Happy 2026.

Doing a year-end reflection is tough.

It forces you to look at the stuff you’d rather gloss over, the trades that didn’t work, the decisions that were “fine” but not great, the moments where you let process slip.

And doing that in public is even tougher. But the market already judged the score.

Price saw every mistake in real time, whether I talk about it or not.

So here’s my 2025 post-mortem. Not as a confession, and not as a victory lap.

Just as an honest review of what I got wrong and what it taught me.

Everyone’s journey is different, but some mistakes rhyme.

If my mistakes help you recognize yours faster, size them better, or recover from them sooner, then they did their job.

So let’s get into it.

This lesson isn’t exclusive to 2025.

In markets, we often need reminders more than we need new instructions.

Ned Davis has a quote that should be printed and taped above every desk in finance:

This is a game of mistakes, you can’t avoid them but simply limit their impact.

If you avoid trying to make mistakes, you usually end up making bigger ones because you never swing, you never learn, and when you do finally swing, you overcommit.

The objective is annoyingly simple. It’s just much harder than it sounds.

Keep the mistakes smaller than the winners.

This is why I gravitated toward Technical Analysis in the first place. 

Technicals are not my crystal ball. They are my risk management process. 

They let me qualify risk, define invalidation, and move on when the market tells me I am wrong.

Here are two “mistakes” in 2025.  

Duolingo, $DUOL ( ▲ 0.56% )  

I wrote about Duolingo when it looked like a clean bullish continuation.

Twitter tweet

Base breakout, high and tight bull flag, post earnings gap, the whole thing looked textbook.

And what’s funny is I basically top-ticked it.

The important part is not that the setup failed, that’s to be expected. 

The important part is what happens after you are wrong.

My loss was roughly mid single digits, annoying for the ego as top ticking a stock make you feel really dumb but overtime a process works. 

The stock’s drawdown from the highs was catastrophic at an almost 70% drawdown from those highs and currently trading around $176…..from $525!!! $DUOL ( ▲ 0.56% )  

That’s the entire point.

Five years ago, I probably would have still been sitting in that drawdown telling myself it was coming back because I had “conviction.” 

Now, when a high and tight structure fails, that failure is information.

I don’t need a speech. I need an exit.

Deckers Outdoor, $DECK ( ▲ 3.01% )  

This one was more personal because I love the product. I have bought a lot of HOKAs.

Twitter tweet

I made money in this name in the past. The story made sense, the chart looked great, base breakout, good relative strength.

And then it didn’t work.

The stock ended up in a 50 to 60 percent drawdown zone from where that idea was framed. $DECK ( ▲ 3.01% )  

Same lesson. I was wrong, and I took the loss. It was not fun, but it was manageable.

The only reason it was manageable is because the risk was well-defined and the exit was non-negotiable.

These are not stories about being “right but early” or “right but unlucky.” These are reminders that price is what pays, and risk is what keeps you in the game.

If you can regularly limit “I was wrong” into “small mistakes,” you give yourself unlimited chances to participate in the winners.

This was the big one for me this year, and it came through in a bond trade.

Twitter tweet

I had a tactical setup in bonds that, on the surface, made sense.

The bottom-fishing checklist was there.

Momentum divergence, failed breakdown, defined risk reward.

Bonds even worked for a bit. I made money quickly.

Twitter tweet

Then they did what bonds love to do, they went nowhere and chopped around now back at around $87. $TLT ( ▼ 0.15% )  

The mistake was not the setup. The mistake was how I expressed it.

I took a short-term tactical trade and turned it into a long-term position without price proving that it deserved that promotion.

I bought long-dated calls, December calls, on a thesis that was tactical.

The time just increased the cost of being wrong when the underlying regime has not changed.

Here’s the exact problem in one line.

I used a tactical bullish setup to inform a long-term trend position when the long-term trend was not up.

So yes, I was right for a little bit, but I positioned like I needed a multi-quarter trend reversal.

