The first time I went to a casino, I won close to 100 SGD. Singapore does not have Poker where you can play against other players. So I ended up playing dice and roulette. After seeing all my friends lose money while I won, I came up with a lot of justifications on why I won. Instead of dumb luck, I attributed it to my newfound gambling skills.
The next time I went (this was after a few months), I lost everything + more. This time another friend, who was trying out his luck for the first time, made more money than I had made the first time. Beginner’s luck eh?
What is the point of this story?
A lot of people are attributing their recent gains in the stock market to skill. A lot of first-time investors are spending hours looking at green and red colors on the screen and wondering if they should leave their job and try this full time.
My advice: Beware of conflating blind luck with skill. Most investors have not seen a bear market. At least one that has lasted a year. Do this as a side hustle for a few more years, see how you have protected your downside when the market goes down (it eventually will). Improve your decisions making process by maintaining a decision journal. Write down your decision process. Don’t get excited about your stock making a killing. Ask if your stock is up based on the thesis you had written before buying each stock. Increase your sample size to avoid bias. And also take a much longer horizon to test your hypotheses around various investments.