Saturday, December 31, 2011

In With 2012 and Out With 2011 (Thankfully!)

Happy New Year!   It was quite the year in the stock market.   Yes, the market went nowhere overall as I'm sure you've read in many newspapers and heard about on many TV shows.  It was a year when trends disappeared (if you consider a trend something longer than a week or so) and when gaps up or down of 2% became the norm.   To be honest, it was an awful year for trading, specifically swing trading.   There were lots of false signals this year and lots of whipsaws.   It was certainly not an easy market, and if you survived and maintained most of your capital, you should feel proud.   Staying in the game is always important, and this was type of year where staying in the game was difficult if you were not disciplined.

On a personal note, I ended up having a pretty good year, although my account spun its tires the final few months of the year and finished about 10% off of its highs from mid to late October.   My main account ended up 58% for the year, and although I am very happy with that, I kind of feel a lot of it was more luck than skill.   All of my trades are listed here if you want to check them out.   My win rate was not very good at all (only 38%) but in this difficult of a market, I kind of expected that.   If I can get that up to 50% or so for 2012, I will be very happy.

If you follow my blog, you should know that I am always very quick to cut my losses (maybe too quick sometimes) and that remained true in 2011.   My average loss was about 2%, and I only had one loss over 10% (which occured on a short that gapped up after-hours on a non-earnings news item that I had no control of) so I am happy with that.   I was able to average almost 6% on my winners and this allowed me to make the overall gains on my account.  I had two 30%+ gains (MOBI and short CROX), two 20% gains, and twenty-three 10%+ gains.   Those type of gains can add up if you keep your losses short.   Some of these were very good trades that I am happy with, but my biggest gain in CROX (short) was really just luck - it gapped down 30+% after-hours the same day I entered on a earnings warning and I immediately cashed out.   That was a big gain for my overall account.



Looking back at my trades, one goal of mine for 2012 is to be a little more selective with my trades.   I think I took too many trades and with the way the market was in 2011, a better choice instead of forcing trades would have been simply staying on the sidelines.  There were times I did do this, but in hindsight, I wasn't on the sidelines enough for the type of market we had.   As you can see below, the market really went nowhere for the first seven months of the year, had a huge drop in August, and then went back to chopping around for the rest of the year with a slightly positive bias.   Nowhere in that chart (besides the August drop) do you see a nice, smooth move of more than a few weeks and that is what made 2011 so difficult.   Hopefully 2012 will bring something different.

Nasdaq 2011

Chart from TC2000, Courtesy of Worden Brothers, Inc.

So what will 2012 bring?   I have no idea and I am not really in the prediction game.   Being a swing trader, I don't care what is going to happen six months from now.   All I care about is what will happen next week.   Besides, according to the Mayans, none of us will be here to check our 2012 predictions out twelve months from now, so what's the point?    One random prediction I will make:  whenever Facebook finally does come public with its IPO, I think it will be a flop, maybe not immediately, but I think the company has no long-term future.   I was talking to two of my wife's cousins (ages 19 and 13) yesterday and both mentioned they recently closed their Facebook accounts.   In the words of the older one, "Facebook is becoming just like MySpace."    That's not good.   I asked what is taking Facebook's place and she told me Twitter, which I can understand.   Don't know when that will come public, but I will be watching.

I'll be back tomorrow or Monday with the outlook for the week ahead.   It should be an interesting start to the new year, as we have formed quite the coiling pattern on the major indices and a big move one way or the other seems poised to occur.   I hope that's what we see - I could care less what direction it is as well.   As long as we have a trend that lasts more than a few days or a few hours, making money will be easier in 2012.   That's my wish for the new year - a trending market.    Be safe tonight and best of luck to all of you as we begin another year.    Take care.

2 comments:

Anonymous said...

Mac,
I just want to say thank you for sharing your insight and methods with all of us. I look forward to your posts each day. I have learned a lot from you and hope you have a really great year trading.

Thanks
Cindy

Mac said...

Thank you Cindy - I wish you the best of luck this year as well. Take care.