Learning to Let Go

 | Feb 24, 2013 | 6:00 PM EST
  • Comment
  • Print Print
  • Print

Did we really believe the markets would go straight up forever? In investors' minds, was there ever a chance the markets could have a couple of down days? Of course not. But when your portfolio is one-sided and you enter the fray toward the end of a nice run, well, any down session is likely to give you an upset stomach.

As I've mentioned here many times, there are a million reasons to sell but there's only one reason to buy. Perhaps the excuse you needed was the release of those Federal Reserve minutes Wednesday, or some other news that hit on that day or the next. I can tell you this much -- if you did unload, you probably missed your chance to make nice gains Friday.

We could be in for more rocky days over the coming weeks and months, especially if the data from the U.S. and abroad are not in synch with improving economies. Could this week be a precursor of things to come, with higher volatility? Certainly that could be the case, but we'll let the market tell us how to proceed and refrain from making any predictions on the outcome. The CBOE Volatility Index (VIX) virtually wiped out the recent complacency with one brush, so we'll be on watch for a shift in this trend.

These days, the market moves are fast and punishing if you miss them. As a trend trader, I'm much more comfortable staying on a trend that I see as long-lasting, accepting the occasional countertrend days and just going with the momentum side. So a couple of down days may not signal a change in trend, but I'll be on guard for a shift.

At the same time, I'm not complacent enough to believe profits should just evaporate. As a wise man once told me, "We are in the moving business, not the storage business."  This game of trading is about booking profits and preserving capital -- period. If you want to stick around for the long haul, you have be able to quickly take a gain off the table, or even cut bait on a loser.

Selling is the most liberating experience. When you free up your mind and body from a trade, it allows you to move forward and not live in the past. Still, we often find our ego gets in the way, and that it limits our trading success. The best advice I can give is this: Lose that ego. Take what you've earned, and move along to the next trade.

Remember, we must not fall in love with companies, stocks or trades. They are simply a means with which to build wealth if our timing is right.

Columnist Conversations

As far as TSLA is concerned, I still have a higher target above the market at the 409 area.  I stated in ...
The TLT setup discussed in my last commentary is a bust. Key support was violated and it violated the recent l...
BBY is getting smoked this mornings(weak forecast).  The stock is off 8% after opening the session with a...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.