Learn From My Mistakes

Getting Out Too Early

Author

Larry Thompson
July 26, 2025

Learn From My Mistakes

One of the reasons I love the market is there’s always something new to learn.

Not just about the market… but about yourself.

It’s a mirror.

A relentless, brutally honest mirror.

You evolve by pruning the old you.

Shedding beliefs that no longer serve.

Month by month, lesson by lesson.

One of my biggest early mistakes?

Getting out of bull markets too early.

Not because I thought the bull was over, I didn’t.

I just thought I could sidestep the next pullback. Get cute. Time the wiggle.

It felt rational:

  • “We’re up 15% in 3 months…we’re due.”

  • “No one ever went broke taking profits.”

  • “The market averages 7% a year this has to cool off.”

Sounded smart.

It wasn’t.

And I still see this mistake everyday so I wanted to break it down this week.

Good Intentions Don’t Matter

What I didn’t understand then and what many still don’t is that the market NEVER actually returns 7% in a year.

That’s just the average.

But averages hide reality.

Take this example:

If I told you the bus arrives at Station 7 at 3:05 PM on average…
So you show up at 3:05 and miss the bus 90% of the time, you’d be pissed.

Did I lie? No.
I just gave you a data point… without the full picture.

In reality, the bus usually gets there at 2:55 and leaves by 3:00.
Every once in a while it’s late and that’s what pulls the average up.

That’s how the market works.

The “average” return is statistically true, but it’s not functionally useful.

It feels safe. So people anchor to it.

But the market doesn’t move in tidy increments.
It sprints off the lows.
It builds strength quietly in the middle.
And inevitably has pullbacks along the way.

Trying to wrap that chaos into a single “7% average” return is seductive… but misleading.

As Einstein said:

“Everything should be made as simple as possible, but not simpler.”

Most people miss that last part: but not simpler.

In markets, oversimplification is everywhere — and it leads to misunderstanding.

Which leads to bad decisions… even when they come from a good place.

But the market doesn’t care about intentions.
It rewards clarity, discipline, and nuance.

That’s where the edge lies.

Embrace the Nuance

It wasn’t until I started embracing nuance that things began to shift.

The market trends. That’s what it does.

One year it’s +25%.
The next it’s -11%.

Welcome to your 7% average.

So yes….. we prepare for downside.
We mark our levels.
Define our risk.
Size our positions.

But trying to sidestep every wiggle?
That’s a great way to miss the move.

Most of the time, the market runs another 5–10% before pulling back 4%.
So if you sell early trying to avoid the correction, you end up asking yourself:

“Am I really willing to buy back in higher than where I got out?”

Most people aren’t.
I wasn’t.

So you sit.
Watching it run.
Still sitting. Still watching.

Until the narrative flips:

“Now it’s too overbought to get back in…”

And just like that, you're stuck.
That’s how people get stuck.
That’s how people are still stuck….sitting on the sidelines since the April lows.

Peter Lynch said it best:

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in the corrections themselves.”

That quote hits different when you’ve lived it.

I have.
And I’ll never forget it.

The Data Will Let Us Know

Bull markets don’t end because they’ve gone “too far.”
They end when the data shifts.

That’s a hard truth for a lot of people to accept, especially when price feels extended or headlines get loud.

But “too far” isn’t a sell signal.
It’s a feeling.
And feelings don’t pay.

Until then, the game is about staying in the trend without getting shaken out by noise.

You’ll never nail every move. But you don’t have to.

You just need to stay in long enough to let the market do what it does best, trend.

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The Sunday Stalk List | Ep. 9

Be on the lookout this Sunday for the next edition of my newest research column.

I’ll be breaking down setups I like right now.

If you like clean charts, clear setups, and tactical insights — this one’s for you.

The early feedback has been 🔥 and we’ve already tagged some big winners.

It’ll hit your inbox every Sunday.

Cheers,

Larry Thompson, CMT CPA