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July, 2021

This is another exciting month! Last month, I was at $186,394. This month I have sustained further losses.

Total of -$11,912(-6%) loss in this account.

I really would like to ask many of you, what would you do in this situation?

Many of you would say: "I'll dump all the losing stocks and save whatever cash I still have, and look for other winning trades. I did loss money, but I'll earn them back in other trades."

Some of you might say: "that was some huge losses, take whatever you still have and run..."

If you have read enough of my articles, you would know what I am going to do.

I remember my mentor love to give me lessons in situations like this.

In this situation, he would most likely tell me...

"James, it is not the strategy you use nor the price you purchase the stocks that matters the most. Its most important aspect is... WHO purchase it."

"What do you mean?" I inquired...

You always told me the most important thing is buying the right stock at the right price and hold it forever... then today, you tell me it is who purchase it that matters the most...

Why are you so confusing? I mumbled...

You see James... What you purchase, at what price, or what kind of stock, or how long you should hold it don't matter... When the person holding the stock cannot carry on with the strategy...

Most people know, they should hold on to stocks forever and let time do it's magic. How many of them can follow through with the strategy? I can tell you... less than 10% people in the stock market. Because that's the amount of people, who actually made profit.

When stocks move. The stock you purchase doesn't move, and everyone else's stock is gaining 5% each day...

How many of you have the discipline to actually stick to the strategy?

How many of you can ignore the voices in the market that tell you to dump your stocks and purchase the trending hot stock?

When the stocks you purchase is deep in red, the fear of losing your entire portfolio.

How do you deal with it?

Sadly, most people couldn't deal with it. They sell out, so they can get a good night of sleep.

The way I deal with it is called "Strategic losses"

I know by experience, stocks don't raise just because I purchased it. And also I know, stocks don't fall just because I sold it.

When I purchase the stock, I already prepared for it to lose 50%, 70%, even 80% of its value.

Because when I purchase, usually means the price is great... when the price is great, usually it's in a bear market.

In a bear market, the bears can get more bearish... In a bull market, the bulls can get even more bullish...

Therefore, what often happens is: when you take profit, the stock often continues to rise... When you purchase a stock at a low price, it often continues to dive lower.

because people's sentiment is unpredictable, we must be prepared for the bad to get worse, and the good to become even greater...

Since when I purchased the stocks at a low price, I am prepared to take 50~80% losses as strategic losses...

Would I falter when the stock falls for 10-50%? Not very likely...

That is why... it matters the most WHO purchased the stock....

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