I woke up with a sense of euphoria as the sun’s gentle warmth crept through my curtains this morning. Having experienced my first real winter this year, I have come to really appreciate beautiful days like today. I threw a light sweater on and laced up in preparation for my morning run. I turned my iPod on to get pumped as I rushed down the stairs. I barely ran a block before I had to stop. Perhaps my coffee was a bit stronger than usual, but everything seemed alive. The cars passing by seemed move in slow motion as I noticed budding flowers, houses covered in ivy, and trees painted in various shades of green. Spring is here and, with it, hope; hope that, despite how cold, dark, and dead life can seem at times, things will get better.

I know it sounds dramatic but isn’t it true? We allow little things like tough exams, difficult problem sets, bad days at work, rough market sessions, fights with our significant other, etc get us down. It’s easy to forget about the beauty of life when we focus on these fairly insignificant issues. Instead of focusing on how fortunate we are to be healthy, to live in a country where we posses freedom and rights, to have regular meals, to have access to education, and to really make whatever we want of ourselves, we get stuck on things like not getting into the school, having the job, or driving the car we want. And, please don’t get me wrong, I am 100% guilty of this as well…

In the spirit of change, I’m going to start making gratitude lists in the morning. Here’s my list for today:

– that it’s finally getting warm outside!

– for the health of my family and myself

– that I have amazing friends and family that support me

– for my education, which enables me to do so much

– for my awesome apartment

– for coffee

– for music and dance

When I look at this list it’s hard to get stressed about my upcoming exams or really to be upset about anything; everything will be ok. In other words, while there are plenty of things I want, I already have everything that I need.

If you’re upset about anything or stressed out, please take a moment to relax, have a cup of coffee, put on some good beats, and make a gratitude list. If, like me, you make that list and decide you want to give back to this world that has blessed you with so much, please check out my buddy Blau’s campaign to build a new school for underprivileged students in developing countries.

He is matching all donations made to this cause and 100% of proceeds will go directly to the building the school. Also, check out Pencils of Promise, where your $25 donation can sponsor a kid’s education for a year! Talk about paying it forward.

– Basil

It’s February and I’m far behind my New Year Resolution of writing a post per week! On my way back to California for winter holidays I planned out how I would spend break: learn to cook from the parents, blog regularly, get in an exercise routine, practice dancing, read a couple books, and get new website ready to launch. One month later I came back to Cambridge a little heavier and completely un-accomplished; I’m sure none of you can relate to that feeling :) On the plus side, although my break wasn’t as productive as I had hoped for, I did have a wonderful time catching up with my amazing family and friends, eating home-cooked meals, and having some amazing sushi for my birthday.

It’s taken a couple weeks but I think I finally have a solid routine down (surprising how much taking a month off school/work totally can derail your schedule). I’m settled in my new apartment (pictures soon!), am loving my classes (especially my Game Theory seminar), and have been dancing a ton. In fact, I’m en route to Montreal to compete at La Classique du Quebec as I write this post. In addition to ballroom, I’m part of the Asset Management group for HFAC and just got involved with a non-profit micro-finance group called Housing Opportunities Program through PBHA. A couple of my friends have also coerced me into doing Insanity with them in the mornings, but that topic could be a post in and of itself… basically Shaun T is nuts. Anyways, I am so grateful for the friends I’ve made and the opportunities I’ve had over the past several months.

Speaking of opportunities, I recently got into a study abroad program at Ca’ Foscari in Venice to study Keynes’ General Theory, Corporate Finance, and Leonardo da Vinci. With newly appointed prime minister, Mario Monti, implementing economic reform to prevent Italy from being dragged under by Europe’s debt crisis, Italy is the perfect place for me to build on the multi-cultural understanding of economic policy that I became passionate for in Greece last summer. While I’m stoked to learn about Keynes and economic policy from a world-class faculty, studying Renaissance art history in Venice, Milan, and Florence is what I’m really looking forward to. Spending summer indulging in my favorite cuisine and tasting world-class wine is just a bonus. Assuming a couple of my friends get into the Neurobiology program they applied to in Trento, Italy, I’m hoping to spend a couple weeks backpacking around the surrounding countries before my courses begin at the end of May. If anyone is interested in joining, please feel free to message me!

