Taking to his Twitter account, followed by an army of day traders, Dave Portnoy is on the offense. As questions arise about Portnoy’s “stocks only go up” mantra , the Barstool Sports founder turned day trader is staying the course.
Stocks haven’t been going up over the past week. Even Portnoy recognizes this, noting that from the recent market peak, he’s down nearly $4 million , with a $700,000 loss on Tuesday alone.
That’s usually a time when most traders would be calmly rethinking their investment strategy, taking some losses and moving to more defensive positions–or panicking out of the market entirely.
Borrowing the phrase from cryptocurrency investors, Portnoy maintains that stock investors need “strong hands,” and that the market is trying to trick investors out of the game.
He further added this morning , “…this is when the suits want you to panic.”
In short, Portnoy, who built a $4 million trading portfolio into over $9 million before the recent pullback, isn’t bailing on stocks either.
He may be right to do so. While conventional market valuations remain high, zero percent interest rates still make stocks the best game in town. And the market is still in an uptrend, even after its recent selloff. The past few weeks saw a mini-melt-up, but with the S&P 500 still above its 50-day moving average, we’re still in a bull market.
And you know something? Long-term, Portnoy’s not wrong.
The market can have its pullbacks at any time, and for nearly any reason. But stocks trend up over time, and even with today’s economic fears, those fears tend to dissipate (if only to be replaced with new ones).
This is the newly-minted trader’s first market drop, and by refusing to get in the market’s psychological trap of selling out on short-term fear, he’s sticking to his guns.
More importantly, he knows that fear is a performance killer. That’s something most professional traders get wrong time and again–and why retail investors usually lag the stock market substantially .
The only way he could improve his performance? Put some extra cash to work (although Portnoy hasn’t touted keeping some cash on hand for market pullbacks). Perhaps someday he’ll discover another market rule: Buy the dip.
Judging by some of the flack he’s getting on Twitter, many of the retail investors who follow Portnoy and enjoyed the ride when the market was melting up have second thoughts now that stocks have their down days as well.
Short-term, they may be right. Long-term, they’re likely wrong.