The Traders Journal

Ten Timeless Tenets of Trading: A 2,500 Year Perspective Part II

Gatis Roze

Gatis Roze

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

Art, history and life can parallel investing.  This blog is my continuation from last week’s Part I where I encouraged readers to be open to a sort of borderless-type of thinking.  To be willing to challenge oneself to look backwards as an aid to moving forwards in the investment arena.  To acknowledge that the past offers us a cumulative depository of wisdom and that art is one vehicle to experience conversations across generations with the masters themselves.  Here is the link to last week’s blog:

Experience is Cumulative:  I have written in previous blogs how Warren Buffett, at 85 years old, is still running Berkshire Hathaway with a market cap of $340 billion.  This year, over 40,000 shareholders attended the annual meeting in Omaha to hear the Oracle speak about his company.  Impressive, yes.  But when you actually walk through the St. Peter’s Basilica at the Vatican and absorb some of its physical complexity, you experience something beyond impressive.

With some parallels to Buffett, Michelangelo was 71 when he was commissioned as architect of St. Peter’s Basilica.  His dome there, completed after his death, is considered by many to be the greatest creation of the Renaissance – a structure which influenced church design for centuries thereafter.  Less known, however, is the fact that at 88, Michelangelo began work on yet another architectural commission, the immense basilica of Santa Maria degli Angeli located in Rome’s Piazza della Repubblica.  It’s no wonder that he was often called Il Divino – “the divine one”.  The man was ageless.

Michelangelo passed away at 89 and Bernini at 82 years old.   Both masters continued to flex their gray cells and produce inspiring masterpieces well beyond what we consider retirement age today.  My point is that experience and intuition are cumulative – not just in the arts, but in business and most certainly in investing.  This isn’t the case in sports where statistics show most athletes hitting their prime in their 20s.  One’s trading acumen is more akin to a fine bottle of Bordeaux that truly improves with age.  Stock market speculation is timeless, with cumulative wisdom and knowledge as prerequisites to achieving mastery in this arena.

Humility:  John Templeton, the billionaire mutual fund pioneer and philanthropist, advised that one should always ”work at being humble”.   This sentiment is also a recurring theme throughout Rome where one confronts the messages found within exquisite masterpieces in all media forms.  Simply standing next to the ancient Colosseum and imagining 80,000 spectators cheering on gladiators will make you feel small and insignificant.  It seems to me that even the wealthiest families of their day, such as the Borghese clan, acknowledged that death ultimately humbles everyone despite whatever power or greatness might be achieved in life.  

Rome is filled with testaments to the recognition that, simply put, “you can’t take it with you.” An example of this is the ornate front of the Vatican’s basilica.  The house of Borghese paid for this magnificent and expensive edifice, but also managed to get their name prominently carved above the entrance.   It’s a stretch to think the Borghese clan was humble nevertheless.  Humbleness in the face of your inevitable demise, I suppose, is simply acknowledging the obvious. 

On the other hand, the most lasting memory for me concerning humility came from a tour guide.  He was not a conventional guide by any measure.  He was an articulate, astute and very well-educated Dominican priest.  He gave us a behind-the-curtain tour of his home that just happened to be the important Gothic church of Santa Maria Sopra Minerva.  The priest’s gentle self-deprecating humor would have made many a comedian jealous as he acknowledged powers so much greater than himself.  But he exuded a caring and peace that was reinforced once we witnessed his living and dining quarters.  The humbleness of his lifestyle bankrupts my vocabulary.   

Perhaps we investors should prepare our own vows and pledge to acknowledge certain personal truths in order to always act with a consistent harmonious humbleness towards a market which is ceaselessly so much bigger than any of us.  

Beliefs & Routines:  In Rome, the weight of centuries is evident everywhere, and one is easily immersed in the unique beliefs and routines that have been passed down through the millenniums.  Don’t assume that the city’s legacy is only Catholic.  Europe’s largest mosque is in Rome, as well a very impressive synagogue that will certainly take your breath away.   It is, in fact, a very diverse group of Romans whose lifestyle and faith-based routines are reflected in their individual weekly rituals which are noticeably different than in the USA.  Many of these are centered around food and religion.  

Stay with me here.  In a recent edition of Psychological Science, researchers from Harvard and Minnesota looked at the effects of various rituals surrounding food.  They found that performing repeated food rituals not only enhances the taste experience but strengthens social ties between those individuals sharing in the rituals.  I found the latter particularly interesting.  Another conclusion from these studies observed that any pleasure emanating from a ritual is enhanced considerably when one performs the ritual oneself rather than watching someone else perform it.  Yes, I will tie this back to investing. 