Things are looking up and life is great. Hopefully, now that everything is settled, I’ll be posting more regularly. Be sure to check back for info on the new investment education/trading diary site that I’m launching in the next couple of month.

– Basil

It’s been far too long since my last blog post. I quickly got sucked back into reality after getting back from my Greece trip. In the last month I finished my first class at Harvard (summer session), moved to Cambridge, am investing more regularly again, started my fall classes, and have begun to dance again! It’s been a rather exciting, scary, and eventful time in my life.

As some of you may know, I was working for the past two years at a financial services company in Orange County, CA. While living in Southern California, I started ballroom dancing and met my girlfriend, Amanda. Although I was and am excited to go back to school, leaving my girlfriend, amazing friends, family, and the beautiful California weather has been difficult to say the least. I miss everyone terribly but am looking forward to this new beginning.

When I first got to Cambridge, in early August, it was actually surprisingly hot; my dresser full of t-shirts and shorts were perfect for the hot, humid weather. About a week after I got here, though, I quickly found out how quickly the weather can change! Ok, in all fairness, it barely dropped below 60 F, but with windchill I was forced into my heated apartment wearing jeans, wool socks, a sweatshirt, jacket, gloves, and my beanie from high school (the ridiculous brown one that you probably saw me wearing all the time)…. if this is how it gets in September, what am I going to do in December??? Fortunately I’ve already stocked up on thermals, warm shoes, and a down jacket, but I have a feeling  I’ll still be cold.

Anyways, weather issues aside, my first few days here were a complete mess. I was supposed to get to Cambridge a couple days before classes started so that I could get settled in, but unfortunately my flight got delayed by almost a week because of Hurricane Irene. Classes were in full swing when I got here on a Wednesday and my apartment was pretty bare. Although I’ve moved around quite a bit, I’ve always had roommates to help with the process; Matt in my first Berkeley apartment, Arun/DSharp/Chase in my second Berkeley apartment, and Scott had our Dana Point apartment fully furnished before I even moved in. Moving to a new place is pretty difficult without anyone to help, especially if you don’t have a car, but fortunately Amazon.com helped (free Amazon Prime for college students is the bomb). I also got a ton of help from Imran bhai and Malaya, who took me shopping a little after I got here. It took some time but now I’m settled in and love my new studio, conveniently located in the heart of Porter Square.

As for school, things are going great. My professors are phenomenal, the campus is beautiful, the city is cultured, and there are so many wonderful student activities. Although it was difficult to narrow down my focus, I’ve decided to join the Harvard Financial Analysts Club, the Harvard Economics Review, and, of course, the Ballroom Dance Team. Hopefully, if I can handle my current activities and coursework, I’ll get a chance to check out other groups like the Harvard Consulting Group and the Crimson. For now, I’m swamped and wouldn’t change it for the world. It is difficult, though, to meet people as a transfer student living off-campus… I probably should have lived in one of the houses this semester. Anyways, I’m meeting people through my wonderful activities so I’m not too worried about it.

That’s it for now but I’ll try and keep the blog updated with all the changes going on in my life. Hopefully you guys will get to come visit soon so I can update you in person!

– Basil

Traditional Greek Salad (served with every meal)

Amanda and I just got back from island hopping in Greece! It was one of the most amazing experiences in my life. The people, the culture, the food, the history, the experience was priceless! We started our trip in Athens, flew to Mykonos, took a ferry to Naxos, another ferry to Santorini, and then flew back to Athens.

Some of our favorite quotes were:
1) In response to us asking why they didn’t stamp our passport or check our IDs when we went through security – “You need to know some things about the country you’re visiting… this is not America.”
2) In response to us telling our host that we were from California – “Don’t tell me that… I love California because it has the three Bs. Beaches, bitches, and baywatch.”
3) On our tour of Delos – Tourist, “Is there a bathroom on this island?” Tour-guide, “Um, yes. Of course there is.” Some British woman, “… But it’s from 4th century BC.” Tourist, “I don’t care what BC. I need a bathroom!”

