Keeping it real — and other tips on staying sane while investing in stocks

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Greg Hlavaty, a writer and amateur investor who lives in Graham, describes his experience attending a training program by Investors Business Daily, the newspaper-website that helps traders pick individual stocks.

Investor’s Business Daily recently ran a half-day “Trading Summit” in Raleigh, and though I’m not a subscriber, I’d done a free trial of one of their trading programs  and was impressed with how accurately they called a stock before it ran up. They’re big on reading stock charts, which pros call technical analysis, and as a hobbyist trader, I’m self-educated and always looking to fill gaps in my knowledge. Or maybe this: I was there because I’ve lost more than I’ve won and maybe IBD could help.

Before the first speaker started, a guy behind me started complaining that there were some empty chairs. IBD had said it was sold-out, which kept this guy from bringing a friend. “The thing that bothers me most is being misled,” he said. “If I can’t trust them with this, I can’t trust them with my money.”

I was surprised at his passion: this event was free, after all, and IBD doesn’t handle your money; they just sell services and information. He’d positioned himself beside an unaccompanied woman in the heavily male crowd, apparently seeking more than just stock advice. He assured her that he was not an novice investor, then told her strangely, “There’s more than one way to make money.”

The comment made me wonder: Why did you come, anyway, which became a recurring question for me. Although the two speakers were knowledgeable, organized, and approachable, some guys in the audience just wanted to argue with them. It was clear lots of these people already knew it all, or thought they did. But if that’s true, then why go?

The answer came as I waited in line for coffee. The woman behind me said she’d been investing for 15 years with some success. Her reason for driving from Winston Salem for this conference? “It’s nice to be around other people who share the same interest.”

So it’s camaraderie that prompts long-time investors to sit through a four-hour conference that’s half informational, half sales pitch for their MarketSmith, SwingTrader, and Leaderboard services. I had to admit, it was a nice feeling to be in a room with other investors. Even the curmudgeons. Picking stocks is a lonely business, and an emotional one. It’s one thing to lose money, but far worse to lose and be alone in that loss.

Scott St. Clair, a senior product coach for IBD’s MarketSmith program, emphasized the idea of continually making small decisions, rather than pulling all your capital out or throwing it all in. You’ve got to keep probing the market, keep trying through your losses, which hopefully you’ve managed to keep small. Everyone loses at this game; that’s guaranteed. The question is how you limit those losses and keep playing, and even more, how you stay sane.

St. Clair called this protecting your “mental capital.” He said everyone focuses on physical capital  — money — but just as important is your psychology. How do you care for yourself between losses? That question might mean more than your account balance. For me, that was a real breakthrough, and judging from the head-nodding I saw, others felt the same.

As if to illustrate, one man claimed to have owned Priceline when it was around $1. He sold it for around $100.

Now? Priceline trades for about $1,800 per share.

Scott St. Clair quipped, “Is there a psychologist in the room?”

The audience laughed, as did the man who’d shared his story.

Did he regret selling Priceline when he did? Probably. But he was at the conference and still in the game. Which meant his mental capital was doing just fine, waiting for the next opportunity.

Greg Hlavaty’s work has appeared in Arts and Letters, Bird Watchers Digest, Our State and other publications.     

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