Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions — Golden West/World Savings — and couldn’t handle another 100% loss like that (options).
Needless to say, if I had held onto those positions — which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. — I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.
So…even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin’ with George Soros and Warren Buffett anytime in the near future. 😉
