Trust Your Instincts

by: Dana Blankenhorn


I have missed some good trades I recommended here at Seeking Alpha.

I cover trading, but for my own account, I take a longer-term view.

Learn your own story here and stick to it.

I spent most of Thursday thinking about taking profits off the table on Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL). I had been negative on the stock, but everyone else was optimistic, so I let it ride.

I had the same thoughts regarding Starbucks (NASDAQ:SBUX). I had been writing sell orders here, but in my own portfolio, the stock was a hold.

These have turned out to be bad calls. They're not my only ones.

In recent months, I have written positively about both McDonald's (NYSE:MCD) and Facebook (NASDAQ:FB), but I have yet to pull the trigger on either trade. So I missed those profits in my own portfolio, although those who trusted my instincts made money.

Instead, I have been raising cash as the market has risen. I have plenty of ammunition ready should the week's downturn turn into something of a rout. That's possible. The psychology of markets is that traders trust their instincts. They act on what we write here at Seeking Alpha, and elsewhere, they act on what we don't write, they act on rumors and innuendo. Traders grab both moves and rumored moves. This is their job.

I don't do that. This is my retirement money we're talking about. It's not "mad money," and I am not going to be measured by how much I gain or lose this week or this quarter. I am looking for longer-term gains even while covering short-term moves.

As I have written here many times, I am a journalist by training. I'm not a financial analyst. I am looking for stories that might turn into profits for someone, but my training makes me somewhat detached from the work.

Journalists are taught, from our birth in the trade, to avoid even the appearance of a conflict of interest. When I wasn't freelancing I was told firmly to place my money in something like an index fund and never to trade on anything I knew. Joining Seeking Alpha, where we are encouraged to trade based on our stories, and where readers find it suspicious when I say "buy" without buying, has been a long, strange trip for me.

The lesson, for you, is to do your own research on stocks, don't outsmart yourself going after the last dollar, and trust your own instincts. The last year has been horrible for hedge funds who bought into their own hype with unicorns and oil and corporate inversions. Overall, it has been pretty good for me, and for those small investors here who listen to the noise, who write their own investment stories and who stick to them.

Seeking Alpha investors may not get the last dollar, but you do get a world of free entertainment, and if you use our stories to write your own, earning fatter profits than most of the geniuses who want you to hand them your money.

I will spend the next week on vacation, and that is my parting advice. If you can't do the same whenever you want, for fear of what may happen to your stock portfolio, then you're doing it wrong.

Disclosure: I am/we are long GOOGL, SBUX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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