Portfolio Pursuit

Back to basics

February 25, 2025

After a thorough ass-kicking yesterday I needed to reset and not get too ambitious today. The news about more chips restriction broke last night while I was watching the Hong Kong and China markets open, and it did not look positive for semiconductors coming off some big losses yesterday. The Trump administration signaling even more pressure on our allies to pursue some tech-merchantilism by further restricting exporting chips to Chinese markets was certainly going to cause problems today.

While I was watching Bloomberg last night there was some question about "when are the dip buyers going to come in?" Another analyst pointed out a significant increase in volume for the Asian markets, 30-50% increase, so the dip buyers were there! I anticipated some more of that today, dip buying but I was doubtful there would be enough.

Sure enough there was some opening bell optimism and then a slide, followed by pretty substantial volatility.

The big lesson from yesterday's failures is that I do a lot better seeing downside opportunity than upside opportunity. Most of the trouble that I got myself into was with call options rather than my puts. My memory is hazy but I think the only put options I have lost on this year was with Twilio (TWLO) and Reddit (RDDT) around their earnings. Frustratingly I was right on both of them, just not right on the correct timeline. They both deflated about 2 weeks after I had to take my losses on those puts.

The other lesson from yesterday is that I let the prior week's confidence inflate my trade sizes. Bigger trades mean bigger wins but also bigger losses. While they are unfortunate, losses are inevitable and I think when I'm playing with larger trade sizes I need to put in my stop orders more aggressively than I have been.

Maintaining focus today with smaller trades and focusing on downsides (puts) with Nvidia (NVDA), Broadcom (AVGO), and AMD I was able to beat my daily goal and restore some confidence.

The big wins are always exciting, but after losses, returning to the basics and getting some small wins is crucial.

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