My first 3 months in the markets!

I began investing in the stock market for the first time back in April of this year. At 32 years old, I had never given investing any serious thought prior to this year. My mind held onto the antiquated notion of, outside of my 401k, the stock market and investing was something only rich people did. So I have a lot of conceptual catching up to do! Definitely not something you master in three months 🙂 I am pretty satisfied with my overall P/L despite it being in the red.

I have tried out a few different flavors of investors over the three months. The one consistent aspect has been "invest in what you know" and I have stuck to the pharma/bio-tech field I work in.

My first month had me doing trades with very little research into the technical indicators. I relied mostly on the concept of investing in the "successful" names in the industry and only really looking at revenue and debt. Didn't turn out so great obviously 😂 I figured it was mostly about luck then - since my best P/L % was the Moderna fractional share. I had no reason as to why I purchased a fraction there and full stocks elsewhere other than Moderna was the last of my initial buying spree and bought with what I had left.

Fortunately, I never let myself become discouraged with the trap that is hindsight. As April rolled into May, I found myself enjoying the process more and started developing a more fleshed out thought process.

Probably my biggest early mistake was having the majority of my money in a single company. I did know about the risk related benefits of diversity. I had to learn the hard way that doing so also carries a big opportunity cost! A good part of my time was spent with little cash to play with having so much tied up waiting until I could break even on Abbvie with this wonderful profit. 😬

This money being locked up was the main impetus for my May trading focusing on trying to flip small bio-tech stock. My personal knowledge of the drug development process, especially the standard timelines, made me quite a bit more successful than I would otherwise have had speculating in penny stocks.

This was also the time I got more into the paper trading feature which has been a very useful tool for me personally. Having that much money definitely changes some of the behavior but the truly valuable lesson was to see worked in both paper trading and my small portfolio and transitioning those into a set of fundamentals.

Around the end of May was when the personal thrill of speculating on penny stocks died down for me. It quickly became obvious that at my portfolio size, without the emotional bump of a "win", the actual amounts of the returns (usually < $2) did not justify the amount of time I was spending on it.

As June progressed, I turned more towards finally doing a deep dive into the technical indicators. I was surprised to see how primitive (in a mathematical sense) they were.

I didn't want the fact I was more familiar with multi-variate calculus and linear algebra to fall into the trap of "more complicated = better indicator." I ran a bit of an experiment on how well I would do using the standard toolkit. I realized that, while I couldn't come up with a way to use them to predict short term gains, they could be used pretty effectively to pick up on price trends. As an example, I found it particularly difficult to know when to get in and out of Takeda (one my early buys). Looking back now, the technical indicators do a pretty good job at lining up with price trends.

So - now that I have finally developed a "system" does that mean June has been an incredible success?.....Nope! 😭

I had actually gotten pretty close to breaking even collectively on 06/24 as I transitioned away from penny speculating and putting money into larger less volatile companies with established data trends. Then all my pharma stocks decided to drop down after that day 😂. Since the industry itself didn't tank and there were still plenty of companies on the upswing - I turned it into my latest lesson to never get too buried in the math lest I forget the "rules of the market" are actually determined by the emotions and whims of us people. And those are impossible to predict I am reminded of the old adage "No matter how much time you spend idiot proofing your system, there are always better idiots being made" 😂

All that said, it's been a fun ride! I am very grateful for the members of the Moomoo community as they both make the app more fun to use and have taught me a greater number of things!

From here, I see myself going one of two ways in terms of future goals. One path has me shift focus to value stocks almost entirely and work on my patience and build-up on an emotional buffer to avoid reactive reading and sunk cost fallacies. The other path has me double-down on the analytics (assuming I can find access to the data) focus on coding my own indicators varying in degrees from something simple (e.g. using the integral value of the second derivative to measure volatility) to something to melt the RAM chips in my PC (i.e. harvesting a century of data and covariates to construct a random forest model). If anyone has taken the time to read all the way to here, I would certainly appreciate your input!