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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Investment Strategies / Mechanical Investing
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Author: Said   😊 😞
Number: of 6131 
Subject: Re: book recommendation
Date: 07/09/25 6:17 PM
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80 trades in 6 months is a lot.
Lot lot.
What matters is not how many trades are wins, but how much money you have made. This is the trap that neophytes at options get clobbered with. 9 of 10 trades win but the 10'th trades loses more dollars than the 9 trades gained.


I just counted: 85 trades of buying/selling puts this year. Many more than just 1/10 lost money, 28, but apart from 6 only pennies, not at all changing that the other around 60 made the huge profits I wrote about on the Berkshire board.

Not with a mechanical strategy, but the simple observation that Berkshire was extremely expensive. So I dared to "bet the bank", in line with what Charlie&Warren were saying, that when you see THE opportunity you have to bet big***.

But I invested always roughly the same amount in any of those puts. So how should "the 10'th trades loses more dollars than the 9 trades gained" happen? That can only happen when falling for "doubling down" when losing --- and that has nothing to do with "neophytes at options" but with a limitless and therefore hopeless gambler´s mentality (which apparently I have - but luckily with limits).

***Probably never again because with any other stock or index I would never be sooo convinced of an unsustainable mispricing, see my post about intending to buy S&P puts now --- and the next one that I quickly changed my mind.

(Realising that while I THINK the S&P being this high is unsastainable I am thinking this since many years now, being wrong all those years, and therefore finally admitting to myself that in fact I know nothing about what the S&P will do tomorrow or next year, that all I know a bit about is Berkshire).

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