A Canadian on Wall Street

Sort of a continuation of my last entry and a further meditation on things…

I look at my latest writing here, and for the average investor or trader who might happen by, it probably seems like a whole load of nothing, especially for the ones who seek answers, who want to learn other people’s opinions about things, who need someone to tell them what to do, or at least give them ideas about what to do. My earlier posts, when I started writing this blog, were about individual stocks, musings on various companies, and speculations on what might happen to them in the future, and I got much more attention for it. I’ve fallen for the trap of “other people’s opinions” many a time, but it’s my firm belief now that the best ideas come from within, perhaps after long and continuous exposure to the market environment and the various attitudes toward it, but nonetheless from something that isn’t influenced.

It’s analogous to the art of writing; the best writing comes from within, but only after long periods of reading and absorbing other writing, until it becomes part of your core and the words come naturally and unbidden. Those writers who consciously mimic other writers’ styles and techniques may occasionally come up with something readable and interesting, but often the results are only a shadow of the original.

One of the things I’ve dealt with in depth as a trader is what has been termed in psychology circles as “the anchoring effect”. It comes into play most often for me when I look at my total portfolio value and watch it progress, as it has in recent days, relatively quickly. Each new high pushes the mental peg up in my mind, and makes each subsequent drop, even to a level a few days or a week ago, somewhat painful. Obviously, this is something that should be conquered to be successful in the markets, and I would not say that its effect is particularly notable in me, but it’s sort of a minor reflection of the attitude a lot of people have to markets and trading — the wish for a constant upward progression (whether that’s in the form of a stable and steady salary, or the skyward trajectory of a bubble) and the inability to cope in the face of any change of direction.

One of the beautiful things about trading and being a trader is the way that it teaches you mental flexibility and an ability to accept when the market is going against you and not trying to create justifications for unprofitable positions. I found that as an investor (in the sense of putting the fundamentals and belief that you are “investing in the business” a la Buffett above market machinations and doing “what works”) this is important but becomes even more magnified in importance for active trading.

This is a pretty good “scoresheet” of US government intervention into the various travails of the banking world. Personally, I think there’s only so much intervention that will work here; it’s like putting a million band-aids on something that just needs time and a high fever to work itself out of the system.

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream — and not make dreams your master,
If you can think — and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ‘em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: “Hold on!”

If you can talk with crowds and keep your virtue,
Or walk with kings — nor lose the common touch,
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much,
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And — which is more — you’ll be a Man, my son!

Uh.

An excellent blog from someone who I think might be an investor in Microsoft. His latest post is indicative of the tone of the website and highlights Steve Ballmer’s continuing inability to figure out current directions in technology.