It Could Have Been Worse

Perspective means so much.

On days like today things could have been much worse.

For me, as an option seller, it is always a case of balancing the fear of missing out (“FOMO”) with the need to have protection.

Sort of like balancing out missing the joys of fatherhood with fatherhood.

As long as we’re talking about me, my decisions are usually predicated on what I perceive as a simple mathematical truism.

I’d rather miss out on a 10% gain than have to gain 11% to make up for a 10% loss.

That may not really answer the question, but in the longer term, even as my perspective on what constitutes “long term” changes, I would rather miss out on some gains than have a deeper hole than a care to dig out from.

But also knowing that in the longer term the market goes higher, it typically is a question of just keeping your capital and your wits.

Right now, these past few days could have been worse, except for two things.

One, is that have more cash on hand than I have had for a while. That falls under the “keeping your capital” category.

Of course, having 20% or so in cash means that I’ve lost out on gains over the past 8 weeks, as I’ve been growing cash.

Did I mention that those would likely have been paper gains, because, you know: FOMO.

Of course, unless interim profits were taken in the past 8 weeks, as well, there was nothing to be missed out upon, other than something on paper.

But right now, having that cash on the side has had some very tangible benefit on days like today and Friday.

The second thing that has helped have been those hedges.

Sure, stocks went down, but those short options positions went higher. That makes it easier to be true to the “keep your wits” category.

For what that’s worth.

Today, it was worth something.

Tomorrow I may be in a position to kick myself, but I won’t, no matter what tomorrow may bring.