long-term holds. Swing trading is for the birds and day trading is even worse, so I don't do it. It's not sound investing.

Ask yourself "what would Warren Buffett do?". Buffett doesn't jump in and out of positions. He's owned Coca Cola, BNSF and See's Candies for years. When has Buffett ever sold any of his holdings? My philosophy is, think of yourself as a business owner as Peter Lynch suggests. When you buy a stock, pretend you're going to own it for life.

Among my favorite holdings are:

UNP Union Pacific
HSY Hershey
GOOGL Google Class A
GS Goldman Sachs
ROST Ross Stores

Not all of my positions are profitable yet, but give them time. My UNP started out to be unprofitable but I waited it out and now, guess what!

If you have a problem controlling your gambling impulses and don't have the discipline to hold onto a good company through thick and thin, then you need to work on that. Or don't hold individual stocks.

You're not going to get instant gratification in the market, either. My #1 investment rule is "don't try to strike it rich".

The other 98.86% of my portfolio is in index funds and I'm happy with that. I've been at this for 40+ years and that is some of what I've learned.
Financial decisions based on emotion often turn out to be bad decisions.
Fallible
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Re: Confessions of a serial ex-trader

Post by Fallible »

DRReaders wrote: Thu Jul 29, 2021 5:54 pm ...
However, even with the knowledge about finance I've obtained since my insanely high risk days, there is still some part of me that every once in awhile wants to buy a proverbial lottery ticket in the stock market. Does anyone have suggestions or ways that they stop themselves from giving into this urge or "disease" as Mr. Bogle calls it given the history listed above and the fact that my logical side knows it would only cause me to lose money in the long run?
You know your investing faults, but don't yet seem to understand what's behind them, the human nature in general and your own nature. Acquiring that understanding can help you avoid future mistakes, so here are suggested readings to help you know yourself with money:

_https://www.bogleheads.org/wiki/Behavioral_pitfalls
_Morgan Housel's The Psychology of Money
_Jonathan Clements's How to Think About Money
_Jason Zweig's Your Money & Your Brain
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
prairieman
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Re: Confessions of a serial ex-trader

Post by prairieman »

Passive 60/40 portfolio might be boring from a financial perspective, but it sure frees one’s life up to doing more productive or enjoyable things.
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Cheez-It Guy
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Re: Confessions of a serial ex-trader

Post by Cheez-It Guy »

Do you mean an ex-serial-trader?

Otherwise, how many stop-and-start trading cycles have you been through?
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DRReaders
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Re: Confessions of a serial ex-trader

Post by DRReaders »

Cheez-It Guy wrote: Sat Aug 21, 2021 3:46 pm Do you mean an ex-serial-trader?

Otherwise, how many stop-and-start trading cycles have you been through?
Probably 2-3, it's died down a bit since I bought single ETFs for several of my accounts. I'll admit I was luckier than most to get out at around even trading aside from opportunity costs, but even I know that's just luck and a matter of time.
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DRReaders
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Re: Confessions of a serial ex-trader

Post by DRReaders »

Fallible wrote: Sat Aug 21, 2021 8:21 am
DRReaders wrote: Thu Jul 29, 2021 5:54 pm ...
However, even with the knowledge about finance I've obtained since my insanely high risk days, there is still some part of me that every once in awhile wants to buy a proverbial lottery ticket in the stock market. Does anyone have suggestions or ways that they stop themselves from giving into this urge or "disease" as Mr. Bogle calls it given the history listed above and the fact that my logical side knows it would only cause me to lose money in the long run?
You know your investing faults, but don't yet seem to understand what's behind them, the human nature in general and your own nature. Acquiring that understanding can help you avoid future mistakes, so here are suggested readings to help you know yourself with money:

_https://www.bogleheads.org/wiki/Behavioral_pitfalls
_Morgan Housel's The Psychology of Money
_Jonathan Clements's How to Think About Money
_Jason Zweig's Your Money & Your Brain
Thank you for the book recommendations, I'm an avid reader so will look at them. I know it's a combination of FOMO and chasing returns, I think only a significant time away from looking at the market would be a solution. A recent vacation has helped put this into perspective a lot.
Fallible
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Re: Confessions of a serial ex-trader

Post by Fallible »

DRReaders wrote: Tue Aug 24, 2021 8:32 pm
Fallible wrote: Sat Aug 21, 2021 8:21 am
DRReaders wrote: Thu Jul 29, 2021 5:54 pm ...
However, even with the knowledge about finance I've obtained since my insanely high risk days, there is still some part of me that every once in awhile wants to buy a proverbial lottery ticket in the stock market. Does anyone have suggestions or ways that they stop themselves from giving into this urge or "disease" as Mr. Bogle calls it given the history listed above and the fact that my logical side knows it would only cause me to lose money in the long run?
You know your investing faults, but don't yet seem to understand what's behind them, the human nature in general and your own nature. Acquiring that understanding can help you avoid future mistakes, so here are suggested readings to help you know yourself with money:

