CHAPTER 3

2011: A Postmortem for the New Millennium

Conducting so-called postmortem analysis is a critical aspect of a trader's regimen since the only way to ever truly understand one's own decision-making process is to study it in hindsight, playing through it in sequence to obtain a full and objective picture of just what happened and how. The dictionary reveals two definitions for the term postmortem:

1. An examination of a dead body to determine the cause of death.
2. An analysis of an event after it has occurred.1

Obviously, we are most interested in the second definition, although in some market environments, for those investors and traders who may have lingered too far and too long in the wrong direction, the first definition might also equally apply! Of course, the point of our own postmortem analyses is to understand what we did wrong when our investment results were less than desirable, and conversely to understand what we did right when our investment results were quite desirable, with the idea of developing our skill set such that our investing activities produce more of the former and less of the latter.

In this chapter, we will engage in a postmortem analysis of 2011 in order to provide a real-world application of how we conduct such analyses. In this manner we hope to provide readers with a hands-on concept of how they themselves might perform similar analyses on their own.

In our first book we discussed much of the success we experienced during the 1990s and ...

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