3 Lessons That Will Cost You Thousands

“We can make up for lost money, but we can’t make up for lost time.” - Simon Sinek

The stock market is like a candy store.

Everywhere you look there is another strategy, trade group, or hot stock trying to get your attention.

Over my relatively short stock market career of 6 years, I have dipped my hands into a number of candy jars including options, day trading, penny stocks, ETFs/index funds, and dividend/growth investing.

Here’s 3 lessons those jars taught me.

Yes, trading short term is fun, sexy, and challenging.

Daily swings in the market are extremely unpredictable. One has no way of knowing what economic news is going to come out, what the President might say (or not say), or what is going to happen in an ongoing war halfway across the globe.

Truth is, for 99% of people your time is better spent elsewhere. For example, investors who bought and held the S&P 500 over the last 10 years outperformed 85% of large-cap portfolio managers. (source)

They buy consistently, sit back, and let the market do the work for them while they focus on other areas of life.

Whether it’s using dividend stocks, growth stocks, Roth IRAs, or ETFs/index funds buying and holding is your best friend.

When I look back on my time spent day trading, I would have much rather spent those hours learning a skill or finding a way to increase my income.

If there is one thing true about the market it’s that some “hot” trend will always be fighting for your attention.

This might be a new IPO that has Jim Cramer hollering on CNBC, or it might simply be a company paying a massive dividend that you can’t stop thinking about.

I’ve chased both. And both have cost me. Here is a few examples showing my pain, so maybe you’ll pinch yourself before chasing like a sucker.

The hype was real in 2020 following the pandemic crash (here is a post recapping the anarchy). What I thought was “understanding good business models” was really just chasing hot stocks that had rallied hundreds of percent.

It sounded too good to be true, and it was. Luckily, I was so terribly late that the market began to fall before I could buy heavy into these positions.

Strike, spread, delta, theta, in the money, out the money, implied volatility.

This list goes on and on…

If you don’t know how to correctly use options you will likely lose money faster than the Fed can print it.

My mistake with options was that they were one of the first “candy jars” I took interest in. The money I used for option trading, and eventually lost (story here), would have been put to much better use building a foundation for my portfolio.

Despite what I just said, options are a great tool in the hands of an EXPERIENCED investor. One strategy I’m looking to share more on in the future is selling covered calls on stocks or ETFs where I own 100 shares.

One doesn’t have to do anything revolutionary to be a successful investor.

Build your foundation first, stay consistent with your long term plan, then dabble with that risky strategy if you want…or don’t.

Remember, if it sounds too good to be true, it probably is.

Cade's Finds

Brainstorming $1M Business Ideas - The My First Million Podcast did a fun episode discussing $1,000,000 business ideas. If short for time skip to 57:42 and hear the tape scam story…it’s a must listen lol.

Intelligent vs Smart - Great write up by Morgan Housel (author of The Psychology of Money) on the difference between intelligent and smart. I’ll let you find out which one he thinks is better.

My Most Viewed Post Ever - In case you missed it, this post did over 2.4M views on Twitter this weekend. Social media is dope.

The government can find your $600 Venmo charge, but an $80 million dollar jet? Check mate.

Just got back from Vegas…this had me check myself.

Refer two friends and add to your money toolbox.

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Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.