As we approach the 4th of July weekend, the subject of vacations
comes to mind. The period from the 4th of July to Labor Day is often
very interesting in the markets. Many of the big players are enjoying
life in the Hamptons or, perhaps, the south of France during that time.
Often the third quarter shows weakness and may see increasing
volatilities as well. One school of thought suggests going to cash and
leave trading for the summer. Others see a chance to capitalize on
opportunities afforded by the summer doldrums. Either can be an
acceptable approach.
Whatever the choice, it is important at least to take a vacation.
A change of scenery accompanied by the removal of one's nose from the
computer screen for a while is important. If we leave the markets to
their own devices, they will still be there when we return and we may
return with new insights into our own trading and into market movement
in general. Vacation provides the chance to step back and view the
forest rather than simply focusing on the bark of only a few trees.
I believe the concept of "taking a break" or "getting away from it
all" is critically important to our well-being. I don't mean just for
traders and just for trading, but for every occupation as well. My
father occupied an important and stressful position. He was excellent
at what he did and was once the subject of a laudatory article in
Fortune magazine. I recall how tense he would become and then, each
summer, we went on vacation to a small lake in northern Maine. There was
no electricity and, most importantly, no phone. Motors were forbidden on
the lake and there were only a few cabins so the quiet was rarely broken
except by the call of a loon or the splash of a jumping fish. What I
remember most, though, is how relaxed my father would become before
returning to civilization. The daily pressures were removed albeit
temporarily. Though we believe in the importance of our jobs and how
important we are to the job, life will go on during our absence even if
we don't take our cell phone on vacation. Our mental health can improve
dramatically.
If you are convinced that taking a vacation really may be a good
thing, you might be concerned about what to do with your portfolio while
you are gone. Should you follow it from your vacation place? Should
you just shut it down for the duration? How about placing orders that would put it on auto-pilot while you are
gone? What you will do should be part of your trading business plan
from the beginning. For a review of some elements to consider when
creating your own plan, you may want to check the archives for my
article on business plans for traders.
Next week, I'll discuss some ways to put your portfolio on
auto-pilot while you are on vacation or even if you just want to set it
up and let it run while you are doing other things at home and work.
Good Trading!
Bill Kraft
Mr. Kraft's past articles are posted on our website for your review.
