Don't Insult The Trading Gods

At the gym yesterday, I happened to notice quite a large gathering around the TV that broadcasts CNBC. The funny thing about this is that during the bear market, the only thing on this TV was ESPN. Now it is back to stocks again just like the good old days.

The guys around the TV were talking about how much money they've made trading the market lately. And one fellow, who I know lost his shirt daytrading a couple of years ago, had the audacity to claim that he's already up 30% this year. This guy, for lack of a better phase, couldn't find his ass with both hands and a mirror. So when he starts talking about his 30% returns in 2004, my stomach starts to churn. And, it is not because I haven't been able to keep up.

The bulls may have the ball and this market could continue to drive higher on nothing but sheer emotion and liquidity. However, it won't always be that way. Rotations are indeed signs of a healthy market, but sheer optimism and big ego creation among the little guys, indicate that we shouldn't get too carried away.

Remember, a healthy respect for the market is always necessary. In the past, I've made many more big mistakes right after I've made big gains, than at any other moment. And, by all means, even if you are up big so far this year, don't ever insult the trading gods by talking up your big returns. Nine times out of ten, they'll find a way to take them back and more.