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.