For new and existing readers, below are my rules that govern how I manage my portfolio positions:
The Investments: I only trade stocks. No options, no precious metals, and no crypto you can’t use as legal tender at a winery’s tasting room.
The Trading Goal: An ideal trade secures a +3% gain, but I sometimes make trades below that goal to manage the portfolio’s risk and/or free up capital for future investment in other positions.
The Portfolio’s Growth Goal: I strive to grow the portfolio’s baseline by value 2% every week. However, with the market’s ebb and flow this is considered a wish rather than a hard line metric that determines my success or failure.
How Success Is Measured: I compare the weekly tally of my gains and losses against the cost of a typical three day/two night getaway to Temecula Valley Wine Country that consists of the following:
- Hotel accommodations for two nights, breakfast buffet included.
- Four meals, one of which must be at a winery of my choosing.
- A magazine or book at Barnes & Noble, plus a beverage and snack at Starbucks Cafe.
- Four premium wines purchased at the winery’s tasting room.
The Reality Check: The market never guarantees a return. There’s always a risk selling a position can result in a gain below my goal, or worse yet, a direct loss of capital.
The Capital: My portfolio represents a small fraction of my net worth. These trades are an additional, potential revenue stream to complement my core, long-term investments.
The Opportunity Cost: I accept the possibility I’ll miss out on higher gains whenever I sell a position.
Profits Definition: Any dollar amount above the portfolio’s baseline value is considered a distributable profit.
My Compensation: Almost all of these profits are swept into my checking account every two weeks. A nominal amount is retained in the portfolio to preserve its baseline value.
Now that you know how I roll, please enjoy my Trading For Tannins blog posts published every Friday after the closing bell.
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