In experiencing Roman rituals so different from my own, I came away believing that it is our beliefs and personal routines that, in large measure, define who we are.  This might explain why investors who buy “black box” investment systems from others and then try to trade following those mysterious routines end up failing more often than not.  Why, you ask.  Because your routines and rituals must be of your own construction, not someone else’s.  Only true belief in your own system will produce regular profitable results.  As investors, our own beliefs and specific rituals are what fuel our behavior.  Therefore, it’s crucial to understand what you, in fact, believe.

Your faith in yourself flows through to trusting your methodology and your routines – knowing you have the ability to control your emotions, having faith in your trading tools and understanding the “law of probabilities” so you are able to act consistently upon your beliefs.  I know of no better way to unearth your beliefs than to maintain a personal trading journal. Remaining intimately in tune with your routines and beliefs is money in the bank.  As Buddha said,  “We are shaped by our thoughts.  We become what we think.”  My investor slant would be to say, “We are shaped by our beliefs.  We become our routines.”  Your journal will help you discover yourself. 

Mental Health Moments:  In my previous blog, I described the crowded frenzy that is Rome.  To the uninitiated, the city seems unduly chaotic.  But I found that, in just a few steps off most bustling streets, it was often possible to step inside a church or gallery to discover a quiet meditative space where one could take a detox detour.  In such places, I could almost feel the weight being lifted off my shoulders and my blood pressure relax.  Even though I was usually not alone, the serene faces of those around me necessitated
quiet reverence. They were not always tourists or pilgrims, but often just local Romans stepping inside to rest or recalibrate their own mindset – something I regularly endeavor to do myself in the middle of particularly hectic market days.

Long ago, the Romans acknowledged the recuperative properties of quiet contemplative outdoor time as well.   The unimaginable wealth and foresight of the Borghese family remains impressive even today, as evidenced by one of their spectacular palaces filled with Bernini sculptures and fabulous Caravaggio paintings.   Now a museum open to the public, it is surrounded by the Borghese’s 148-acre park that shows today’s public how Rome’s nobility embraced nature as a catalyst for physical and mental regeneration in hopes of breeding new ideas and perspectives.   The Pope’s country palace, Castel Gandolfo, is another such place.  We were fortunate to tour the grounds privately, and it took hours to explore the vast gardens and working farm there.  It was somewhat surreal how I found that the combination of having contemplative quiet time while walking the grounds re-energized me so completely.  I can only imagine how much something similar might have helped me deal with the stress of serious market corrections in the past, such as the meltdowns in 2001 and 2008.

Let the Art Speak to You:  Anyone can enjoy touring an art museum, but not everyone stops to hear the stories that great pieces of art might have to tell.   My favorite sculpture in Rome is Bernini’s masterpiece of Apollo and Daphne.  This life-size sculpture depicts the climax in the tale of Daphne and Phoebus in Ovid’s Metamorphoses.  In examining the piece from every angle, I was struck by the energy, the ornate laurel leaves, the softness of the hands and the drapery folds in the fabric – gorgeous details that are beyond remarkable when you realize it’s all chiseled out of cold hard stone.  Astounding!  So when a tourist shuffled quickly past me and looked up briefly at the Bernini with an offhand observation “Cool”, I suspected that he really didn’t get it.  

Each individual stock chart also has an interesting story to tell.  If you quickly shuffle by, you don’t allow it to speak to you.  Most artists have a message or a story to tell.  If you don’t look for it, you’ll rob yourself of the inspiration and the message which the art has to offer you.  Charts, too, can inspire us if we take an interest in the story it tells.  The degree of inspiration is determined by the viewer.  If you don’t take the time to look for the message, the chart will quickly shuffle on past you, too.

Hone your powers of observation and let the art speak to you.  The same skills will allow you to let the charts speak to you better as well.  I submit to you that both great art and the right stock chart can inspire and illuminate your investing goals.  

I do hope these ten timeless tenets contribute to an investing future of better decision making, and by all means, go visit Rome!

Trade well; trade with discipline!
-- Gatis Roze

P.S. Click HERE for information on my future appearances & seminars.
October 17th, 2015- ASSET ALLOCATION WORKSHOP with Gatis Roze & Chip Anderson.

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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