Lately I’ve been listening to some pod casts at night. There’s about 300 interesting ones under Covel on iTunes. They’re free. Worth checking out. Yesterday was Meb Faber and the day before that was Tom Basso. Both worth listening to. Meb Faber is the author of Ivy Portfolio and a well respected momentum expert. Some of the portfolio we follow is based on his work. Tom Basso is another momentum guy, he started TrendStat back in the 80s. A lot of these podcasts are about life in general as well as trading and the relationship between both.
Tom Bassos most recent podcast was a bit eye opening and inspiring. He’s a very well respected manager and he determined that sitting in from of the screens and doing discretionary trading above and beyond his already set system ended up being net zero. They tracked it. No benefits, so he fired himself from actually actively trading in front of the screen. It’s not quality of life to always be glued to the screens and the market. It’s something that I struggled with a bit after leaving the more active trading style that I had last year. I was so used to having to be connected and monitoring the markets that it was sort of hard to disconnect from it. I started asking myself the question, like what would I do anyways? I mean there is a few hedges I could add and things like that but really, those aren’t time sensitive and any timing used intra day would probably be net-zero over time. I still find myself wanting to know whats going on in the market and still being glued to the screens during events like the Fed meetings or the jobs reports etc etc. There’s no need. I am slowly adjusting to that, it’s a challenge but it’s coming. It’s part of the game when you get into something like this, you feel like you want to control it. But the point of moving to the new style was to get away from having to actively trade on market events and movements in an intra-day manner. I’ve got portfolios constructed that are hedged and complement each other. We’re set and we can handle any directional movement. A funny note: You know what’s funny and sort of irrational. I find myself putting on a hedge or something similar and then hoping that the hedge itself wasn’t an error and that in of itself almost makes me want the market to go with the hedge even though I put it on to protect a much bigger position in the opposite position. Why? Well it was a discretionary trade where I had to use my best judgement, and well, I don’t want to be wrong on those as it can cause some stress BECAUSE it was based on a decision I made that was not part of the pre-determined system. It’s irrational and of course I don’t really want the market to move those ways but the thought enters the mind all the same. The psychology of these things is quite funny.