The Saturday Cut: The Problem With Year-to-Date Returns
Markets move on. These ideas don’t.
Three themes pulled this past week’s Daily Updates.
Don't Let the Perfect Setup Cost You the Good One
There’s always another day you could wait.
A stock pulls back toward support and you think one more tight candle would make the setup perfect. Maybe you’d like it a little closer to the moving average. Maybe you’d prefer another inside day before it goes.
Sometimes you get it.
Sometimes the stock leaves without you.
That’s the tension between the greedy trader and the pragmatic one. The greedy trader wants every variable lined up perfectly before taking the position. The pragmatic trader recognizes when enough of the setup is already there.
That doesn’t mean lowering your standards or chasing something that has already left the station. It means accepting that markets rarely hand you textbook entries.
There’s a point where waiting for additional confirmation stops meaningfully improving the trade and starts increasing the chance that you’ll miss it.
You don’t need the perfect entry.
You need a good setup with a clearly defined place to be wrong.
Let the Price Answer the Question
A company reports terrible earnings and suddenly everyone has a question to answer.
Is this the beginning of something worse, or was the bad news already priced in? Did the previous decline anticipate the disappointment, or does the market still need to adjust to the new information?
I don’t know.
More importantly, I don’t have to know.
That’s one of the great advantages of technical analysis. Instead of trying to determine what the market should do with new information, you can watch what it actually does.
Does the stock hold the previous low? Can it reclaim the high? Does it get back above an important moving average or resistance level? Each one gives you objective information about how buyers and sellers are responding.
You don’t have to decide whether the news is good enough, bad enough, priced in, or misunderstood.
Let everyone else argue about what the news means.
Let the price tell you what matters.
Your Return Doesn’t Tell Me How Well You Traded
Someone tells you they’re up 50% for the year. Someone else is up 25%.
Who traded better?
You can’t answer that from those numbers.
Show me how they got there. Did they suffer enormous drawdowns along the way? Were they constantly overexposed, flying by the seat of their pants and one bad week away from giving it all back? Or did they wait for the periods when the odds were most heavily in their favor, manage risk when they weren’t, and build that return without putting themselves in a position to blow up?
I’ll take the second trader every time.
Here’s why.
$100,000 → +25% → +25% → +25% → +25% → +25% = $305,176
$100,000 → +50% → +50% → +50% → +50% → −75% = $126,563
Performance matters. Of course it does. But the number at the end doesn’t tell you whether the process that produced it is sustainable.
A great return produced by reckless risk-taking can look brilliant right up until it doesn’t. Just ask Leopold.
Don’t just ask how much somebody made.
Ask how they got there.
This is the thinking.
The Full Daily Update is where ideas become action—best setups, best odds, least risk.
All opinions expressed in The Lund Loop are my own personal opinions and don’t reflect the views of my employer, any associated entities, or other organizations I’m associated with.
Nothing written, expressed, or implied here should be looked at as investment advice or an admonition to buy, sell, or trade any security or financial instrument. As always, do your own diligence.