As you all know (and if you don’t, you know now.), I spent my younger years as a member of the National Kayak team.

As I learned through my many years racing, to be successful in kayaking I had to play to my strengths.

I stood out as one of the bigger/taller athletes during my time on the circuit. As a bigger athlete our strength came from our reach. We could take big long strokes and reach for the faster rapids or eddies... and if you had the strength and power to pull on that paddle, well, that's when the magic happened. On the other hand, the smaller athletes were really quick, snappy, and dynamic. I often found myself in awe, wanting to do things the way they did because it just looked faster. No matter how many times I tried to copy them, I would fail miserably. I couldn’t do things the way they did. I wasn’t designed that way. Being quick, snappy and agile - that wasn't my game.

My best performances always came when I raced my race. 

On reflection, it is so logical. Like most things in life, this is how we learn. Try, fail, learn..repeat.

Anyways, with the first half of the year behind us, and the S&P500 off to it’s worst start in nearly 50 years! Whether you are new to the market or have been involved for many years, you may be trying to figure out what to do next. Some are sitting on cash, some are sitting with holdings that are down 20,30,70% and wondering if they should hold, buy more, or sell?

Well, before you answer that, maybe you should be assessing what your strengths are, and what game you want to be playing? Are you more of a trader or an investor?

Believe it or not, traders and investors are very different. And only when you recognize who you are or where you land on that spectrum will you be able to decide your next moves.  

As a trader your goal is to spot trends (up or down) and make the appropriate bet to generate a profit. The price you pay is kind of important, but in your mind someone is going to buy it the next day or in the next hour at a higher price. You will likely not care about the underlying investment or what it is, rather you are looking for an opportunity, an arbitrage, and want to jump on it. If you want to learn more about really successful traders, have a look at any Jack Schwager’s Market Wizards books.

As an investor, you are placing money in a company (or other), with the intention of holding it for a longer horizon (maybe months, years, or even decades). You are a business owner, and as a business owner you understand that the business will go through cycles (ups and downs). As an investor, you do your homework, develop a thesis that company you are investing in is doing something unique, different, or really well that will provide you with a meaningful, consistent and predictable return on your investment. If you hold it long enough maybe you will start realizing some compounding.

So why does it matter to make this distinction? Why should you be deciding if you are a trader or an investor?

As an investor, you are signing up for the good times and the bad. The bad times, like now, aren’t fun, but it is part of the game you signed up for. It’s the cost of admission. So, if you are an investor – unless your investment thesis on the company you own has changed - you should either be investing more in the same company, or just staying put. Interestingly, we are seeing a significant uptick in insiders buying their company’s shares as of late.

If you are a trader, and you’re sitting on holdings that are down 50-60%, well, you aren’t doing a good job trading. As I learned in Schwager’s books, the most successful traders are incredibly disciplined with risk. They control risk on the way up (e.g. they set target prices), and on the way down (e.g. stop losses). That said, with the VIX jumping around, and companies down 20 – 80% off their highs, there is plenty of opportunity out there.

So do some thinking. What is the game you are playing or want to play? Think about your strengths – are you good at spotting trends or spotting long-term opportunities? Whatever it is, hone it, strengthen it, play to it. You can do really well as a trader or investor; one is no better than the other. That said, trying to do or be something you’re not will likely yield a less than favourable outcome.