I wonder if it will happen again? I lost money in 1987, and it scared me, BAD. I guess Ive either been smart or lucky since then. If I ever had a large percentage losing year now, being "early retired" (not by choice), it would be VERY bad because I don't have a check coming in or years to make it up with.
Assuming that this is a serious question, then you need to change your attitude towards trading. Part of your trading philosophy ( which comes before your trading methodology) might be 'no losing months' or 'no losing weeks' One way or another, do not allow yourself the option of a losing year.
You can consider applying a hard risk management scheme, where you stop trading after a certain drawdown occurs for the set period. e.g. No more trading if drawdown exceeds 10% per quarter, half year, or etc. This way you'll know exactly how much risk you're taking while preserving capital.
20 years straight since '87 and not a single down year? That's better than 99% of mutual & hedge fund managers. You must have quite an equity base built up if you've been trading 20 years compounding gains nonstop..
Yup. In 1987 I lost about 30k, which was 38% of the portfolio, the entire loss being taken in 2 days. I made some back by the end of the year by doubling the bet after the crash, but it was a very scary time. I was at least somewhat diversified, but that didn't matter on "no bids" Monday. You couldn't get through to sell even if you had tried. I pretty much avoided putting any major money in the market for a long time after the crash, was completely out in CD's 2000/2001, and never went "all in" again until the world collapsed around me in 2002. Since then I'm up 600% after tax. If I was to lose 38% of liquid assets, like those 2 days in 1987, it would be catastrophic. At this point in 2007 it would be impossible for me to have a losing year because I'm being pretty conservative.
PS: It was a lot easier to "not lose" money being out of the market all those years, but you don't really make much, either after inflation is taken into account. I was a techie, and generally in tech stocks, for example in 1987, so its probably a lucky thing I stayed out, because 2000/2001 would have crushed he kinds of things I was into. For the rest of 2007, I think I'm just going to keep limiting exposure and keep the profits already taken banked. I seriously don't think the market is going to give me much more this year than I've already taken, anyway.
========= T Bob; Dont think you will make ''much more''; its still May , not half over with??????? Usually do best in 4th quarter Big losing year iis possible but unlikely; if one cuts back size.