Lessons learned from dabbling in the stock market

I've dabbled in investing in the past but over the last two years I've really gotten involved heavily with managing my portfolio. I'm still a complete amateur but I did pick up some very valuable lessons:

  • I've started to attach probabilities to events way more than I used to. This has the benefit of helping me think about potential events more objectively.
  • There is a zen to riding the highs and lows of the market. It takes confidence in a long term game plan, diversification, and some good ole detachment in order to psychologically bear the swings.
  • I learned not to go into a trade without an exit plan (still working on actualizing this one).
  • The more you risk, the more you could potentially be rewarded.
  • You could also lose everything in one bad trade. Don't put all your eggs in one basket.
  • Leverage is a powerful and dangerous tool. Use it with extreme caution.
  • A stock's price usually reached an equilibrium until some catalyst occurs. The same could be said about life, usually we reach some steady state until a catalyzing life event occurs.
    • TODO: explore how to introduce catalysts in a more consistent manner.
  • Companies rise and fall on a regular basis. What seems like a juggernaut one year may implode the next. Same for companies that seem to be worthless can be turned around and brought back from the grave.