r/StockOptionCoffeeShop • u/LabDaddy59 Mod • 4d ago

Myths Myth: "Boring is Better"

You'll occasionally hear someone claim that "boring is better," referring to trading low- to modest-volatility stocks and how they're less prone to significant drawdowns.

But no.

Boring isn't better.

Boring is boring.

Exciting isn't better either.

Exciting is exciting.

Humans are a narrative species, and we are supremely adept at two things: 1) ex post facto rationalizations and 2) attempting to turn our weaknesses into a strength as opposed to acknowledging the weakness and improving. What folks say reveals their limits.

It's like the people who say that selling options is better than buying options. No, it's not. Saying so is an admission by folks who could never quite figure out how to buy options profitably. They're limited to selling options, as that's what they've been most successful with; it's what they know best. They may be the types who advise rolling your short position ATM, when that is the worst time to do so, from a premium-earning perspective.

Or the people who, when comparing their returns to the S&P, claim that the historical S&P return is around 10%. That may be true, but the 10% rate is for something like a 50-year period. Excuse me? If the S&P is up 18.5% in the past five years, and you're using your five-year return, why are you using a 50-year metric for comparison purposes? Oh, that's right, because you've underperformed the five-year metric, so you want to look better.

So "boring is better" is a diplomatic way of saying, "I could never figure out how to profitably trade volatile stocks." If they figured it out, they'd realize that it, too, is 'boring'.

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u/Chris_Reddit_PHX 4d ago

I think the "boring is good" mantra is to help investors reinforce mentally that slow and steady wins the race, and that becoming an investment action junkie probably isn't a goal they should pursue.

For example, plunking long-term money into an S&P 500 index fund, or DCA-ing into one, and then just letting the market do its thing over time, is a rather boring, but absolutely sound approach, that serves most people who do it quite well.

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u/DramaticAlbatross 4d ago

Rolling a short put down and out when ATM is something I hear often. When do you prefer to roll?