Learning and Growing From Your Mistakes
This has been a tough month for me, for the country, and for the world. As the negative impacts of the Coronavirus are becoming part of our everyday lives, life as we know it is being put on hold. People worldwide are coming together and making sacrifices for the greater good of humanity, and while this can be depressing at times I believe this is a time to reflect. If you have lost your job or just limiting your social interactions you may find you have more free time than you would care for. There are alot of negative things happening and surely more to come as a result of Covid-19, but I have seen a substantial amount of positivity coming out of these tough times. People are getting a reality check, being reminded what is truly important, spending more time with their loved ones, and there have been some great advances in technology as a result of the entire world working together against a common enemy.
As an American I cannot speak for the entire world, but I truly believe while these times will be difficult, we will come out of this stronger than ever. The economy is in decline and while this is tragic, it is ultimately creating some great investment opportunities. I made some great calls this month through anticipation of the market declining and playing $TVIX and trends such as face masks, Covid-19 test kits, and vaccines. Unfortunately through all the gains, my account was hit hard, not by one, not two.., but three stock offerings in one month. Each one of these hit my account for around a 50% blow.
What I learned from this is that while trading off of technicals is probably the best way to create your entry and exit strategy whether your going long term or short term, one needs to have some sort of understanding of the companies balance sheet, especially if you are planning to hold the stock overnight.
To say this in the simplest of terms, if a companies stock goes up on news of a new development, oftentimes this is going to take money to execute. There is no crytal ball when it comes to investing, but if a company is low on cash, and they are going to need cash to produce some sort of product, there is a great chance once that stock price goes up they will use it to their advantage and have an offering. This can leave the retail investors account to be devastated, thus creating new bag holders.
So what have I learned? Know the balance sheet or stick to a quick in and out day trade that’s driven purely off technicals. Have your entry and exit strategy, and more information on this can be found here.