Dealing with Pain and Failure

Dealing with Pain and Failure

I’m still currently holding my hedge and I am now down just over 13 percent on that position since putting it on in late March. Since my hedge is an ETF that trades on the NYSE I have been hurt severely by the rise in the Canadian dollar (the ETF trades in American dollars).

I confess to feeling a little frustrated. The Canadian dollar took off not long after I bought the American ETF. Yet that was one of the risks entailed in taking the position (currency risk). When we face an unknowable future, anything can happen so an investor has to try to gauge his position and adjust his risk parameters accordingly. The currency movements were an added risk I was taking on at the time. Sometimes things will move against you. There is no point in beating yourself up about it. Things like this happen when you invest in the stock market. An investor has to learn to stay balanced and calm when faced with the volatility of his positions in the market.

Luck, chance, randomness play a major role when one invests his money in the markets. And the shorter the time frame the bigger the role they will play. You just have to learn to roll with the punches and not let yourself get caught up in the short term gyrations of the market place. An investor should have faith in his long term strategy and know that in the short term his positions could turn against him for awhile. It’s just the noise of the fearful and impatient. Know within yourself that you are above that noise and have your sights set on far off horizons.

Sometimes your positions won’t work out at all and you will decide to liquidate a position and take a loss. This happens to everybody. Investing in the stock market is not for perfectionists. It will always be more of an art form than a science. All investors will experience their individual failures. This is part of the price you pay for participating in the investment game. The important point is to stay in the game by focusing on your overall investment portfolio and not let your individual failures upset your investing equilibrium.