“Success is peace of mind which is a direct result of self-satisfaction in knowing you made the effort to become the best of which you are capable.” – Dr. John Wooden
Yes, it’s that time of year again, and I thought I’d invite you into my trading room. I look ahead to 2016 by considering my investment efforts of 2015. My regular readers will recognize this falls into Stage 10 of my Tensile Trading methodology. I have a number of techniques I use each year to accomplish this objective. One I use regularly is to focus on an extraordinary individual and try to understand how he or she succeeded and how I might compare my own efforts to those achievements.
This year, I turned my inspection upon the “Wizard of Westwood” – Dr. John Wooden. Dr. Wooden was UCLA’s Basketball Coach in the 1960s and won ten NCAA titles in twelve years, seven in a row. Remarkable when you consider that no other coach has ever won even three consecutive titles. With exceptional skill, Coach Wooden taught his players to succeed in both athletics as well as in life. The basis of his methodology was his “Pyramid of Success”. I caution any investor who might be asking, “what can I possibly learn from a basketball coach?” I challenge you to keep an open mind, put your ego aside and be receptive and ready to be amazed.
The foundational level of this pyramid encompassed five elements:
“Success travels in the company of very hard work. There is no trick, no easy way.”
My take: If you bring an entrepreneurial mindset and work ethic to your investing, you will succeed. Anything less and you’ll be just average.
“Strive to build a team filled with camaraderie and respect: comrades-in--arms.” My take: If you think investing is all about being a lone wolf, you’ve got it wrong. Draft a support network that becomes your team.
“Be true to yourself.”
My take: Investing success must emanate from your heart, your head and your financial plan. That is why trading someone else’s “black box” never works.
“Have utmost concern for what’s right rather than who’s right.”
My take: Since my sport is the stock market, which is always right, my utmost concern is to get my ego out of the way. I’ve come to understand that I’m only right when I don’t argue with the market but cooperate with it instead.
“Your energy, enjoyment, drive and dedication should stimulate you.”
My take: If you are enthusiastic in following the markets four out of five days, you will achieve something special.
The second tier up Coach Wooden’s pyramid had these four essential elements.
“Control begins with yourself. Be disciplined.”
My take: The Investor Self portion of Tensile Trading (Stage 3) will determine your success as an investor more than any indicator, methodology or strategy. Experts embrace this as fact. Novice investors take years to come to the same realization.
“Constantly be aware and observing.”
My take: Monitoring is Stage 8 that sits between Buying (Stage 7) and Selling (Stage 9). It’s where profits are made and lost, and it requires Dr. Wooden’s constant alertness.
“Make a decision! Failure to act is often the biggest failure of all.”
My take: When a trade goes against you, a failure to act is actually a decision you make. Failing to take the initiative is the act of continuing to be wrong.
“Stay the course. When thwarted try again; harder, smarter. Persevere relentlessly.”
My take: There are five stages every investor must pass through. You don’t skip stages. If you don’t stay the course and make a commitment to persevere, you’ll stall out as an investor.
There were three key elements in the third tier of the pyramid.
“Ability may get you to the top, but character keeps you there – mental, moral and physical.”
My take: Stay emotionally and physically fit. Trading the markets is not for lazy souls. It requires all of you to be healthy.
“What you learn after you’ve learned it all counts most of all.”
My take: I paraphrased his words a bit here to make the point that skill and intuition only result from real world experiences. When you pay tuition (i.e. trading losses) to Wall Street University, be certain that you’ve learned the lessons such that you can apply your new skills.
- Team Spirit.
“The star of the team is the team. We supersedes me.”
My take: Humbleness breeds success. It’s more important than IQ. The correct perspective is that we – team stock market – will earn profits. This is better than saying ‘me’ – I’m going to take regular profits out of the stock market.
Getting closer to the top, the second tier of Wooden’s pyramid had two elements.
“Be yourself. Don’t be thrown off by events, whether good or bad.”
My take: Plan both bullish and bearish scenarios for every trade and play them out over and over in your mind. The market will tell you which one to execute. Maintain your poise; pull the trigger. You’ve rehearsed it already in your mind.
“The strongest steel is well-founded self-belief. It is earned, not given.”
My take: Market trading intuition is something you earn over many years and after absorbing many experiences. It is based more on confident humbleness versus confident arrogance.
At the top of Dr. John Wooden’s “Pyramid of Success” is one all-important element.
“Perform at your best when your best is required. Your best is required each day.”
My take: Perform at your best every day and the markets will reward you with six to seven winning trades for every ten you make. Your competitive greatness will not be rewarded with a winless season. Losses are part of any championship season. Be prepared for both.
Trade well; trade with discipline!
-- Gatis Roze, MBA, CMT
Presenter of the Tensile Trading DVD, Stock Market Mastery.
Developer of the StockCharts.com Tensile Trading ChartPack.
P.S. Click HERE for information on my future appearances & seminars.