As an individual investor, what you bring to the table in the way of intellectual, emotional and behavioral skills will determine whether you succeed or fail. This is hardly a breakthrough revelation, but it needs to be said nonetheless. It’s been my experience that great investors are not born. For the most part, they are average people who simply make a personal commitment to teach themselves the most appropriate skill set.
Investors Business Daily (IBD) acknowledges this by its regular features about individuals who have excelled in one sphere or another. For it is role models who can indeed jump start the acquisition of these essential faculties. IBD features a large number of entrepreneurs in these bio picks. This is clearly from experience and by design. This is a reasonable alternative in lieu of face-to-face mentoring.
I came out of Silicon Valley, and I will personally attest to the fact that if you are determined to excel in business, investing or life, then modeling your behavior after exceptional entrepreneurs is a worthy strategy to acquire and embellish your personal skill set.
So, what specifically are some of the attributes of entrepreneurs that we investors can emulate to become more consistent and successful in our trading? My hypothesis is that is has to do as much with who these entrepreneurs are as who they are not. It answers the question, why do a disproportionate number of entrepreneurs also succeed in the investment arena?
Yes, often successful entrepreneurs are indeed dreamers, but not impulsive dreamers. Their impulsiveness tends to generate ideas which they let ferment within the parameters of their business model. They tend not to be the kind of impulsive person who says “yeah, I think I’ll get a tattoo” or “I think I’ll follow that hot tip and buy 15,000 shares of that IPO ” In other words, they have the ability to conceptualize their impulsive ideas through to their natural conclusion. Impulsiveness is fine in the kitchen, but it has no place in your investing arena.
In the “who they are” department, I believe financial frugality and a sort of cynicism helps. Entrepreneurs are always cognizant of protecting assets. They realize that there are infinite forces and new schemes always lurking in the shadows, plotting to relieve them of those assets.
As I’ve preached for years, asset protection comes before asset growth. Most entrepreneurs generally have their own type of monetary-skin-in-the-game mentality which is different than the big name corporate folks who generally use the OPM (other people’s money) approach. As a result, entrepreneurs tend to build a more lasting foundation before pursuing their equity investment goals. It’s as if what they bring to the table is a vintage bottle of entrepreneurial skills that decants away the macho monarchy mentality and big egos that leads to losses for so many in trading the markets. They realize that stocks are not employees and do not follow a mandated job description. The good news with stocks is that you can fire them at will by selling your position.
I’ve always encouraged my fellow entrepreneurs to manage at least a portion of their assets themselves. They might discover, as I did, that they love the game and are really quite good at it. Investing isn’t easy and they don’t expect it to be, but the arsenal of skills they actually bring to the task is really most appropriate.
Entrepreneurs tend to be positive thinkers who have a vision and are mentally equipped to take appropriate action to achieve those goals. More often that not, they are tech savvy, hard working, disciplined individuals who are not afraid to learn from their inevitable mistakes but will persist until they succeed. Finally, they have the focus necessary to pull it all together and take responsibility for their own efforts. The blame game has no place in one’s investing efforts.
Now, you can better understand why I’d wager my own money on these folks to excel in the stock market and why I continue to encourage my entrepreneurial friends to manage at least a portion of their own assets themselves. It’s truly inspiring. I’ve seldom seen them fail.
Trade well; trade with discipline!
- Gatis Roze, MBA, CMT
- Author, Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016)
- Presenter of the best-selling Tensile Trading DVD seminar
- Presenter of How to Master Your Asset Allocation Profile DVD seminar
- Developer of the StockCharts.com Tensile Trading ChartPack