It’s been a few years since I read it, but a friend reminded me of Ayn Rand’s classic “The Fountainhead” the other day. He kept talking of the character Ellsworth Toohey and making the connection to current day society. Sadly, some people no matter what want a “Toohey” in their life.
Not me.
I want to cut all Toohey’s.
I want the Howard Roark build attitude in my life daily.
A short course in thinking from Daniel Kahneman. This might not help with your buys and sells, but it sure adds perspective to the “mind” part of the game.
More.
I found a good excerpt on Mark Cuban’s blog. He attended Indiana University when Bob Knight was the basketball coach. Cuban was reflecting on what was the greatest thing learned from the famed basketball coach:
When I was at Indiana you were on 60 Minutes. In your interview you said one single thing that I took to heart. I reminded myself of it while it was in school at Indiana. I reminded myself of it when I failed. I reminded myself of it before any of the many businesses I have started I will continue to remind myself before any of my endeavors going forward. Its also the best advice I’ve been able to give people of any age who ask me for advice. Its also the characteristic I look for when choosing a partner or hiring…You said, and I’m paraphrasing: “Everyone has got the will to win, its only those with the will to prepare that do win.” Words for every athlete and those of us who partake in the Sport of Business to live by.
Trading rules, or a good entrepreneurial plan if pursuing some business idea, are important, but that will to prepare is even more critical.
A good read (PDF) from Brett Steenbarger. An excerpt:
It is not at all unusual to find that a trader is losing with a trend following approach because he or she is acting out unmet personality needs in the market. One of the best trading strategies one can employ is to find adequate outlets for attention/affection, achievement, self-esteem, emotional well being, and excitement outside of trading. Sometimes traders I talk with try to impress me by explaining that trading is their entire life. They do not realize that their very ‘passion’ and ‘obsession’ with the markets are likely to sabotage them, imposing undue pressures and interference. If you have a trading system and you faithfully execute that system, trading should be reasonably boring and routine. Better to enjoy roller coasters outside of market hours than ride them with your equity curve!
Janice Dorn sent in nice feedback:
Without realizing it, people tend to perceive things according to how they want to see them, suggests a new study, soon to be published in the Journal of Personality and Social Psychology. In five separate tests conducted by a graduate student from Cornell, participants regularly labeled an indistinct figure in a way that would lead to their obtaining a taste reward.(in this case fresh-squeezed orange juice as opposed to a lumpy gelatinous veggie smoothie). In other words, when faced with ambiguity, the subjects made the choice which would result in something pleasurable for them. This gives credence to the age-old hypothesis that wishes, hopes and desires actually influence what a person sees. The analogies to trading are clear. We see whatever is happening in light of our expectations of reward, and will use all manner of neural trickery to rationalize “why” something is happening rather than to deal with the reality that it is actually happening. We want the orange juice, and will lie to ourselves about what we are actually seeing, in order to attempt to obtain that reward. Just as we feel uncomfortable in our personal lives when faced with “uncertainty” or not knowing, so do the markets. We want to get the orange juice, and this tends to distort our perceptions and lead to an insidious kind of self-deception. Sigmund Freud said that neurosis was the inability to tolerate ambiguity. Do we bias the outcome of ambiguous situations in favor of hope and away from fear? What do you think?
Janice Dorn, M.D., Ph.D.
