Hi Saul et al,
Here’s a story of what NOT TO DO whereas most of the info on this site is how TO DO more successfully. At the risk of looking foolish, my aim here is to help someone avoid a similar mistake and also, forage for ideas of where to go from here.
As you may know my wife is quite a bit younger (and sharper) than I and after many months of managing my 2 portfolios, (I started at ground zero as an investor), I realized she was much better an inputting orders than I. I make more mistakes now in a week than I used to make in a month (when I was working). I chalk that up mostly due to diminishing intellect which I am comforted in knowing comes with the inevitable aging process, viz., don’t see the small icons on the IB platform, the IB platform itself seems to be created to help one make mistakes, emotional flightiness that ends in panic moves, slower thinking, slower grasping of concepts, etc.
So for maybe a year now I still do most of the stock buys but she has been using IB’s Option Trader with very few mistakes. I have gotten out of sync with Option Trader and any memories of how to do this or that are of the same quality as a deja vu experience. The few times I jumped in to do an apparently easy option trade further confirmed to me that SHE WAS THE ONE to handle all inputting.
On this particular day following TMF Pro, I had an in-place SPY hedge that was turning over on the expiration date in October so I got up very early on October 16 to try and catch the guided price. We’re on the West Coast and my Julie sleeps much later than I and never sees the market open.
After careful deliberation, double/triple reads of the recommendation and moving cautiously, the first thing I did was to double the position, instead of my intention to buy it back and roll it. That was really unnerving but I’ve done this before. As I looked at how that happened I could feel the panic rising. During that panicked assessment, I realized I didn’t know if I had bought or sold the bear put spread that I had in place and I had either bought or sold the original and should be either selling or buying it back and then selling or buying the new one…I still don’t know what the hell I did.
So now I had 2 of the spreads that had to be closed out and/or rolled. I entered a “2” into the Option Trader SPY trade box. Then, I saw a button that said “Reverse Position” and another one right beside it that said “Close Position”. I sure didn’t want to reverse the position since I didn’t know what the hell I had done in the first place. I then thought, “I just want to close the (now 2) positions” and then I’ll do the roll separately but I wasn’t sure if the screen was taking into consideration the original position and the faulty purchased position…right at that point I saw another button beside the other buttons that said, “Close All Positions”. I hit that one.
Next thing I saw was my financial life running backwards before my eyes, like the guy that receives a fatal wound and watches his life pass in front of him before the ultimate darkness, i.e., every stock and option position I had (and there were over 60) were alphabetically and in rapid succession, being closed so fast that when I saw a particular position
- that I had labored successfully for months to initiate - flashed before my eyes, before I could get my finger to the keyboard to do (I still don’t know what)…something…6-10 more positions had joined it in the trashcan/history books and were closed out. This went on until they got to “Z”. It was the fastest decision making I had been involved with since I started managing my own portfolios.
In the midst of it all I panic screamed for my Julie, who was still sleeping; I thought of turning off the computer but realized that only stopped me from watching the show, not the production of it. So by the time my darling came out of the bedroom, and I think it was less than 15 seconds, everything was closed out. I didn’t see it but it felt like smoke was coming out of my computer or my ears or both.
All those many positions I sweated bullets over to buy, increase, trim, etc, were GONE. I took losses that probably would have reversed; I sold stocks I had NO INTENTION of selling EVER. My beloved positions in AAPL, GILD, CELG, AMT, a beautiful DIS long call that had tripled and was on its way to quadrupling, etc.
The good news was it was only one of my 2 portfolios…but the larger one. My IRA was safely unopened at the time. The bad news was it had caught me in a market downdraft such that I am now $18K down from the year’s start whereas at one point I was 22% ahead. A mess to be sure.
Take aways for me:
Stay the hell away from IB Option Trader;
Try to get Julie to bed earlier so she can get up with the market for early maneuvers;
Have Julie input orders and I check them before pulling the trigger;
NEVER vote for anyone over 70 as President of these great United States. Even with fail safes, a nuclear mistake could happen since after all, it’s just one button (or maybe 2).
Now I have the task of deciding to:
Rebuild the portfolio (it’s now 89% in cash as I have been pecking away at some stocks and options that appear reasonably priced). If I choose this I still have decisions about what kind of portfolio I will try to build this time and what service to follow, or maybe I should hold onto the cash for that supreme moment which may or may not be coming within a year so I can buy back in at 2008/2009 valuations, etc, so lots more decisions with lots less confidence that I can pull them off.
My old plan, when I took over from Morgan Stanley in mid 2013, was to build my portfolios higher such that a 5% return on the total base would give me enough yearly income to live on. Once I got to that higher base, (all the while converting my positions focused on mostly safe, income production vehicles) I intended to exit what I call the hampster wheel investing style in early 2016.
Mainly I wanted out of managing because it kept me in front of a computer 12 hours a day, most days of the week and it was work that I really was not cut out for (though with TMF I was able to do much better than Morgan Stanley).
I was making very good progress with this build and then convert to an income portfolio strategy. But now with an $18K YTD loss in my taxable portfolio, my timetable is seriously behind.
Progress before the fat thumb/brain move was based upon a combination of selections from Pro, Options, TMF One, some SA picks, my darling AAPL, etc, but starting over again, back to step one seems daunting and especially now with a tad less confidence.
There’s the long and short of it. Probably not many lessons for you all in there but for sure, stay away from any button that says, “CLOSE ALL” no matter WHAT you think it refers to. I was in IB’s Option Trader order screen and I had SPY in the STOCK box with 2 spreads to close and somehow, I ended up selling all options and all stocks. (I called IB and they offered their condolences. Seems like there should have been a big BOMB icon next to it.)
Actually, I feel much better about it now since it could turn out to be a good move (though I feel badly about the $18K and am trying to make some of that back). If there’s a market crash before I can figure out what to do with the bulk of the cash, (89% cash position now), I’d look pretty smart but that thought is just to make me feel better. I really don’t want to be out of the market based upon a stupid mistake. For me to profit from a crash I would have to consciously choose that path and have a plan waiting to capitalize on it.
As it stands now, I have bought SKT for the first time and at a great price, bought back AMBA but higher than my original purchase price, and entered some no brainer option plays on GILD, SWKS, WFC and DIS. What I don’t want to do is move forward with no plan or rather a loosely based rules plan and then find myself somewhere I may not want to be. Been there, done that.
So here I sit with many decisions to make. Any and all suggestions on how to move forward will be happily received since feedback, whether positive or negative, is a gift.
Ciao and hope this helps somehow.