You probably decided to read this book thinking it would be about how to beat the market, about how the market really works. And at this point, you might be thinking, that isn’t at all what this book is about. You didn’t expect that you would be reading about how you unconsciously fall into clusters of perception and expectations that began as experiences you had somewhere between conception and your teenage years, and most likely on the earlier rather than later half of that span. You thought you intended to learn how to better analyze the numerical dance of market numbers.
Here’s the moral of the story: once you become familiar and hopefully facile with consciously contextualizing or curating market information in terms of who is or will be taking the other side of your trade, once you give up on finding “the (nonexistent) facts,” the mind game of the markets is in your mind—and nowhere else. The perceptions belong to you, the interpretations are yours, and the one pushing the button, no matter what your timeframe, is either you or your ego.
Everything will fall prey to your ego and your unconscious, unless you make both conscious. You can leave the unconscious where it is, but that will be your biggest risk factor. Sooner or later it will burn you. “The Street,” as it’s known to those of us who professionally tend to the garden of Wall Street, is littered with examples, many of them repeats.
Think you are not susceptible to your own ego? Think there are guys out there who don’t know a thing about how they really feel and yet are billionaires? There may be, although I would argue they know themselves better than their press agents ever let on. The other thing they certainly know is that markets are at their core only human games, not mathematical ones. They know this even if they spend all their time developing algorithms to stalk the cadence of the market’s language. The numbers represent the playing cards and winning is way more about the mind games of playing poker, hands down, than anything else.
Regardless of whether every billion-dollar portfolio manager knows himself or herself or not, you can. And in doing so, you create an insurmountable edge that no changing market regime or market multiple personality disorder can take away from you. Spend half of your time working on yourself and you will make more progress than if you spent all of that time trying to figure out the next great unknown piece of information.
If you do, and I hope you will, then for every time you put your mental capital and psychological leverage first in your decision sequence, you can be guaranteed that at least for that trade, your outcome will be better than it would have been.
Imagine what will happen by the end of the year if you do that even just 50% more of the time than you do now?