Milk Trader offers this good advice:“Once you set up your own trading system, you’ll find that losses are simply the cost of doing business and have nothing to do with you being right or wrong.”

Although he’s referring to a short-term trading system based on technical analysis, the philosophy applies to those of us who hold option positions for a few weeks or a few months, and are basically short-term investors.You cannot allow losses to get you down because there’s no way to win on every trade.It’s foolish to take significant risk in an attempt to do the impossible.Good risk management is your key to success.

***
Unrelated to trading, Kathryn offers some common sense advice on finances for couples.
***
Mark Hulbert points out that contrary to most trader’s expectations, price to earnings ratios (P/E) are extremely high these days: “Earnings in this bear market have fallen even faster than has the market itself. And no matter how fast the “p” in the ratio is falling, the ratio has to climb if the “e” is falling even faster.Indeed, today’s p/e ratio is higher than 97.8% of the monthly readings dating back to 1871, according to data compiled by Yale University Finance Professor Robert Shiller.”

***

I found the following to be so scary that I just had to share it.Barry Ritholtz blogs: “a friend …is going through some hard times re-inventing herself. She is doing well in this terrible market but as with so many, got a bit over-levered during the bubble years and is now spreading it thin trying to keep all of the monthly payments going out. Some months when it is thin, she will chose to skip a payment on a specific card or two to pay other things…but she is paying nevertheless.

Yesterday morning she logged into her Wells Fargo checking and savings accounts to pay bills online and there was a ZERO balance across her accounts. However, her debt was paid down considerably. Immediately she called Wells and they informed her that because she was over 30-days late paying her Wells credit that they drained the accounts in order to pay down the bills.

This is also the second time somebody I know personally has had this happen with Wells – the first had their accounts drained of about $5k to bring current a HELOC payment. Leaving people with zero money and no credit is a drastic measure. Stories like this will get around quickly – it will not be too long before you hear about practices like this on 60-Minutes (I happen to know someone there!)

Yes, the money was owed and she was getting calls from Wells collectors but I still have to question the way this was done. This ensures she defaults on everyone else this month and in the future must keep all money out of banks from which she has credit.”[italics added by mdw]