Don't Ego-Lift Your Portfolio

Louis Sykes
August 25, 2022

From the Desk of Louis Sykes @haumicharts

There's nothing more annoying than a stubborn injury that just won't go away. All you want is to exercise or to play a sport, but you're just physically unable to do it.

Among high-level athletes, there are countless stories of seasons, careers, even livelihoods lost due to injury.

I'm quite possibly the furthest thing imaginable from a high-level athlete, but I have been dealing with a minor shoulder injury of my own.

I'm working with physios to get some mobility on my left shoulder back so I can finally make use of the home gym I've recently built in my garage.

It certainly wasn't an acute injury, more of a cumulative thing worsened by living a lazy university student's life. And it's correctable. It might not be easy, but it can be fixed.

There are many types of injuries, some the consequence of normal use, some that stem from genuine human error. 

And then there's outright stupidity.

In every gym on the planet, there are ego-lifters -- gym bros always trying to lift more than they're capable, compromising proper form and technique in the process.

There's nothing more cringe than the dead-lifter with the back of a hunched cat, quarter-squatting, or seeing a two-inch range of motion on a bench press.

When I used to exercise at a small local gym, I'd go at the same time of day. A few weeks in, I'd begin to recognize familiar faces.

The rather obvious ego-lifters would come and go. And, rather than making progress, these guys often lifted themselves in the quack's office from self-induced injuries.

If you're injured, you can't train.

And if you can't train, you can't make progress.

Markets and risk management operate under similar frameworks.   

The degens taking out loans to YOLO into $BBBY over the last month are the financial equivalent of ego-lifters. It's get-rich-quick nonsense.

Of course, some of these traders made killings by over-leveraging themselves. But this financial pleasure is no different from the temporary satisfaction you feel ego-lifting your way out of a 500-pound squat.

As Leonardo da Vinci said, "He who wishes to be rich in a day will be hanged in a year."

In nasty bear markets like the one we've recently endured, great traders don't look to make a killing. Their primary objective is to avoid the steamroller and to preserve as much capital as possible.

This is especially true in crypto, where most projects are down 90% from their highs...

Our goal isn't to make the most money. Our goal is to prevent large losses.

That way, when the good times inevitably return, we can go back to booking multi-baggers instead of clawing back penny by penny from frightful drawdowns.

Patience is a great virtue -- in life, of course, but particularly in financial markets.

With ample forbearance, I'm sure my shoulder will recover, and I'll be back to hitting the weights. The moment I push it too hard, though, I'll be back to square one, repeating monotonous rehab exercises.

Markets are the same: Your next trade could very well be your last.

And that underscores our responsibility to be humble and to manage expectations when we put money to work.

Inflating your ego is a dangerous exercise. Some of the most intelligent, most sophisticated traders on the planet lost everything in this crypto bear market because they let ego get in the way of judgment.

Whether you're pushing weights or managing a portfolio, never let your ego get in the way.

Thanks for reading.

We'll see you tomorrow at 10:00 a.m. ET for Crypto Friday.

And please let us know if you have any questions in the meantime.

 

 

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