Tuesday, January 05, 2010

2009 Reflections

I've just finished reading the ever perspicacious Jeff Saut's "Lessons Learned" of January 4. You can find it here. As I close the door on 2009, I have these reflections to share:

Reflection 1 | Learn how to embrace and thrive in uncertainty: While there are a multitude of people espousing multitudinous methods that are guaranteed to make you rich, understand in your bones that investing involves risk. Keep in mind that the capital of many ends up in the pockets of a few--the market is not an egalitarian arena designed to enrich all participants. Unfortunately, it is often presented that way. Why? Because you have capital that can be extracted into another's pocket.

Reflection 2 | Learn how to lose: Much like any other endeavor that is important (your health, your relationships, your reputation) you can undo quite a bit of good with a few stupid moves. Ultimately, you win by learning how to lose. Lose small; win big. The obverse is much too easy to embrace. Unfortunately you don't learn how to lose in other venues; you learn how to win. You will fail in positions you take. Learn always how to fail better.

Reflection 3 | Conviction v. Bias: At what price?: There's a line between conviction and bias--it is drawn with the time and dollars pencil. Make sure that you know how much you want to pay for that pencil to draw the line between the two.

Reflection 4 | Commiseration v. Collaboration: The blogosphere offers unlimited availability of opinions. You'll have no trouble finding opinions uttered by very smart and erudite folks that perfectly align with yours. Best to seek out people that disagree with you and try to understand their arguments so that you can find potential holes in your thinking. I've never seen any business venue where commiseration led to good outcomes. Commiseration and collaboration are not the same. Commiserate less; collaborate more.

Reflection 5 | Your mileage may vary: I'm always amused by the examples of the great investors (Buffet, Graham, Lynch) and the idea that all investors can achieve such results. That is simply not true, for the plain fact the market place necessarily has to have two opposing opinions for a transaction to take place (a buyer and a seller). If it were so easy to attain such status and cultivate prescience regarding investment decisions, there would never be a buyer when you want to sell or a seller when you want to buy. Plus, there is so much more at play than can ever be codified in a way to make investing a "color by number and you'll get a masterpiece" type of endeavor. Not every golfer will be a Jack Nicklaus (yeah, already the name avoidance!). Again, you don't have to be the best to beat the market, just a bit better than the rest. You CAN do that.

Reflection 6 | Own your decisions and be a sport about it: It's your money; your decision. Railing about how stupid other people are who are on the other side of a transaction and making money is whining. Griping about the "They" who are propping, dropping or holding the market up, down or sideways is detrimental to your mindset of owning your decisions. Fairness in many of life's venues (go visit a hospital or an unemployment center) is absent. If you are expecting it in the market, you need to recalibrate your expectations. Whining is not a strategy that will yield good results.


David O said...

Hi Leisa,

I stumbled upon your blog this evening and must say, well done!

I particularly enjoyed your reflections from 2009. Lessons for every trader for sure...

Thanks for your thoughtful posts.


Leisa said...

David, thanks for your nice comment.

Anonymous said...


I think one of your best ever.


Deming said...


Very well put! Great way to start the New Year.



Leisa said...

MarkM and Seamus...thank you. Seamus, it has been a long while. I hope that you are well.

Boson said...

Hi Leisa;

Stumbled upon your blog this evening and found your musings interesting.

What do you think of passive investment strategies - ie; ETFs?