When the trade stalled and failed, the options bled and eventually expired worthless.

That’s an execution mistake, not a charting mistake.

There are two sub-lessons inside this one that I want burned into my process.

Lesson A: Align your instrument with your timeframe

If it is a tactical trade, then trade it tactically. Size it like a tactical trade.

Structure it like a tactical trade. Take partials if it moves quickly.

If you need to, get back in. You can always get back in.

This is one of the most important mental shifts I am still working on. When you lack confidence, you treat every trade like it is “the trade” and you grip it too tightly. When you have confidence in your process, you understand there will be another pitch.

I let the bond position sit in my head for too long. That is a tax. The market charges you for mental bandwidth.

Lesson B: Stop trying to be overly unique

This one is more subtle, but it matters.

When you are surrounded by smart people, or you have done well professionally, you start craving uniqueness.

You want the clever take. You want the trade nobody is talking about.

You want to be contrarian for the sake of being contrarian.

I have lost more money trying to be unique than I have made.

I already knew a key part of the bond story. Bonds were unlikely to do anything meaningful if energy was not moving. Energy and yields tend to travel together.

That relationship matters. And yet I held a view that bonds were going to start a real trend reversal while energy stayed rangebound.

Twitter tweet

Why did I hold that view?

Because I was trying to be different.

That is not an edge. That is an ego trap disguised as sophistication. Simple trades work.

Boring trades work. You do not need a unique thesis to make money.

This one was a position sizing lesson.

I spent a lot of time this year thinking about homebuilders and home construction.

Twitter tweet

It mattered to me because housing drives a ton of economic activity in the U.S., and homebuilders often behave like a barometer alongside areas like semiconductors.

Housing was a concern. Homebuilders were struggling for a stretch. And I let that one area of the market carry too much weight in my exposure decisions.

To be clear, I was not bearish. I stayed in equities and had a great year.

But I was not risk-on enough, for too long, because I kept staring at one piece of evidence that looked messy.

Here is how I described it, and I still think it is the cleanest way to say it.

I allowed eight out of ten things being bullish to equate to eighty percent long exposure, when it should have equated to one hundred percent long exposure.

Twitter tweet

If the regime is bullish, don’t handicap yourself because one indicator is annoying you.

You can adjust around it. You can size down the problem area. You can avoid the weak pocket. You do not have to take down broad exposure if the weight of the evidence is still bullish.

This is where a lot of people, including me at times, confuse “a concern” with “a signal.”

A concern deserves monitoring. A signal deserves action.

Bull markets solve problems. That does not mean you ignore problems.

It means you do not let one problem override the scoreboard when most of the market is still acting well.

If I boil these into execution rules, they look like this.

1. Accept that mistakes are mandatory. The work is not avoiding them. The work is keeping them small and keeping yourself emotionally stable enough to take the next trade.

2. Price decides the duration. Do not promote a tactical idea into a long-term position without price confirming a regime shift.

3. Timeframe and instrument must match. If the setup is tactical, express it tactically. If you want long-term exposure, wait for a long-term trend signal.

4. Stop trying to be clever for the sake of it. Uniqueness is not a return driver. Process is.

5. Let the weight of the evidence set the baseline. Then use position sizing and selection to handle the messy parts, rather than turning one weak area into a blanket exposure haircut.

I am human. I got plenty wrong in 2025. The good news is that the market does not require perfection. It requires survival, humility, and a repeatable process.

Anyway, that’s my two cents.

🎥 Thompson’s Two Cents Live

🚀 Throw it on 1.5x speed and let it rip.

👍 Give it a like! It’s the easiest way to show me some love.  

The Sunday Stalk List

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

It hits inboxes every Sunday so you know exactly what to keep an eye on for the week ahead.

Checkout last weeks post.

Cheers,

Larry Thompson, CMT CPA

Follow Me On Twitter (X)

Follow Me on StockTwits

Sign Up For Thompson’s Two Cents