Why the Trading Test?

Thats a good question you might ask. Its like this. In a few years, I expect to be "retiring" such that I wont be spending each day at a desk job. I've got a nice little nest egg salted away for that time, but the thought occurs to me that a pretty good and dependable bit of extra income would surely help with the peace of mind. Knowing that I can pocket $10,000 up to $25,000 a year with a trading account would be nice for a little extra spending money that I wouldnt have to use the nest egg for. The fear, of course, is that a trading account can get wacked pretty hard during a quick crash as we've seen in the recent past.

So my thought is to try to protect against, or hedge, by having nearly half the account always invested on the short side with stocks that are in downtrends anyway. Ideally both the long side and short side investiments are complimenting each other as their trends play out. I know there are tactical problems to making this work and I havent thought through all the likely hurdles yet. But, as I say, its a work in progress and I expect to get to where I want to be eventually. I have anywhere from 2 to 4 years to work the bugs out...so time is on my side. On the whole, I think I've experienced pretty much the entire gamut of investing quirks....I've seen some of my buy and hold stuff get slaughtered, I've managed to trade away profits by being overactive in the markets, I've seen nice profits vanish or turn into losses and I've watched long trade losses grow and grow hoping things will turn around. After all this, my experiences tell me that you have to be patient but...most importantly, when things go your way and then turn around, you must take profits and walk away to look elsewhere or simply reverse the position and look to make gains in the other direction. The markets give...they also are more than happy to take that away, and then some. In the words of Don Wolanchuk, "think like a criminal".

and furthermore...it strikes me that there are a lot of folks in or close to my position ....a lot of people appraoaching that point in their lives when its time to think seriously about what comes next. In my honest opinion, its not gonna be bad, all we have to do is be smart and navigate our way through it. In the meantime, take the time to pay attention to the things that are important in life...you know what I'm talking about.