Hey Guys,
Well that sure was a brutal 3-day stretch. The S&P 500 dropped from a high of about 4140 three days ago to about 3750 yesterday. Almost a 10% drop in 3 days, and we officially are now in bear market territory. Of course all it takes for us to get out of the bear market is for the S&P 500 to go back up above 3850, but as of now we're in one until the market gets us out of here. This morning the market is hovering near where it closed yesterday.
I hit yet more stoplosses since my last email. I do have a couple positions that are showing profitability (COP and GO), but overall the accounts have been red. I'll tell you this: for those of us who are living through this, we're getting a true firsthand experience of what it's like to live through a big drawdown. This last few trading days has of course been bad, and that's one core segment of the drawdown experience. But this entire year has been a drawdown experience.
It rivals the deepest drawdowns from the 20-year back tests that I did. And to me, that's good news for those who have lived through it. The reason is because it shows you have what it takes to trade through a drawdown. And if you look back at history, those back tests suggest that if you can live through the drawdowns and stick with it over the long haul, there might be some pretty nice rewards at the finish line.
That said, there is of course very real risk still involved. There is no way to be certain what the future holds. And that's what makes trading and drawdowns so difficult. You have to decide what's right for you from a risk perspective, and I fully support whatever you decide for yourself.
I picked up a couple new positions in the low-priced account today. I bought OVV and SHC. I haven't bought anything in the other accounts yet, but DELL and VMW from the watch list are in the vicinity of triggering.
If you have any questions or feedback, I'd love to hear from you.