This ugly market has made it hard to have confidence in the upside. I'm kicking myself over and over. I thought a rally was overdue and bought some way out of the money calls for JPM (Mar $24) at .12, .16 and .18. Sometime during the big run Tuesday I realized how far out of the money they were and sold for .20 and .22. Now they're over .70 and could go much higher. Last month I told some fellow traders that we needed to look at the far out of the money calls near option expiration. I did so, failed to carry out the plan, and left walked away from a 500% gain in a few days. Words cannot express my frustration.
Maybe you are looking at the market the wrong way—for your style. Maybe you shouldn’t be a “gambler.”
There’s a reason that Buffett and others have for years urged people to do their research, and then unless things change drastically, they should ride it out. Now I know he’s sold lately, so this is indeed proof that we are in an exceptional period in our economic history. But when you look at the big, old companies and their management, you have to ask “Are they still strong enough to believe in, and are they well led?” If they are, then stick with them.
Otherwise, get out the pick-a-stock dart board and start throwing. During the several years before 2000, even a monkey playing that dart game was making money.