Honestly...I Need To Trade In 2024

In my last post, I wrote about why I want to be an investor rather than a trader, citing lifestyle motivations as well as business ones. Today, I’m back, writing about how I’m going to do the exact opposite in 2024. Let’s get into why…

One of my core beliefs is that success in the markets has more to do with how you behave than what you know. If it was as simple as studying math and finance, we’d all be rich. However, we’re all wired with behavioral biases that impact how we view and interact with money, markets, and the rest of the world. Today’s post is going to touch on mine and how I plan to address them.

As with most people, my behavioral biases can be traced back to my childhood. The environment I grew up in caused me to develop many unhealthy behaviors/ways of thinking, two of which really impacted the way I’ve lived so far.

The first is a scarcity mindset. I grew up middle class and never went without food, water, or other basic necessities, but I was always in fear of losing them. Neither of my parents were financially savvy, so when life knocked them on their asses, they did what they thought they had to do to survive. Through the time I went to college, they never financially recovered from those missteps, which led to constant stress/fighting and a lot of hours at work just to get by.

The second is an overall lack of confidence from not being given the space to fail. My dad was served a shit sandwich many times in his life, leading him down some challenging paths. As a result, he’s a chronic risk avoider and thought he’d help me out by protecting me from any and every risk he could think of, no matter how small. This stunted my decision-making process and basically caused me to avoid anything and everything I couldn’t immediately master. After all, failing at something didn’t mean I just hadn’t learned it yet; it meant that I was a failure and should be embarrassed by my incompetence.

That second point also caused me to avoid conflict with others at all costs, often advocating against my own best interest just to keep the peace. The best way I’ve heard this described is that I don’t take up space. Instead, I’m constantly thinking about others and figuring out how to make their life easier. A certain level of this is being considerate, but I definitely take it to an unhealthy level.

So, what have I done so far to address these areas and become a functioning member of society?

First off, I spent years in therapy unlearning many of the “coping mechanisms” that I developed as a child and also working on my self-esteem/confidence so that I could advocate for myself without feeling guilty. I worked hard to develop high-paying skills so that I could have job security and put both my parents and myself back into a financially secure place. And I’ve spent time pushing my boundaries with activities like traveling internationally, renovating our new house DIY style, learning a new language (Tagalog), and many other things that have forced me beyond the limited experiences I had through age 21/22.

Despite my progress, there’s still plenty of work to be done. So why do I think trading will help me progress as a person?

Trading will force me to directly develop in the areas discussed above. I’ve already spent ten years growing competency in this space, and there’s a large overlap with my day-to-day role as Senior Writer at Stocktwits, so it’s an obvious opportunity. Not to mention, I’ve started and stopped this journey about 100 times…so it’s about time I figure out if I can actually make money in the market.

The other question is, Tom, why not just invest instead? It’s basically the same exercise with a longer timeframe.

That longer timeframe is exactly the issue. Trading will significantly shorten the feedback loop and allow me to get in more repetitions to build that decision-making confidence and get comfortable with having money at risk.

I’ve always hidden my lack of confidence behind the guise that I like to “focus on the long-term” and do “thorough research” before making decisions. But honestly, that just allows me to delay making decisions (or never make them at all). Even when I do have all the facts and am confident in a decision, I often don’t make it. And if I do, I spend the whole time second-guessing myself rather than moving forward with conviction.

Take some of the recent work that I posted on Stocktwits but did not act on.

Moderna short, Ripple long, Uranium long, Solana long.

No matter what the evidence is or how clear my conviction should be, there’s always debilitating doubt. I want to begin to see myself the way others do, especially those who have supported me personally and professionally over the years. The only way I’m going to do that (and quiet the constant “what if’s” in my head) is by getting off the sidelines.

Whether I make a financial return on this exercise over the next year is irrelevant. The return I’m looking for is a character development one. 

Additionally, creating a clear process for how I view the economy/markets/etc. will be helpful in future endeavors. Some people like to be agnostic of those factors and instead focus only on the things they can control. But I’ve personally found that having a general view of trends and where the overall wind is blowing is important to making decisions in business and in life.

So what’s next besides more (hopefully regular) blog posts?

The plan is to spend the rest of 2023 documenting a clear research process and trading plan. Although I’d love to take a “portfolio approach” to my trading, with my small pool of initial capital, I’m not going to worry about position size limits or other metrics that use total account value as the denominator. Risk management will be implemented on an individual trade basis. And I’m just going to focus on identifying and executing high-reward/risk setups. Trade by trade, it’s time to get some actual experience under my belt.

I’ll be sharing everything involved in the process publicly, both on this blog and via Stocktwits/X. Because it’s one thing to be self-aware. But it’s another thing to be self-aware and use that information to actively improve yourself.

The last thing I’ll say is this is a side project. Because I don’t intend to monetize this blog and am trading a small amount of capital, I can only dedicate a little time to it each week. But if I stick with it, I know that over time, I can accomplish what I set out to do here.

That’s all for now. I’ll leave you with two long-term charts to ponder.

If the smartphone and PC chip cycle is at (or near) a bottom, as many companies in the space are forecasting, Qualcomm looks well-prepared for the shift. The stock has stabilized above its former highs of around $100 and began to turn higher after its last earnings report.

Next, I know that Disney has its fundamental problems. But, prices have once again found support near $79 and turned higher. With free cash flow improving and the business being restructured, the return of its dividend (or a buyback) could be ahead, offering additional support for the stock at a big level.

Happy Friday and weekend. Talk soon. - Bruni