Here are some details and a few pictures from our trip (check out the rest on my Facebook):

Athens – A Historical Haven

We got into Athens pretty late so we scrambled to squeeze all the site seeing in. We saw Zeus’ temple, the Parthenon, and went to some taverns in the historic Plaka district. I wish we had some more time to participate in the government/IMF protests, but aside from that we covered everything.

the road to Athens from the airport

pretty sweet room entrance...

view of Zeus' temple from our suite window

view of the Parthenon from our rooftop terrace

Mykonos – The City that Never Sleeps

Alright this island was crazy. There are bars that don’t open till 2 am and it wasn’t odd for people to stumble back from a night of partying while we were having breakfast. It might have been fun to party till the sunrise, but we decided this trip was more about leisure and sightseeing… not something a hangover would afford. Maybe next time! Anyways, we did do a day trip to Delos, which is the most well preserved archaeological site in all of Europe. With temples dating back to 7th century BC, it was quite the site.

view of Psarrou Beach from our balcony

Mykonos port at night

some 5th century BC columns, thought to make up a wealthy person's courtyard... reminded me of Spartacus (Delos)

lion's guarding Apolo's temple (Delos)

Little Venice on our last night in Mykonos

Naxos – The Country

Naxos is a relatively huge, mountainous island. It has many lovely and picturesque villages with whitewashed houses, narrow bright coloured windows, and narrow stone-paved alleys. In the center of the town there is a well-preserved Venetian castle. Because this island hasn’t been hit with tourism like some of the other islands, the crystal-clear turquoise waters have been well preserved. Many say that Naxos’ beaches are some of the best in the Mediterranean. We rented an ATV and toured the island’s landscape, ancient churches, beautiful beaches, and a few distilleries along the way :)

the Port of Naxos

the sunsets were to die for

Apollon's Gate- an iconic 6th century BC marble gate on the islet of Palatia in Naxos harbor

The Church of Panagia Drosiani- this Early Christian, tri-apsidal church is considered to be the oldest church in the Balkans

relaxing on a secluded beach after a day of ATV exploration

Santorini – The City in the Sky

This island was absolutely sensational. The views were picturesque, the wineries were remarkable, and the beaches were truly unique. Santorini is actually the result of one of the largest volcanic eruptions in recorded history, which formed the beautiful caldera. We stayed in highest town in Santorini, Imerovigli. The views from our room were so fantastic that we hardly wanted to leave, but we did make time to watch the sunset in Oia and to take a catamaran tour around the caldera. On our tour they took us to the white, red, and black sand beaches, the volcanic hot spring, and the two volcanoes. Amanda had to drag me home after this island…

aproaching Santorini Port by ferry from Naxos

enjoying the view from our villa balcony

this is what we were looking at

dinner at Sunset Tavern in Oia, where they serve fresh fish that was caught minutes earlier

the group we went boating with... they were a blast!

While we were on the boat, one of our new friends told us that the planes and ferrys were on strike. I can’t say that I would have been upset if we had to stay for an extra few days but, unfortunately, the planes were not on strike. It was a bitter sweet feeling flying back to reality over the Atlantic. While I’m excited about moving to Boston and starting school again, who would want to leave behind our beautiful Mediterranean oasis? Anyways, time to get back to work! I can’t wait till our next chance to travel.

– Basil

Some of my closest friends and me, watching Matt complete one of his milestones (graduating from UC Berkeley)

Milestones are great. For me, they are a signpost; something to strive for; a measure of my will and efforts. And, of course, there is that feeling of sweet satisfaction when you get to cross a milestone off your list! The following is a list – in no particular order – of milestones that I would like to accomplish in my 20s.

Note: because these are milestones for my 20s – not life goals – they are primarily financially driven. I’ll make a life goals list soon.

1) Graduate from a Tier 1 University – in progress: estimated graduation from Harvard in 2013

The benefits of a college/graduate degree are obvious: further your knowledge base, greater career options, networking opportunities, etc. Several certification programs that I’m interested in, as well, have a degree requirement, so I don’t have much choice. Another personal, yet important, side reason for me is that attending a great university is very important to my family.
 

