Yeah, pretty much that. I’ve come to the conclusion that buying and holding doesn’t really make all that much sense. The fastest way to appreciate your capital is to:
1. Identify mispricings in the market with catalysts that will return the security to it’s range of intrinsic valuation.
2. Open a position in the security and prepare for the position to move against you (set cash aside for future movements against you)
3. Make a market in the security, relative to its volatility, difference between price and intrinsic valuation, and personal risk tolerance.
4. Buy and sell profitably on a daily basis as you lower your cost basis for the position as well as taking some off the table when things go in your favor and putting up to a certain amount back on the table when things go against you.
5. Hello profits! Wow! There is so much money out there in trading, I had no idea.
I cannot wait to see this system build up in size. Pick your limits and constraints and try to target low price, high volatility stocks that you think are undervalued. dividends help even more! Dividends add to the volatility as your algo’s tend to buy after the dividend kicks off and the stop drops proportionally. over time it works its way out and it’s just more free money
So there you have it. instead of looking to own businesses, now my objective is to treat business ownership like a business. Trading is a business that throws off daily estimatable cash flows given my risk levels in the market (dollars invested). over time, trading is actually less risky than buying and holding and it actually has more upside in my opinion if you do it right.
The better you get, the more money you’ll have and the more able you are to trade and set additional parameters that add market liquidity and line your pockets with various currencies.
At present, I am trading in London, Canada, and USA.
This is all part of my minimization of future regrets philosophy.