“There are few ways in which a man can be more innocently
employed than in getting money.” (James Boswell, The Life
of Samuel Johnson)
I used to have a regular routine on the Internet. I’d check e-mail,
then go read the news — first several newspapers, U.S. and
foreign, then some magazine and commentary sites, then a blog or
two, and from then on keep up via a couple of news roundup sites. I
was a news guy. I consumed it, I wrote it, I talked about it.
But things have changed now. Sure, first I look at the e-mail,
and then I read this website to see what my colleagues are up to.
But then comes a shift. Over to the London Telegraph,
where I click on “City News,” and then click further on the
headline for the latest about the Financial Times Stock Index, the
FTSE, pronounced “Footsie.” When I first get to the computer, you
see, it’s noon London time, and the stock market has put in half a
day already — a day which may portend what the U.S. markets will
start to do at 9:30 in the morning.
Then to the mailbox — the real one out on the road with a metal
flag on it, not the one on the Internet — to pick up
Investor’s Business Daily for a rundown on yesterday’s
market action. This I read the old-fashioned way, spread out on the
kitchen table with a cup of coffee alongside, my reading glasses on
my nose, and a pen in hand.
Things have changed. I’ve found a new baby. I’m trading
stocks.
This will not be an investment advice column. I’m not qualified
to write one, and if I tried, you’d be ill advised to read it. It
will not mention specific stocks or specific strategies. Instead, I
will deal with the really interesting thing about trading —
whether of stocks, bonds, commodities, futures, or other
exchange-traded, readily liquid instruments.
It’s the way your mind works.
First thing, how should you think about what you’re doing? Go
for the money? Or keep your focus on the game, play it as well as
you can, and let the money come?
Many years ago, I helped write a sales training course for a
high-technology company. I interviewed more than a dozen successful
salesmen. To the question, “Why are you such a good salesman?” more
than half replied, “I really like money.”
That makes sense. If you want to engage in what is damn near
exclusively a money-making activity, you had better not have any
“issues” (as the p-shrinks say) with money. You’d better like it,
plainly and uncomplicatedly. You had better not view money, its
making, its losing, its having, its not having, as any sort of
moral verdict on your worth, your self-image, or (shudder) your
“self-esteem.”
Money doesn’t know any more about you than a golf ball knows
about the player who holds the club that hits it.
Second, you can expect, at times, to feel really discouraged and
really bad. For me, that moment came not when I lost a bunch of
money. It came when, for some ridiculous reason, I got blocked out
of the Investor’s Business Daily website, the only source
for many a critical piece of information about stocks. (See my
earlier
column, “The Racing Form for the Stock Market.”) Not only did I
experience the maddening frustration of trying to solve an
ultimately insoluble computer problem (some deeply buried router
error in a server farm somewhere), but I was blind. I didn’t know
why my stocks were doing what they were doing.
I literally took to bed and buried my head, wanting only to
sleep. Thankfully, my ISP changed my IP address, and everything
started working again.
Third, you cannot mistake good luck for good judgment. In the
1980s, when I worked in the mutual fund industry, I saw all kinds
of fixed income fund managers who thought they were geniuses
because they made money while interest rates were going down. In
the 1990s, any idiot could have made money in the stock market —
and many of them did.
As the flea said to the elephant, “Boy, we sure shook that
bridge when we went across it, didn’t we?”
For now, I’ll stick to the simple rules I keep learning. Like:
Never let the first hour of the market go by unobserved. If
something bad is going to happen, that’s where you’ll see it first.
And I’ll remember Jesse Livermore’s advice that you do not make
money from buying, but “from the sittin’.” Hardest thing to do in
the world — just sit still.