2) Get rid of all bad debt – complete: credit cards paid 11/2010, no current loans

My interpretation of bad debt is those assets that depreciate in value. Examples of bad debt include credit cards, car loans, personal loans, etc. Assets that appreciate, like your home, can be considered good debt and are not included in this milestone.

(I did not include my car lease as bad debt because my company pays for it. If that changes, it will be added to my list of bad debt.)
 

3) Finance a dream vacation… in cash – complete: trip to Greek Isles paid 05/2011

At the time I didn’t know I was saving for a dream vacation so I won’t claim credit for planning this particularly well. I did, however, prior to deciding to go on the trip, estimate the trip costs to ensure that it could be financed in cash!

In general, I would recommend that your dream vacation fund be budgeted in advance. No cheating by borrowing from your Emergency Fund or any other savings account. Pick a place you want to go, estimate the costs, and start setting aside whatever you can every month. Before you know it, you’ll be on your way. I found American Express’ Travel Planner pretty helpful, but for some real travel tips be sure to check out Joanna’s Guide to International Travel Planning (she’ll post it here this week).
 

4) Make my first investment mistake – complete: investment in a friend’s business venture 01/2010

Sir John Templeton said, “The only way to avoid mistakes is not to invest – which is the biggest mistake of all. So forgive yourself for errors and certainly don’t try to recoup losses by taking bigger risks. Instead, turn each mistake into a learning experience.”

My first financial mistake, for example, cost me $15,000 dollars and was one of the stupidest decisions of my life. Since then I have come up with investment guidelines to prevent the same mistake from happening again. It is my hope that the knowledge I learned will save me from losing far more in the future.
 

5) Create a budget/manage cash flow – complete: budget 01/2011, cash flow 05/2011

Just like no business should operate without financial statements (cash flow, profit and loss, etc), neither should you. It’s important to make sure that you are spending less money than you’re earning, while still setting aside some cash for retirement, dream vacations, your Emergency Fund, or any other fund you may have. I use American Express’ Money Manager so that I can view my cash flow and ensure that I’m following my budget. There are also free tools like Mint that provide the same functionality if you don’t have an American Express account.
 

6) Learn to negotiate – in progress: I’ve gotten pretty good at negotiating but still forget to utilize the skill

The art of negotiation can save you hundreds if not thousands of dollars a year, especially when making larger purchases for yourself or your business. Sometimes the result of the negotiation isn’t a monetary discount, but an upgraded room or rental car instead. I’m by no means advocating haggling, just polite bargaining. If produce or meat seems a day or so old at the grocery store, ask for a discounted rate. If you’re comparing rental car companies, choose two and force them into a bidding war. You get the point.
 

7) Establish multiple revenue streams – in progress: my current side hustles consist of investing in the stock market, financial consulting, and college advising

Establishing multiple revenue streams is the goal I find most important on this list. The last several years have shown that few jobs are as secure as we all thought. If you only have a traditional 9-5 job and get laid off, you just lost 100% of your income; having multiple streams of income mitigates this risk. In addition to security, multiple streams of income are cumulative and often multiplicative. My current side hustles haven’t had a multiplicative effect yet because they cater to different markets but I’m working on fixing that.
 

8) Break an 800 FICO Score – in progress: current score is 760

Having excellent credit entitles you to the best credit card, insurance, mortgage, and car loan rates. Even if you don’t carry a credit card balance, having a sufficient credit score is often needed to qualify for the best rewards programs. Basically, excellent credit means creditors will offer you the highest loans and most rewards at less cost to you.
 

9) Build an adequate Emergency Fund

One of my favorite bloggers, J Money from Budgets are Sexy, is always stressing the importance of having an Emergency Fund.  Following his advice about having a separate savings account for a rainy day has really helped me out. Last year my roommate moved out and left me with an early move out fee of $2500 (that sucked!). If I didn’t have an Emergency Fund I would have had to charge my credit card, which would then be subject to interest, making my situation even worse. My goal is to have at least 6 months worth of expenses (roughly $10,000) saved up in case of any unforeseen bumps in the road.
 

