No new trades this week.
music selection: “Meant To Live” — Switchfoot
weigh-in: 195.6 (2.4)
I’m down over six figures on the year. Since I’m playing with less than half a million to begin with, this is an enormous decline. So, is anything wrong?
In a word, yes. I made a mistake. Namely, I leveraged up into volatility. I have positions far in excess of my cash (a margin loan). During good times, that magnifies gains. During times like today, it magnifies losses.
The core strategy to generate income from my assets in excess of my budget remains intact. My passive income from dividends, distributions, and interest continues to exceed my budget by 21.20%. My projected year income from options is tracking about 45% over my budget. But therein lies the problem. I should have settled for just a little bit of gravy instead of swinging for the fences.
I will survive this test and remain gainfully unemployed. But I expect to be forced to lock in some losses as stop losses are triggered. There is an off chance the market will turn around just in time with a “Santa Claus” rally that bails me out relatively unscathed. But I expect to feel some pain.
I didn’t practice what I preached. A major goal here at the raptor is to teach others how to trade for income: safely. Forrest Gump’s mamma always said, “stupid is as stupid does.” But Lizard King says, “stupid is as doesn’t learn from its own mistakes.” Even better is to learn from the mistakes of others. Has anyone out there learned about excess leverage?
Devour your prey raptors!