The steamroller catches up to me. I saw big declines in TGT, WMT, COST on weak retail sales data. These add to the 2022 list of loser that includes AMZN, FB, NVDA. Overall my trading account is down about -10.4% for calendar 2022. Grade C-. For added perspective, my conservative retirement account (no options, no short term trading) is down a similar percentage, -10.7%, for 2022.
For those not familiar with the steamroller reference, the strategy of selling way out of the money puts, is like picking up pennies in front of a steamroller. Once in a great while, a person or the market might slip and get flattened. My saving graces include small position size, large cash reserves and taking losses instead of taking assignment.
For example, I was selling puts on FB and NVDA at least a hundred points higher. While I have a decent size account that kind of loss would still be significant.
Here are some etfs ytd:
GLD
gold 0.6%
SLV silver -6.7%
EEM
emerging mkt -15.8%
SPY SP500 -18.0%
TLT US20 yr -20.0%
IWM
Russell 2000 -20.8%
QQQ Nasdaq 100 -27.4%
Bonds haven’t provided shelter. Gold is the only gainer and had a down month. I have been building a tiny position in TLT, using delta hedging. This might involve buying 2 shares and selling a 2 delta call option way otm.
I hope the readers have survived the storm. It remains to be seen when the indexes will make new all time highs.
I’ll repeat a lesson learned from my dad. He started investing in 1966/67, near all time record highs. The vicious bear markets of the oil shock 1970s made for paper losses of 70%. It wasn’t until 1982 that the market made another all time high in nominal terms. There was high inflation during many of those years, so a nomimal high on the DJIA still meant years on a road to no where in real financial terms.
Thankfully, my dad was able to keep investing during the down years and came out way ahead when the bull roar returned. I’m not predicting another 15 years before new all time highs, but it is a possibility. The country of Japan has experienced more than 15 years of a stock market to no where, after their bubble market in the 1980s. Most young investors have only seen higher highs, higher lows and believe it is inevitable. They don’t understand that nothing is guaranteed.
While the 1970s era bear markets are listed as shorter than the 15 years, there were no new highs, during the short bull moves. Some people that were unlucky enough to go all in at the all time highs, couldn’t keep investing, or had to sell due to job loss during the lean years.
I have to remind myself to remain grateful. Here in Southern California there are homeless people on most areas. Some areas are now third world style shanty towns, with homeless living in tents and crapping in plain sight. We are fortunate to have money to invest, and all our other blessings. Might be cold comfort during tough markets, but it is comfort.