10) Max out IRA and contribute up to employer match in 401(k) – in progress: maxing out my IRA

Compound interest can be sweet (depending on which side of it you’re on). Say you get your first job at 22 and start investing $5,000 a year to your IRA. Assuming a 10% return, you would have $2,002,238.89 at age 60.

Now let’s say at 30 you start investing an additional $5,000 a year in your 401(k) and your employer does a fixed 5% match. Assuming the same 10% return, you would have an additional $949,952.98. Add that 401(k) saving to your IRA savings and you have a whopping $2.95 million to retire with. Guess how much you had to invest to get that much? Yeah… only $340,000. Pennies compared to your return.
 

11) Save for a down payment on a house

When I graduate, or maybe sooner, I want to buy a house. The kind of house will depend on my financial situation but I’d like to make at least a 25% down payment. Why you ask? Because it’ll save me a bunch in interest. Just to set a goal let’s say I’ll be in the market for a $250-$300,000 house, making my down payment $60-$75,000. Really not going to enjoy saving for this one…
 

12) Start a college fund

I am very thankful that I was able to go to college without having to take out student loans and I would like my children to have the same opportunity. I don’t know how much I’ll invest in a college fund during my 20s because I don’t plan on having children till my late 20s, but I figure the sooner I can start setting aside money the better.

RJ Weiss from Gen Y Wealth suggests using a 529 College Savings Plans for “tax efficient” investing. Your contribution and earnings grow tax deferred and can be withdrawn tax-free if used for qualified expenses. Qualified expenses include tuition, room and board, fees, and supplies (books, software, computers, etc). I’ll probably start investing in a 529 College Savings Plan after I knock out some of my other savings goals.
 

13) Get my doctorate

While financial success is important to me, I believe my desire for further knowledge will lead me to pursuing a doctorate in economics after my MBA.  I’m not sure if I’ll still feel this way in three years, but it’s definitely a goal of mine for now.
 

14) Start my own company

My ultimate career goal is to start a company that delivers to shareholders while having a higher purpose than revenue. My company will be my contribution to the world and it’s my hope that it lasts and continues to do good far after I’m gone.
 

15) Invest $1 for every $1 spent – the 50/50 Rule

The 50/50 rule is that for every dollar you spend, you should invest an equal amount. In my opinion this is better than the typical “pay yourself first” rule. Paying yourself first has you focus on increasing your income (x) if you want to spend more money (y). The 50/50 rule, in contrast, suggests that there is another variable to consider: savings (z). Under this rule’s logic – regardless of income – you would need to save more if you want to spend more. Implementing strategies like the 50/50 rule, among many others, will be key in helping me reach milestone #16.
 

16) Reach a 7 figure net worth

This was actually my first financial goal. As long as I can remember (since before high school), I’ve wanted to make my first million before turning 30. It’d be pretty sweet if I could cross this goal off the list at 25. Gotta work those side hustles :)
 

So there you go – 16 milestones for my 20s! Regardless of whether I reach some or all of these milestones, I’m sure striving to complete them will keep me in the right direction. In the comments section please share any milestones that you’ve found helpful in gauging your success or keeping you on track.
 

– Basil

After nearly ten years of war, billions of dollars that don’t exist, and tens of thousands of lives, Bin Laden is dead. In a concise, respectful,  and eloquent speech on May 1, Obama reassured the world that “the death of Bin Laden marks the most significant achievement to date in our nation’s effort to defeat Al Qaeda.” Across the nation, Republicans and Democrats alike rejoiced in the death of the most wanted man in the world.

After 9/11, images of him stained the newspapers; his face was undeniable, his name was inescapable, and his terror was indescribable. As such a widely recognized symbol of evil, he became hated not only by Americans, but by people worldwide sharing in our dedication to fight terrorism.

So it makes sense why his death was rejoiced. After ten economically draining, politically controversial, and emotionally scarring years, he is gone. But drinks in the name of justice, chants glorifying America, and bong rips for Obama? What does this say about our nation. As a country that now praises murder as a means for revenge and a measure of justice, we have forgotten about the ideals of justice on which our country was founded. Our reconceptualization of justice marks the decline of democratic ideals and reversion to more fascist ideologies.

