Nothin' but lint
21 May 2010. Trader Paul has been driven out of the market. I may have had deep pockets, but they're empty. I've cashed in my chips.
I rode out the US financial crisis, although my account did take a pretty heavy hit. I was well on the way to recovery — before everybody decided Greece was going under, I was actually up almost 20%. The European crisis took care of that! All the gains were wiped out and for the second time this year I was down 16% YTD. The ugly chart is here.
I started trading in individual stocks in my Trader Paul account as a challenge — having lost my shirt on Enron, I would figure this out! Some years I did very well; other years not so much. But along the way I learned a lot about technical analysis and the gazillion things you can chart. By the end of the game I had come to rely on just a few: the 50- and 200-day moving averages; the Bollinger bands, daily volume, and, at the top of my list, the Percentage Price Oscillator (PPO). I eventually figured out that the recommendations by the folks at MarketEdge were actually pretty useless: I still don't really know what timeframe they have in mind, but I do know it isn't mine.
After painful experience I finally figured out how to define and implement workable rules for using stop-loss orders. I never did figure out how to deal with a catastrophic plunge like the one we've just gone through, and therein lies the source of my big loss this month.
So, 8 years later, how'd I do?
Wins - Losses - Ties
Over the years I took 950 positions: 513 of them resulted in a profit whereas 434 produced a loss. There were very few ties — breaking even.
If investing in the stock market is really taking a "random walk down Wall Street" then I beat the odds -- slightly.
Making money isn't everything, but it definitely is better than losing money. Laid out on a graph like this in actual dollars instead of percentages, my record looks fairly modest. But along the way the profits from Trader Paul paid for some fun cruises and some fine home improvements. I always looked at the Trader Paul account as "play money" and never thought of it as critical to my financial well-being. A good thing, that!
I shall return?
I don't know if I'll come back to Trader Paul. It was fun. After the new house is bought and paid for, the old house is sold, and the markets get over their jitters, I'll consider the question. Until then, I'm on the sidelines, making lintballs.