Thursday, May 24, 2018

Baptism of Fire

There was this certain gentleman who messaged me one sunny afternoon. Let's call him John. 

The man started investing in the second half of 2009 when the stock market was starting to recover. It was the best time to invest. John was a fundamentalist and a farmer by profession and understood the concept of the seasons. He was taught that farming and investing are very much alike - That just like farming, it takes time before you can reap your harvest. It was the best time to buy long-term investments.

 Several years later, he was able to grow his investments from 6 to 8 figures. Now that's a lot of zeroes! But as he continued with his story, John said he was lost on his investments and needed help. He explained that in the past 5 years, his investments stopped growing and even eroded chunks of his profits. 

All these years he was loyal to his stocks, which has now become a big fund, and was rewarded handsomely. But this time, his loyalty was being tested.

John confessed to lightening his positions in the first quarter of 2018 to buy his new set of "investment winners." A few months later, he found himself in a slump - His fund almost halved.

"-40% na ako sir. Ano gagawin ko sir Zee?"

It was his first time to experience such a terrible thing in such a short amount of time. And to make matters worse, he took a substantial loan to add to the losing position. What happened? What was the cause?

As I started to probe, It seemed that John discovered Facebook Trading Groups like how Magellan "discovered" the Philippines.

And the rest was history.

This was the exact moment John knew, he f****d up.

He thought he was a fundamentalist. But he wasn't. He thought he was because he got lucky. He was a speculator but didn't realize it. Because a true fundamentalist wouldn't be fazed by bear markets.


Many traders who start out are like John. I was also like John. A few jackpot trades and we think we can trade for a living - until the season for bears come.

For those of you who seek the truth, here it is:

The market rewards us for the discipline in our trading system, not the loyalty to our stocks.

If you consider trading for a living, then you should ask yourself during a bear market when things are in chaos and the atmosphere is filled with fear. Not during times when the fields are green. If you can confidently tell yourself that you'll be alright with utmost certainty, then 




This is the ultimate "litmust" test. This is every full-time trader's Baptism of Fire.

 Because if you have the ability and the belief that you can build even in the harshest environments, then you will definitely thrive when the good times come.


It's a bear market. Are you ready to go full time?