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May P/L Challenge: Have you spotted the month's trading hotspots？
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Brianjh joined discussion · Jun 1, 2024 11:29

New learning point for me in May: Value creation & destruction

Finally have some time to trade/invest this month (May) as my school hoilday started 1 montha ago.
But is ending on July

Hope the reader for this post is able to learn something new or have new inspiration for your upcoming trading/investing plan.

*Tading Plan*
- Hope everybody here have a well-defined and detailed trading/investing plan to follow and not just do based on feelings or guts.
For me I have a few portfolio that I have curated for myself to suit my goals and risk appeittie
1) One portfolio for "Itchy finger" (Mainly for trading short term movement to take advantge of shares below their intrinsic value)
2) Another one more for long term growth and capital appreciation portfolio ( Mainly US tech)
3) And last one is options portfolio for income strategies (which I dont use it on this platform because it will be hard to keep track. )

*Dividend stocks*
- For investing in dividend stocks, if you are charged with US witholding tax of 30% or whatever % (My opinion is dont bother with that, because it eats up too much of your returns)
- For people who are thinking of investing in dividend stocks, my advice is : dont bother unless you got sizable portfolio like $100k - $500K if not you are better in putting other areas. (Especially if you are just starting or your porfolio < $100k , just dont bother with that because you are not at that stage yet.
But, of course is just my opinon and I'm not stopping you to invest in dividend stocks. You can still definetly do that but you need to also know that that is not the most effifcient way todepoly your capital and therefore maixmize your returns.

*Value Creation & destruction*

- Look at S&P 500 index yearly returns.
For example : IF $S&P 500 Index (.SPX.US)$ return 15% this year. (example)
You will need to look at your performance for this year as well ( if you are actively managaing your portfolio or picking individual stocks to trade/invest)
If your porfolio return for that year is less than 15% - It means that you have essentially destroyed value or have - negative Alpha (α). Basically you have wasted your whole year trying to get better returns when you can investly passively into the index. (Which happpens to alot of trader/investors)

Recently, I just started a position in a small brokerage firm and you will be surprized to see how many retail investors/traders are losing a shiton of money.

I have seen portfolio ragning from $10k to $8 million/ per person

Usually portfolio of over $1mil are people who higher occupation title like Director or VP

But most of their hight market value portfolio is losing money over like many years (Absolute bonkers!!!)

How????

Even a blind randomly picking stocks in the index can have better returns than that.

It Doesnt matter how much your portfolio or how much income you are making.

If you dont really know what you are doing, you probably will lose money ( And most people dont really really know what they are buying or why they are buying )

*Level of trader/Investor*
Just like many things in life, there is a levels to trader/investor
These are seperated into many groups.
BUt mainly is these few
1) Trader/investor who have no idea what they are doing (losing money)
2) Trader/investor who have no idea what they are doing ( breakeven)
3) Trader/investor who have some sort of idea and experience in what they are doing ( some profits)
4) Trader/investor who have have experience and knowlegde and understand how money flows ( make quite abit of money)
5) Trader/investor who have an "edge" in terms of information, knowledge and skillsets ( make a shit-ton of money per year) These portion are taken by the institutional investors and small portion of high level retail traders

So for average retail investors if you dont have:
-Capital advantage
-Knowlegdge advantage
-Experience advantage
- "Edge" (How/ how fast someone obtain a information that can affect the stock price or Ways that you find that can consistently outperform the market)

How are you going to compete with those high level traders/investor? ( Fund companies, private companies, hedge funds) ??

Truth is: You cant compete with those people

And thats why most retail investors should stick with passive investment strategy which is to buy the index and hold( This can include S&P 500 or Nasdaq, etc). But many prefer excitment and gambling which make them lose money which is essentially pointless.

Remember I am still a Finance student in university studying. So there is alot more information to learn.
These are just some of my thoughts in month of May. Hope yall find it useful

Thanks

Stay safe and dont gamble.
New learning point for me in May: Value creation & destruction
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S & P 500 1 month performance
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Brianjh
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Part-time Finance Student Swing Trades + Long-term investing Road to 10M
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