Reflections for 2015
The Most Important Aspects
Most of the time, when my system was giving me warning signs, I had zero-exposure in the market. This lead me to outperform, avoid down-swings, and ride outliers. I also set in my mind that I’m in no rush of making money. I only take what the market gives me. Though I have a high goal, I am not pressured with the amounts and the targets, my only real focus is on the process, with perpetual questions like these embedded on my head:
- Am I following my system?
- Are the probabilities on my side?
- Is the trade worth taking?
- How is the overall market health?
- How can I exit this play?
- Am I forcing myself or am I just going with the flow of the market?
Challenges and Lessons
2015 has also been the first year where I started to encounter liquidity problems. Since I had an increase in my managed funds (clients), the size thing was a big challenge in an environment like this. And it is a very great lesson for me, there were many instances where I did not follow my cut loss plans because I was hesitating due to the liquidity, little did I know how fast some plays fell down ‘due to lack of liquidity’.
This is an imminent trait in most bear markets, weak small caps are the first one to perish. I realized that in the future there should be no exceptions, I took some unnecessary hits this year just because I wasn’t disciplined enough to take the pain early on. But it’s all good, I still managed to survive, and those lessons will be remembered forever.
2016 will be a killer year. A killer of those who were invested at the high levels with no cut losses. I expect chaos, but it’s all cool when you’re all in cash. As usual there will be profitable bounces in these critical moments, but we should always remember that the game and environment has changed.. 2015 was probably just an appetizer.