So where’s the justice in murder? We are still fighting a war against terrorism, our troops are still deployed across the Middle East, and 2,996 people are still dead because of the events that took place on September 11. That’s not including the 109,032 Iraqi civilian lives lost, 3,771 of them being “friendly” deaths, 9,010 Iraqi armed forces slaughtered, and 4,404 American soldiers killed.

Instead of reveling in the death of one, we should be celebrating the lives of thousands.

The importance of the death of Osama Bin Laden should pale in comparison to the importance of the lives of American citizens. The praise we give the Obama administration should drown under the praise we give to the guiltless souls.

Simply put by Martin Luther King Jr., “I mourn the loss of thousands of precious lives, but I will not rejoice in the death of one, not even an enemy.”

Four days after he was pronounced dead, I am still struggling to abandon my ideals of justice and morality. At the end of the day, we are the ones hands in chains, imprisoned to an endless war, morally and economically bankrupt. Where is the justice in that?

This work was inspired by “Date a Girl Who Reads” and “Date a Girl Who Writes“, so be sure to check those two out as well!

Date a girl who dances. She won’t be easy to find because she’s always busy learning, teaching, preparing. She won’t be like the other girls you’ve dated. You won’t find her in the weary squalor of a bar. You won’t find her in the smoke, drunken sweat, and varicolored light of a nightclub. And, if you do find her, she won’t be engaged by your unsentimental trivialities.  Your pick-up lines and inward laugh will not amuse her.
 

If you’re lucky, you’ll find yourself in her studio. You’ll know when you see her. She’ll be standing there – watching, observing, absorbing – always listening to the cadence of song, practicing a new routine, immersed in the scene of it all. And because she’s so immersed, she’s always occupied, and why, even if you notice her, she may not notice you.
 

If you see her looking at you, look back and wait. If she looks away, it’s ok; keep looking at her. She’s a performer and, at the very least, will enjoy the attention. But, if you can get her to look at you and not look away, she wants to get to know you. She’s targeted you, pursuing you, inviting you. Once she catches your eye, once she hears your voice that first time, she begins her profile. She’s the one who will have your character in 10 seconds and have you completely profiled in 10 minutes. She doesn’t need to hear your story because she’s a dancer; she can follow your body language, hear changes in your voices tempo, and see the emotions hidden in your gaze. She’ll listen to what you have to say but is really looking for the nonverbal cues that will tell her who you really are.
 

After two weeks she’ll know you better than you know yourself.
 

Date a girl who dances because she’ll complement you perfectly. She dedicates weeks, if not months, for a few fleeting moments of success. She has an unwavering belief in her ability to be exceptional. And, if she chooses you as a partner, she’ll share that dedication and belief with you. Date a girl who dances because she’ll gracefully follow. But more importantly because, when life’s tempo becomes irregular, she’ll willingly lead.
 

Do it because a girl who dances understands syntax. Rhythm has taught her that moments of tenderness come in sporadic but knowable intervals. A girl who dances knows that life’s arrangements are not planar; she knows, and rightly demands, that the ebb comes along with the flow of disappointment. A girl who dances, who truly understands the story – no, syntax – ever present in her choreography, understands irregular pauses – the hesitation of breath, the look in your eyes, the inflection in your voice – that often take place prior to mustering up the courage to speak an “I love you” for the first time.
 

If you’re really lucky, she’ll say it first. She’ll respond “I love you too” and you’ll smile knowing that she can always sense exactly what’s on your mind without you having to utter a word. You’ll come to cherish these moments of silent communication.
 

Date a girl who dances because it’ll be an adventure. She’ll want to salsa after a day of chasing bulls in Barcelona, tango after cliff jumping in Rio, and relax after a day at the beach in Cinque Terra – not because it’s some dance haven, just because it would be romantic. Or maybe she won’t. But, the fact that you think she’ll enjoy those things and are willing to make it happen will change both of your lives forever.
 

Your love will grow, sometimes uncontrollably, as the days turn to months and the months to years. You’ll find that the girl who dances makes your heart oscillate with a significant passion. And although the traveling will have made for great photo albums, the best memories will be the simple time your spent together. After all, who you travel with can be more important than the destination.
 

You’ll decide you want to spend the rest of your life with her and a short love story, inspired by your charming proposal, will be written.
 

