Today's Investors

by Jay Pestrichelli on October 25th, 2013

 I usually don’t post fluff pieces on the blog, but it feels like a little reminiscing is in order, but today is the 20th anniversary of my first stock trade. I was working as a manager in a small restaurant and bought 13 shares of GE.  I had saved up something like $500 and a friend of mine let me buy it through his account he had with his dad’s broker.
Back then do-it-yourself brokerages were just getting launched, and trading stocks was a very different business. Of course GE went on to have this great run and I thought this stock buying thing was a piece of cake. Turns out so did everyone else. The 90’s had a great bull run and it seemed like whatever you bought went up.  The internet boom had brought in a whole new generation of traders and easy money was made in anything with a .com at the end of it.
When I first starting working for an online brokerage in 1999, I felt sorry for the old timers in back office that kept telling us new guys to watch out because it was all happening too fast. I thought to myself, what did they know? I almost felt sorry for them missing all these great winners. Their old ways of investing were the ways of the past. Diversification? Sector analysis? Buy and Hold for the long term? All those methods that were fading like the age of the silent movies. It was a new time for investing and us Gen-X’ers were going to redefine how stocks traded. Who cared about this Warren Buffet guy anyway?
Well, we all know what happened…the guys with grey hair were right (they were grey because they earned it). The bubble burst and those of us that made it through that one fought back to even just to get slammed by the great recession.  All of this resulted in a lot of resentment for Wall Street with significantly less new faces coming into field. So 20 years later, I still feel like the new guy…only because there’s no one else to be it.
Once again, however, I (we) have got a new way of doing this investing thing…and that is Buy and Hedge. Hearing us coming at the market from a different angle makes sense knowing where I came from.  2 huge market retracements have both seared the lessons of risk-management into my investing soul and now I’m the one reminding people that it all seems to be coming on too fast.  Don’t get me wrong, we aren’t bears here waiting to capitalize on a pull-back, we just want you to understand the risk you’re taking with your investments.
As the old saying goes, “The game is the same, just the players have changed.” However, Ill argue that both the game AND the players are the same. Understand that who is on the other side of your transactions probably isn’t some fly-by-night kid who just graduated summa-cum-loudmouth. It is going to be someone bearing the scars you have and watching out for you are watching out for.  However, if you’re reading this blog, you know that you’ve got a tool in your belt to help and that is hedging.  Follow the 5 Iron Rules of Buy and Hedge, and you and I will be able to talk about how we made it through the next bubble.
Here’s to 20 more years of market bells and thanks to everyone for their support.  (The fluff is over, now it’s back to work)

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