Do not hold a position against general macro events like (Trade) Wars
Lesson learned: impact of loss aversion and reversion to mean is muted when trade war is occurring
Don’t double down on your mistakes
Lesson learned: it is cheaper to admit mistake and cut losess
Committing too much to a position leaving not much liquidity for later. This forces freeing up liquidity at a loss when new buying signals surface.
Lesson learned: it is cheaper to under allocate portfolio to a position upfront.
Entering too late into a buy signal by more than 48 hours.
Lesson learned: it is cheaper to forget about it when you are late
Entering too early into a buy signal.
Lesson learned: it is cheaper to figure out the support level before entering into position.
Don’t enter into position when there are no buy signals.
Lesson learned: it is cheaper to wait for a wave than to get carried away by the anxiety that there will never be a buy signal again in this lifetime.
Not verifying assumptions
Lesson learned: Seek evidences to challenge your own assumptions. Lessons could be learned when you dig deeper into pass records to for deeper insights.
Additional insights
Sudden news about macro economic events (Donald Trump tweeting) does follow a lose aversion and reversion to mean pattern.
Gradual news about macro economic events (US passing tariffs on China and banning Huawei) will have a long term negative impact.
Price of REITs are:
relatively insensitive to trade wars
hyper sensitive to Federal Reserve (expected) interest rate changes
Only execute loss aversion and reversion to mean trades on positions that exhibit bullish trends both at the individual stock level as well as at the SnP level.
