Hanging in There
As of this very hot Sunday, along with the broader market, my portfolio is at all time highs. Yet, as is the nature of existence, I do not feel any kind of elation; only the mild, ever present anxiety from an amygdala that hasn't discovered tools yet and still thinks it resides on the lower end of the food chain.
Anyway, to put it concisely, taxes are going to fuck me. I'm barely keeping up with the index and most of my gains are realized. So, after taxes, I'm underperforming by a fat margin. I'm not really doing this investing thing properly. I'm entering my second year of this game and I've got some serious improvements to make.
In investing, what continues to be my biggest takeaway is that you are your own worst enemy. What I have found surprising is that despite understanding and accepting this on an intellectual level I continue to inflict financial self harm upon myself; selling too early, buying into fomo, acting on fear, etc.
While I'm slowly making improvements with regards to acting on fear, what has been costing me the most lately is selling cash secured puts when I should be buying and selling covered calls when I should be holding; basically running the wrong strategy for the market environment. Selling options feels like easy money but the taxes are going to be kick in the dick with regards to performance. I need to strike a better balance, combining long term holding and options selling. Since my objective is both income generation and capital appreciation, I cannot dedicate my portfolio 100% to long term holding, but at the same time, to avoid getting bent over by The Man, I should not be generating more income than needed to fund my household.
Too much income is obviously not a bad problem to have, but I still need to reinvest a significant portion of it just to beat inflation, let alone keep pace with the indexes.
At the end of the day, the most important thing to me is survival; maintaining an independent lifestyle and in that regard, it's so far-so-good. My litmus test for an optimal lifestyle is being able to go fishing once a week while the kids are at school--impossible when your ass needs to be at a desk from 9 to 5 every day.
That said, I also like to be good at games. Who doesn't like winning? Of course, what defines "winning" in the game of investing is highly personal depending on your goals. For me, it's generating enough income to fund my household while simultaneously growing my wealth at a rate equal to or greater than the indexes. So far, I am falling short of that goal. That's the bad news. The good news is that it doesn't feel impossible in that it's fairly evident which behaviors I need to improve in order to stop being my own worst enemy.
