On silver lining of market turmoil...

It can be very unsettling in a weak economy, what if all the still-falling property prices, tumultuous stock market, job loss, and stagnant salary for extended period. Given a relatively secure job in a tech leader company that has demonstrated commitment in US, I sometimes watch the markets with almost clinical detachment.

Sure, my 401k balance has fallen by 30%, albeit as diversified as it can ever get. I still check it from time to time (to make sure no one hacks my account, and sell everything off, without me knowing it - as some horror stories had it), but I don't really bother with it as much. To me, it's not really loss to me unless I have to do fire-sale now.

I do find a silver lining in it all. I have come to appreciate the market gyrations. I must admit, I haven't touched the stock market, or bought/sold anything since the tech bubble burst in 2000. In a way, I have kind of mentally tuned out since the paper profit from my company's stock options evaporated, and I don't find a compelling need to check the market.

The market up/downs this year have had me refocused. I was looking at the market, the market swings, and thought, it's not altogether a bad thing. If I don't get greedy, I can buy-low-sell-high and make some candy money out of it. And so I did.

Here's my little strategy would work out:

(1) So, I picked only a few solid companies that I certainly won't mind holding long-term, but have experienced huge price swings. (Well, most every company goes through that these days anyways, so the selection is big.)

(2) I limit myself to a small amount of funds. In that, I acknowledge that this is nothing more than casino gambling, and I want to limit my downside.

(3) I don't limit myself to day-trading. Trading costs are high these days. There's no point mandating myself to close out positions in day-trading. Afterall, I don't mind holding the selected companies in the long term anyways.

(4) I pick a price point to buy/sell for the next trading, after the market close today. Since I sleep late anyways, I would take a look at the sentiment/performance in overseas markets overnight, maybe once or twice. Before US market opens, I finalize the buy/sell price points, look at my cash positions, and decide on how much profits I'm comfortable to take.

(5) Since I have limited the funding, I have to be mindful that even if I take profit, it'll take T+3 to have the funds available again. That limits the amount of trading I can do, which is fine with me.

It's working ok so far, although I have only started since the huge market swings happen for the past few months. Initially, it wasn't as good, since I was greedier. These days, I compare the gains to, say, treasury or money market yields, and it's alot more attractive.

Naturally, there's risk involved, but I'm more comfortable in taking control of these small funds, and manage it myself, rather than delegating to some mediocre fund managers whom I have no control over their performance.

Huge market swings won't last forever. But it's quite fun, actually. I have only myself to be accountable to. It'll probably extend till beginning of next year. I'll have my share of fun, for as long as "my party" lasts. :)