MorningWord 1/2/15: I Have A Very Particular Set of Skills

by Dan January 2, 2015 9:39 am • Commentary

Welcome to the New Year.  If you read this space regularly then you like trading, and you use a portion of your risk capital to take advantage of price volatility that creates short term trading opportunities. You also look to employ some non-traditional weapons to achieve your trading goals in a generally risk defined manner. Make no mistake, everyday is a battle to find new actionable ideas and manage risk.

Regular readers know that we think this sort of directional trading should be a small % of your overall portfolio and we suggest the bulk of your investment returns should come from buy and hold strategies and portfolio diversification as a means of generating consistent positive returns.  That being said, our background is “event trading” and equity volatility trading and we find the combination of the two skill-sets to be a compelling strategy to add alpha to what is (and should be) an otherwise mundane investment program (read more on our ABOUT page, here which was written almost 4 years ago to get a clear sense of how we viewed RiskReversal at its onset, and have not tweaked the mission since).

So what to expect from us in 2015?  More of the same on the trading front but we will also be focusing more on portfolio risk, yield enhancement, and stock alternatives as we think achieving positive returns through stock selection should become more difficult given the many headwinds facing the global economy. But here is the thing, We are NOT your investment adviser, or your broker, we don’t offer investment/trade advice, or overall financial planning. But we are here to guide with a fairly unique process of identifying attractive risk / reward trade set ups and arrive at optimal ways to express those views with an eye towards capital preservation.

If you are like me, right about now you may be going over your investment related daily reading lists, and you may be culling down your feed of those that promise you fabulous financial rewards. To be clear, That’s NOT our value proposition. NO ONE in financial media can make you money consistently, only you can. There are plenty of great ideas out there but they take the know how to understand the inputs, the risk management sensibilities for entry and sizing and the the skills to manage profits and most importantly cut losses.  Only you can do that for yourself, not some guy on TV, or some anonymous guy on Twitter.

So a bit of advice. Make 2015 the year that you took control of your trading, relying on your own set of skills that work for your risk tolerance and financial goals.  Stop thinking that financial TV or the financial blogosphere is a sound replacement for your own hard work and education.

If arming yourself to trade on your own seems like too much, then you should merely go to a robo-advisor like Wealthfront of Betterment, answer a few questions and ride the bull wave for as long as it lasts.  But I suspect you are not going to do that if you are still reading, so make 2015 the year that you took responsibility for your performance relative to what a simple investment in the SPY would be a year from now.