The title may sound as if pessimism is at its peak, but as you scroll through this article, you will realize it’s one of the “best” statements for traders. It not only contributes to your financial well-being but also your mental well-being.
Let me take you back in time to 2017. I had just completed my postgraduate studies with a degree in finance. I came out of college with two useful assets: first, a basic knowledge of finance and investing, and second, a lot of enthusiasm and energy. For me, these were enough to begin trading. For the rest of the knowledge, I turned to reading and watching business news.
My job at the time required a lot of travel, and for almost 10 days a month, I was in a different city, often in a different state. So, there wasn’t much opportunity to read thick books or learn consistently. I remember switching on the TV early in the morning (around 8 a.m.😝) to watch business news while getting ready for work. By 10 a.m., I would have taken a position in some stock, mostly based on the recommendations of the “stock market experts” on the show, and then moved on with my day. During the rest of the trading hours, it was difficult to track my portfolio, so I’d only check it when I returned to the hotel in the evening.
Frankly speaking, I used to do little to no research before trading, which left me with a lot of “regrets” afterward. These regrets included:
1. Blindly following the “stock market expert” pitching a stock on the business show.
2. Regretting why I hadn’t researched the stock or company before investing.
3. And, most of all, regretting buying or selling a stock at that particular price. I could have avoided buying until the price came down or held on to the stock a bit longer.
Trust me, if you are a conscious trader keen on learning about the market, the first two regrets will fade with time and experience. Sooner or later, you will realize that “news” isn’t the best source for making investment decisions. At times, it’s just propaganda to inflate stock prices and trap retail investors.
However, the third regret is the most concerning and requires serious effort to address. Even after almost eight years of trading, it still hits me hard at times. Let me break this third regret down even further:
1. You bought a stock at price x, and it came down.
2. You sold a stock at price y, and it went up.
3. You bought a stock at price x and sold it at price y (where y > x), but the stock price went even higher to z (where z > y > x).
And if you’re a well-disciplined trader, there could be one more type of regret:
4. You bought at x, planned to sell at y, and set a stop-loss at x-1. The stock rose to y-1, but you didn’t sell. It then dropped to x-1, hitting your stop-loss, which triggered an automatic sell. After that, the stock began rising again and eventually touched z (where z > y > x).
Now, cases 1 and 2 could lead to either profit or loss depending on the selling/buying prices. Case 3 gives you limited profits, while case 4 results in limited losses. All these scenarios are different and have varying outcomes, but there’s one constant: REGRET. At the end of all these trades, you are likely to regret your decisions, irrespective of whether you made a profit or a loss.
That’s the stock market for you! To avoid these regrets, there’s one golden rule you need to keep in mind: “I cannot time the market.”
If you want to be a successful trader (and avoid high blood pressure 🥲), you need to move past these regrets. In other words, the more content and less greedy you are, the smoother and less stressful trading will be.
This article is part 1 of a series titled “Regret is the Only Constant.” In part 2, I’ll share some of my “deepest” regrets from the past and talk about the stocks that would have given me superb returns by now (if only they were still part of my portfolio). Except for one, all these stocks were purchased in the pre-COVID era, when “finfluencing” wasn’t so common. You can read it here
