Recently, I’ve thought a lot about what skills I’ve learned through investing and trading. While most of my investing is relatively simple, I do invest in LEAP out of the money call options, which can wildly fluctuate in valuation. Basically, if the stock goes up you make a lot of money, and if it goes down you can lose all of your money. This causes increased volatility in your portfolio.
In January or February of this year, I bought some call options for January 2015 in technology stocks. Promptly after I did so, tech stocks tanked 30% or more and my options became almost valueless. While I could have freaked out and sold them at a significantly loss, I knew the market would rebound so I stuck it out and remained patient. It took awhile for tech stocks to regain their momentum, but now my options are profitable or almost so. I’ve learned to embrace market corrections and stay calm in the storm. The best times to buy stocks or options is when everyone else is freaking out about big dips. As a contrarian, you want to buy what everyone else is afraid of and remain patient for your investment thesis to come to fruition. While you may not always be right, it is almost always better to buy when stocks are tanking than when they’re soaring. Most people can handle making money, but most don’t have the guts to “lose” money or be in the red, even if temporarily.
I’ve realized that these lessons of contrarianism and remaining calm can transfer to business situations as well. It’s best to stay poised at all times and keep the big picture in mind. If you can learn to do so, you will be at a huge advantage in almost any scenario.
Revolutions & Rockstars 