She’ll expect you to make the wedding invitations, create a budget, arrange the catering, and coordinate vows. All the planning she’ll leave to you will, at times, seem overwhelming. But it won’t matter because she’ll choose the venue – one with a grand ballroom – she’ll choreograph a romantic first dance that will bring the audience to tears, she’ll wear a stunning dress, and she will be the most beautiful bride that anyone has ever seen.
 

You, the girl who dances, make me want to be better. Your fervency is simply inspiring. You will accept nothing less than a rich performance, an intriguing partner, and a life worthy of an audience. I date the girl who dances because she gives me the most riveting life imaginable.
 

– Basil

“Risk comes from not knowing what you’re doing.”

- Warren E. Buffett

 
Coming up with a trading plan is vital to protecting yourself from risk; it doesn’t guarantee success but it betters your chances. Your plan should dictate your framework for decision making. To get you started, outline the following information to create a general outline:

 
1. Products you will trade- Start with high-level selection: bonds, securities, ETFs, mutual funds, etc. Then, drill down deeper. If you’re trading securities, how will you choose what stocks to purchase? Get as specific as you possibly can. An example would be, “I invest in small-mid cap stocks in emerging markets”.

2. Strategies you will use- Avoid using trading profiles like day trader, high frequency, position trader, swing trader, etc. Instead, outline how you will select stocks to trade within the product category you mentioned above. Do you engage in technical or more fundamental analysis? If you’re a technical trader, what metrics will you use to determine the value of a trade?

3. Research resources- Your research resources should supplement your personal analysis. What news sites and blogs will you read? Who will you discuss potential trades with? Take advantage of the charts, news, educational articles, and free consultation offers that your brokerage account provides. Do not simply rely on recommendations from analysts if you want to stay ahead of the curve.

4. How much time will you devote to research- Decide how much time you need to spend on research to make educated trades. You should be researching the stocks you’re trading (before and after executing a trade), stocks that are related to positions you own or plan on trading, current events that could affect the market, etc. I, for example, do not allow myself to trade on days where I don’t conduct at least an hour of research before the opening bell.

5. Your realistic profit goals- Come up with quarterly, annual, and long term profit goals for your entire portfolio as well as specific positions.

6. Your loss threshold- What are you willing to lose on each position? What about on your entire portfolio? The market has ups and downs so you should be prepared for bear trends. However, if your portfolio drops below your threshold for too long, you should consider changing your strategy. If an individual position drops below your threshold, cut your losses. Remember, the market can remain irrational longer than your capital can hold out.

7. How will you allocate your assets- Determine your risk profile: conservative, moderate, aggressive, somewhere in between. Once you know your risk profile you can decide how want to allocate your investments. An aggressive trader, for example, may invest 50% large cap, 20% small cap, 25% international, and have 5% in cash. A conservative trader, on the other hand, may only have 15% large cap, 5% international, 50% fixed income, and have 30% in cash. (These numbers are examples and not recommendations).

 
Once you draft your plan, stick to it and update it regularly! Here are some thoughts to keep in mind while your create your plan.

 
Be realistic. There is no such thing as a sure bet, so create realistic profit goals and loss thresholds. Make sure that your trading plan is thorough but create guidelines that you can follow.

Test your strategy. Paper trading or virtual stock games are a great way to test your strategy before exposing yourself to real risk. For these resources to be useful you need to set up realistic conditions. What I mean by that is invest as if you’re using real money and track unrealized losses/gains. Try and test new strategies for at least a month or two to ensure its ability to withstand “longer” trends.

Keep it simple. In short, don’t make a complicated strategy that you don’t understand or won’t follow. As the Oracle has said on numerous occasions, “Beware of geeks bearing formulas”.

Keep emotions in check. Your trading plan should be designed to provide a structure for making decisions based on discipline, not emotions. Trading involves losses. Never increase the size of your trades to gain back your losses sooner; that type of irrational thinking will bankrupt you.

 
Sticking to a plan will help you bring discipline to your trading. I’ll post my full trading plan for you all to review, comment on, and critique in the next couple weeks. Good luck!

 
– Basil