The Traders Journal

Secret Sauce: The Other 50% of Investing

Gatis Roze

Gatis Roze

Author, Tensile Trading: The 10 Essential Stages of Stock Market Mastery

SauceOver decades of training and teaching, it’s been my experience that the majority of both investors and traders are data driven, first and foremost.  Their mantra seems to be “better living through numbers” or a hundred variations on this theme.  But I’ve always wondered: with so much data out there, are the numbers the only thing that matters?  Or is there some other secret sauce to investing success?

I recently delved into my trading journals trying to ascertain the reality of my own emotional status versus trading results and the connections within.  What I discovered was quite an enigma.  It was baffling at first, but it became much less perplexing the more history I reviewed.  The periods of my greatest investing success were invariably tied to positive times when my life was on an even keel.   As a passionate car devotee, I might call this a “turbo boost” in investing because financial rewards seemed to be the highest when I didn’t just follow my methodology but was able to align it with positive equilibrium in my personal life.  The flip side: there were clearly instances where I nailed the methodology portion, but my personal life was somewhat discombobulated.  In those periods of disharmony, I inadvertently created my own ISHTAR – my synonym for the 1987 movie that turned into an expensive blunder!

Coincidentally, at about the same time I was exploring this subject, I happened to attend a presentation by Dr. Fred Luskin, who is one of the world’s leading researchers on the subjects of forgiveness and happiness.  Listening to his talk, I felt like a starving beggar being given food.  While I’d tacitly acknowledged the circle of equilibrium and its importance in my trading, Dr. Luskin was able to shine a special spotlight that helped bring together my somewhat fragmented notions.  In presenting his latest research, he challenged me to find my own story while allowing me to be driven in my personal quest as a successful stock market trader. 

Among other concepts, Dr. Luskin talked about the inner hollowness that Buddhists call “the hungry ghost”.  He warned about the dangerous consequences when people are driven to achieve success and stay on top at all costs.  Perhaps one recent biking champion comes to mind?!   As studies show, success and achievement do not generate personal happiness.  People do not find more joy in life just by moving up the rungs of a ladder.   It is only when you reach the very pinnacle that this begins to change.  Research indicates that corporate CEOs at the very top do seem happier than their subordinates mainly because they’ve finally achieved the ultimate control over their time and work. 

As individual investors managing our financial lives, we also have that kind of ultimate control.  With no one telling us how to spend our investing time, it’s only logical that we, too, should be happy in this realm of our lives.  This reminds me of the cliché “Happiness is wanting what you have, while stress is wanting anything else.”  I ask you to dwell on this a bit from your perspective as an investor.  Just don’t let yourself fall into our culture’s trance that says “more will make you happy.”  For myself, I’ve fine-tuned my own personal mantra so it focuses on achieving a higher percentage of wins, not more money.  The money takes care of itself. 

In any event, I gleaned some key pearls of wisdom from Dr. Luskin’s talk.  Here are a few essential elements for being a happy, healthy person – elements that have a high probability of making you more successful as both a person and an investor.

  1. Do something you love.  Have meaning in your life.  Don’t be greedy.
  2. Savor your experiences in both good times and trying times.  Learn to relax and be reflective about the moment at hand.
  3. Relationships matter – big time.  Appreciate other people and cultivate a circle of friends.  Carefully listen to their needs and be sincere in caring about them.  Reciprocate when people care for you.
  4. Make a positive difference in some way in the global community.  Have compassion.  Give to others, whether it’s your time, tutoring or legal tender.
  5. Appreciate what life brings you, and be thankful for all the good things in your life.  Learn to verbalize your gratitude.  Expressing your gratefulness to others contributes mightily to your own happiness.
  6. Suppress your anger.  Focus on the 99% that’s good in people and in situations, instead of only seeing the 1% that isn’t.  Acknowledging the best in others and staying positive will have immense benefits for your own psychology and physiology.

As I’ve always maintained, the “secret sauce” for stock market success is comprised of two basic portions.  One part obviously involves the technical aspects of investing – all the numbers, charts and methodologies.  The other 50 percent, however, is the investor self.  Learning how to achieve and maintain equilibrium in this arena is critical.  Trading the stock market is tough, and for all of us, it is emotionally charged.  Research has proven beyond a shadow of doubt that investors perform better when they acknowledge this and when they can anticipate how their emotions will affect their trading behavior.  Nurturing both parts while staying happy is crucial to profitability.  It’s as straightforward and simple as that.

Trade well; trade with discipline!
-- Gatis Roze

Personal Note:  I want to thank my readers for all the kind comments and encouragement.  Your responses most definitely motivate me.  For those of you who are not yet using the automatic delivery feature, please check it out.  This feature makes it easy to receive fresh content every Friday by various delivery methods of your choice.  See the options under the heading “Subscribe to this blog” on the right.

Gatis Roze
About the author: , MBA, CMT, is a veteran full-time stock market investor who has traded his own account since 1989 unburdened by the distraction of clients. He holds an MBA from the Stanford Graduate School of Business, is a past president of the Technical Securities Analysts Association (TSAA), and is a Chartered Market Technician (CMT). After several successful entrepreneurial business ventures, Gatis retired in his early 40s to focus on investing in the financial markets. With consistent success as a stock market trader, he began teaching investments at the post-college level in 2000 and continues to do so today. Learn More