Trading: Past Performance (Part 1)

A post on my investment/trading history. I had intended for it to be a quick one but unfortunately it has grown rather lengthy, so I will present this in a number of parts instead.

It began in 2007, when on the cusp of graduating it dawned on me that income from my job is not going to suffice if I wanted an early retirement; I had to make my money work for me. I began to equip myself with knowledge of the investment world and my first dip in the markets was via a unit trust offered by POEMS that invested in the S&P 500. Back in early 2007, on hindsight the markets had reached the heights of "irrational exuberance" - any dip in the markets was cheered by investors who simply bought the f-ing dip. I was happy to join the party as well and was pleased to see my account (fueled by my first paychecks) going up steadily. I made money and began to make plans for my ascension as "Master of the (Trading) Universe".

But a little knowledge is a dangerous thing. As we know the music ended and everyone began scrambling for chairs. I was without one as I saw my account reducing in size even though I tried to prop it up every month with savings from my paycheck. It was rather gutting and the only consolation that the paycheck was not large. To cope emotionally, I picked up the concept of "averaging down" and consoled myself that I had a plan - I was averaging down.

And then I picked up on another concept that has served and burnt me - Elliot Wave. Applying the methodology, I began shorting the market in the last quarter of 2008. Take note this was just after the days of AIG's collapse and days where the market could dip by 5% in a single day - emotionally it was easy to make the "right trade" by shorting along with the other bears, who roared like a tribe hungry for more food. Then came March 2009 (which was the bottom for the S&P 500) and I carried on shorting the markets and the markets rose like a phoenix from the grave each day. It was a slow bleed as I lost money everyday, comforted by violent corrections that gave me hope but each downswing was overridden by even fiercer rallies. Like trying to put out a fire in vain, I would toss my savings from the paycheck at the trading account but the size of the account went down every month. I would listen to and sing "Bleeding Love" by Leona Lewis and "Down" by Jay Sean during those dark days.

It was only on 16 November 2009 that I finally gave up my short bias and admitted that a new low in the S&P 500 was no longer likely. By then, I had lost in excess of S$50k. I guess to get good tuition, you gotta pay the fees.

Part 2 continues here.