_https://www.bogleheads.org/wiki/Behavioral_pitfalls
_Morgan Housel's The Psychology of Money
_Jonathan Clements's How to Think About Money
_Jason Zweig's Your Money & Your Brain
Thank you for the book recommendations, I'm an avid reader so will look at them. I know it's a combination of FOMO and chasing returns, I think only a significant time away from looking at the market would be a solution. A recent vacation has helped put this into perspective a lot.
You're not alone in struggling with FOMO and there have been some good forum threads on it. Here's one:
viewtopic.php?t=324928

And if you enjoy reading, here are more recommendations in the wiki:
https://www.bogleheads.org/wiki/Book_re ... nd_reviews
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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DRReaders
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Re: Confessions of a serial ex-trader

Post by DRReaders »

One of the ways that I was able to restrict myself from doing impulse buys/trading and keeping to my AA was to use mutual funds rather than ETFs since they only trade at the end of the day rather than being able to buy and sell instantly.
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CyclingDuo
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Re: Confessions of a serial ex-trader

Post by CyclingDuo »

DRReaders wrote: Thu Jul 29, 2021 5:54 pm Hi Bogleheads,

I'm new to this forum as a contributor, but have been following and reading along for a few months now. I started off as I'm sure a few people can relate to, investing in individual stocks and companies that I thought had potential and had an upward trajectory in future industries (growth investing). As my interest grew, I started trying to increase my returns and slowly went down the rabbit hole of derivatives until I ended up where Bogleheads abhor, the mosh pit of high risk options trading, day trading, WallStreetBets, and Robinhood. I was one of the lucky ones, I ended up watching my portfolio shoot up due to pure luck and crash and a few months later, managing to get out at even.

From that point my approach to the stock market changed. I tried to educate myself on all things finance and economy related and happened to find out about the FIRE community. From that community I learned a lot, and through it I found the infamous HFEA thread here. After spending several months reading through the forum, I have been fully convinced myself that I wanted to adopt the Boglehead's way of investing.

However, even with the knowledge about finance I've obtained since my insanely high risk days, there is still some part of me that every once in awhile wants to buy a proverbial lottery ticket in the stock market. Does anyone have suggestions or ways that they stop themselves from giving into this urge or "disease" as Mr. Bogle calls it given the history listed above and the fact that my logical side knows it would only cause me to lose money in the long run?
Back in 1990 I took a class for wannabe stock brokers in San Francisco and the professor had a nice saying for your type of high risk options trading, day trading, WSBets, etc... .

It would fall under his analogy...

"Get in a convertible with the top down and drive along Highway 101 (along the Pacific Ocean where there is always plenty of wind). Drive as fast as you can. Reach in your pocket and throw up a big stack of paper cash as high as you can in the air. Whatever lands in the back seat you get to keep. The rest is gone forever...."
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
chris319
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Re: Confessions of a serial ex-trader

Post by chris319 »

"Get in a convertible with the top down and drive along Highway 101 (along the Pacific Ocean where there is always plenty of wind). Drive as fast as you can. Reach in your pocket and throw up a big stack of paper cash as high as you can in the air. Whatever lands in the back seat you get to keep. The rest is gone forever...."
Ah, but it isn't! Lavoisier proved that in the 18th century.

If you see a Caltrans maintenance worker driving around in a Lamborghini you can probably figure out how that came to be. :mrgreen:
Financial decisions based on emotion often turn out to be bad decisions.
chris319
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Re: Confessions of a serial ex-trader

Post by chris319 »

When the lottery jackpot is over a billion dollars do you go out and spend $10,000 on lottery tickets? Some people might but they likely won't win. Most normal people might go out and spend $5 or $10 on a quick pick and that's it.

When you go to Las Vegas do you bring $10,000 worth of quarters to play the slots? No, of course you don't. If you're smart you might set a $20 or $50 limit and that's it.

Either way you've resolved your FOMO and have skin in the game but you've utilized a prudent amount of risk capital.

There are people who live in the Las Vegas area who gamble their social security checks at the casinos. Are any of them wealthy? I doubt it. I hope they can afford groceries.
Financial decisions based on emotion often turn out to be bad decisions.
Sonic1968
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Re: Confessions of a serial ex-trader

Post by Sonic1968 »

Joseph Kennedy said only a fool holds out for top dollar
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