By Larry Greenfield
Trading and investing is a mental game and mimics the game of life. Though most people will claim to think about the future in reality most of us live in the moment. “My name is Larry Greenfield and I have been a professional trader for a Hedge Fund. My first career ran for some seventeen years though as a private investor my trading career has been even longer.” Like everyone, I have made many mistakes but thankfully my triumphs have outnumbered my less happy moments – as Napoleon was quoted, “He only wanted generals who were above all lucky.” All personal investors should analyze Napoleon’s subsequent career as clearly despite conquering nearly all Europe his own ‘stock’ picking skills eluded him sufficiently that he met his Waterloo. I have learned many things about myself from trading stocks day to day and many of them have influenced my long-term investment decisions.
For many, including some in the finance community the view of the trader is made by Hollywood – think of movies such as Wall Street, The Boiler Room or the more recent Martin Scorsese trip back to the 1980s – The Wolf of Wall Street. While all these movies have an element of truth or build from a moment in time, trading is a short term game full of excitement but for those of us who made a living doing it being a professional and knowing yourself is the critical difference between success and failure. Trading is cold, it plays no favorites and for those who have tasted success mastered it there is no better satisfaction then mastering the craft.
Let us for a moment look beyond the news headlines and consider the stock market meltdown of 2008. Were you personally too heavily invested in stocks? If you were or are panicked about your stock investments or for
that matter any of your investments I would suggest that you should reevaluate your allocation to any such investment. Know yourself is the basis for any investor.
I learned early on that my conservative personality was holding me back in my trading career. While I still err on the side of caution in selecting my wardrobe I embraced this part of me and in turn was able to tailor it to become a profitable trader. There are super successful aggressive traders who fear nothing and believe in themselves and in some cases become the most profitable traders. There are so many types of traders though in my personal experience have never met one who was successful without demonstrating some degree of risk taking.
Today, in my personal investments I maintain a very conservative approach. I do not like huge moves down in my portfolio though of course the consequence is that it limits my upside. The number one benefit of this approach is that it makes me sleep better at night and smile more effortlessly when socializing. For other investors the feeling of missing out creates anxiety and a more aggressive portfolio is the way to go. Between these extremes there are many shades of gray – of the investment rather than the literary kind. To paraphrase the ancient Greeks “Know thyself” is the key.