Reflecting on a Solid Year

On the whole, I am pleased with my trading this year. If you have been following my work, then you know that I have been more defensive - in my trading portfolio - than usual for a good while now, opting to take an opportunistic, hit-and-run style of trading in lieu of aggressively pushing all-in. Although the major averages are closing out 2014 right near all-time or multi-decade highs, there have been devastating drawdowns suffered by even the most ardent of bulls this year, namely in the growth names in the spring as well as this autumn. My posture, however, enabled me to sidestep the huge losses, instead playing some shorts here and there and picking off modest winners on the long side. My sizable wins came from the long Ebola plays (APT LAKE INO TKMR) back in September and early-October, as well as in several successful ventures into natural gas and the precious metals and miners. I played coffee early in the year and was able to capture a portion of that run-up, too. Those inter-market trades offered beta due to the levered nature of the ETFs I was long (e.g. NUGT UGAZ). My signature move of the year, however, was selling WWE as a long-term position, a name I openly noted as a long-term investment idea back in August 2012, into the parabolic run-up in March of this year--I bought the stock under $9 and sold over $30, just when it appeared it was guaranteed to go to $40, all noted in real-time. With the benefit of hindsight, I am sure I could have picked off more winners here and there and avoided a loss here and there, too. But that will always be the case, regardless of any trader in any market. Although I wanted to press a short in the bond market throughout the year with conviction, as well as load up on precious metals and miners for long-term investments, the price action simply did not align with those theses and I chose my wallet over my ego, all but eschewing them and choosing to stick with quick trades here and there instead. Those of you who are relatively new to following me may not realize that I am capable of shifting gears quite quickly. In the back half of 2010, for example, I was as wildly bullish on stocks as anyone, riding that trend higher with a full boat of longs while many were fighting what was still a baby bull with a true wall of worry (that phrase is used erroneously in this particular market). The main point is that I stayed true to my philosophy this year of religiously minimizing losers, exuding patience, and picking off winners with precision. When the market becomes a grind or is not particularly amenable to my style of being overly-aggressive, I have no problem doing what I have done of late, which is tightening things up and picking off winners here and there while "grinding it out." Indeed, to think of trading, speculation, or any form of gambling as a glamorous/sexy job is a very dangerous mindset. Even with the indices at the highs and the VIX relatively benign, I suspect many newcomers splashing around in the options market have already learned that lesson the hard way. You can only imagine the humility which will come when we do, in fact, see a true correction. 2014, in sum, was a year where I made my read and stuck to it, as I was not proven wrong. 2015 will see many exciting developments coming to this website, namely premium services and a full redesign. But what will not change will be my focus on the passionate grind of trading and discussing the markets with all of you. With well over 230,000 page views since we launched MarketChess.com last month (despite no comments section...yet) I want to thank all of you for reading and for your generous support. HAVE A HAPPY, HEALTHY, AND SAFE NEW YEAR!