- Experience does not equal success
- The Mind of a Failure
- The Mind of a Temporary Failure
I had the pleasure of talking to a veteran of the markets recently. He has been trading for 46 years, maybe even longer. Of course you may already know of the gentleman, as his analysis is often featured on these web-pages.
Larry Pesavento started dabbling in the markets in the late 1960’s. By 1972 he was a trading millionaire. I remind myself that this is a million dollars in 1972 money, when a million really meant something. By 1973 he was broke. He had to start over, and he did.
A while back I read an article in the New Yorker called “The Blowup Artist”. John Cassidy has written piece on the maverick fund manager Victor Niederhoffer. I took a personal interest in the article because like Victor I love board games and squash.
As the article title suggest, Victor has blown his fund up on more than one occasion. In 1997 he lost virtually everything as the Thai market went into a tailspin. In 2007 his Matador fund lost nearly 75%. His trading style was once characterised by legendary George Zoros: “Victor picks up $100 bills running in front of an express train”, while another traders said “Vic’s style is akin to sell flood insurance in New Orleans – you will get away with it for hundreds of years, but one day a hurricane Katrina will come along and wipe you out”.
The article on Niederhoffer and the conversation with Larry Pesavento remind me of the nature of the world I am operating in. Experience is invaluable. It enables me to relate to past situations and direct my actions accordingly. However, if two of the greatest traders I know have the ability to blow up, then surely it could happen to me.
Experience does not equal success. In the famous fight practise scene between Christian Bale and Liam Neeson in the film Batman Begins, set on a frozen pond in the Himalayas (actually it was in Iceland, but the former sounds a little more romantic, doesn’t it?), Liam Neeson says:
“Training is nothing – will is everything – the will to act”
It doesn’t take long to acquire the necessary skills to navigate the financial markets. Navigation is one thing, knowing what to do. Doing it, the will to act, is a life time pursuit. Every morning we face the possibility that today means glorious success or abject failure.
It helps me to know that far greater men before me have faced the same dilemma. Some have failed – temporarily – and some have stayed down. No matter how much experience you clock up, your mind-set is your most important asset. It is the one that decides if you stay down, or if you get back up again. Experience won’t do that for you.
Until next time.