Below is an excerpt transcribed from Tuesday's special edition of The Macro Show hosted by CEO Keith McCullough. Joining Keith were special guest (and Hedgeye Power User) Leslie From Denver and Communications analyst Andrew Freedman.
Watch the full clip below.
McCullough: So Leslie, what do you say to people that go, "Oh you're not an investor Leslie, you're just a trader."
Leslie: "Oh, I'm a dirty trader."
From the very beginning I wanted to trade like this, but I had no signaling #process, so I kept getting smacked down. I kept searching from a way to learn how to trade this way.
McCullough: So I know you use options to augment your Full Cycle Investing #process, because it's the smart thing to do. What did you do wrong initially, that you think you're doing better now?
Leslie: Position size.
That's the biggest beginner mistake. You get a signal, think it's alright, go all in, and there's nothing incremental. It's far more about bites and intervals now.
McCullough: If you don't mind me asking, when you're building an equity position, what's your max position size?
Leslie: My equity max is about 4% [of my overall portfolio] right now.
The biggest problem, frankly, is that in all of your research there are so many names. So I've been taking little positions in lots of them, so I can watch and learn how to manage positions without signals per se.
I'm learning how to take off the training wheels and do it myself.
McCullough: That's a great way by the way, to learn how the market moves.
Just having the bloody position on.
For those of you who don't do it the way Leslie does it; to me it's like having the foundation of the basement to build a house. If you don't have a decision made on what your max, min, and incremental position sizing is, you really should.
Leslie made a great point that the hardest thing to solve for is sizing.