I guess I should have done this a little sooner. Although I've been doing this for a while, 2009 was my first year as a full time trader/investor. When I look back at how I did in 2009 I have mixed feelings. I returned 32%. It's a good number compared to most I'm sure and I made these returns while carrying a cash balance of about 50% on average and with Bernie Madoff-like drawdowns (except his numbers were fake while mine real). Therefore, if you took some sort of risk adjusted measure of my performance like the Sharpe ratio I did quite well. But why do I have mixed feelings? I should have done better. I fell short of my 40% goal. Yes it's a lofty goal but it was certaintly doable had I acted more on my convictions. I was a little slow in embracing the turnaround in the market even though I saw the signs a lot sooner than most people. Although I didn't get burned shorting the rally like everyone else in the spring and summer, I was waiting on the sidelines too long given like I said, that I saw signs that the trend had changed from bear to bull. But I can't be too hard on myself because waiting for a clear turnaround after the historic crash we went through wasn't such a bad thing to do. How many people turned bear to bull far too early and got killed in 2008? Tons.
I learned throughout the years that it’s OK to miss the first few months of a new bull or bear market because there's still plenty of time and opportunity to make money with the new trend. The safest and easiest way to make money is when you have the wind at your back and the number one thing that makes people lose money is trying to catch tops and bottoms. I saw so many smart people convert from bear to bull far too early in 2008 and got absolutely crushed losing any money they had made being short and then some. Many people made the same mistake on the upside in 2009 by turning bear too early.
My main criticism about myself in 2009 was that I didn't act upon my beliefs enough. The good thing I did do was being patient enough to wait for the good opportunities even although I missed some and I often didn't put enough on the line when I did make a move. A mistake I would often make in the past would be this: I would miss a great opportunity or only bet small kicking myself for not being bolder. As a result I become bold but at the expense of patience, chasing subpar opportunities often losing money which made me feel even worse about myself. This caused me to be gun-shy which resulted in missing out on good opportunities yet again - a vicious cycle. That didn't happen at all this year. Sure, I missed some good opportunities but I didn't go "on tilt" afterwards as described above.
Another criticism I have about myself relating to missed opportunities was that I was too picky with entry points often waiting for everything to be "perfect" before making a move. This again, caused me to miss out on some opportunities. I have corrected this bad habit by taking at least a small "starter" position when I see something I like but I'm a little unsure about the timing.
A good thing I did as well last year was cutting any losing trades short. My biggest loss on a single trade was 2.5% of my account. A bad thing I did was cutting winners too short simply because I showed a good profit immediately. However, I did a lot better at letting winners ride as the year progressed and I really began to get in the zone come September as I rode a couple of big winners.
If I had to grade myself for my overall performance I would give myself a B.
Given a renewed sense of confidence I have in myself I need to be careful in not getting a swell head being reckless with my trades/investments just because I'm showing a profit. Don't treat your profits as the house's money. My goal is focus on longer terms moves because I've realized that this is my strength. This is going to be a big test because I'm one of those guys that checks his portfolio intraday several times (when you do this full time I suppose it's hard not to) and that may cause one to make hasty decisions by bailing or taking profits too soon which I've been guilty of doing.
I hope everyone else had a successful 2009 and if not I hope you learned from your mistakes.
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