The Traders Journal

How to Produce a 250% Run-Up

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In his Market Wizard books, Jack Schwager proved to investors that they could indeed significantly improve their own investing skill set by mimicking Wall Street’s greatest money managers.  In this blog, I’ll show you how investing greatness can and should be built upon a similar parallel paradigm used by one of our true industry titans — Alan Mulally, former President and CEO of Ford.


Mr. Mulally was CEO of Boeing Commercial Airplanes prior to becoming Ford’s CEO in September of 2006.  Ford’s stock at that time was selling for $5.81.  When he retired in July 2014, the stock had reached $14.61 — up over 250%. That should get your attention!

Here’s why:  Mulally brought his own particular system to Ford.  In fact, he gave it the acronym “WTMS” which stood for “Working Together Management System”. You might dismiss this and question what it has to do with helping you become a more consistently profitable investor — but keep reading and I’ll lay it out for you.

In the Wizard books, we’re told over and over again by top traders that the Holy Grail is not some magical indicator known only to them.  Instead, it’s all about the individual taking responsibility.  It’s about having a strategy and methodology — a written plan — and having the Investor Self discipline to follow your process.  Wizard Mulally is telling us the same thing.

It often surprises audiences when I tell them that investors who’ve read our book (Tensile Trading, Wiley 2016) often mention Stage 2 (The Business of Investing) and Stage 3 (The Investor Self) as being pivotal in revisiting their own approach to money management. I won’t endeavor to recount those chapters here, but I’ll share Mr. Mulally’s WTMS system in hopes that you’ll see the parallels to your own investing endeavors and how by embracing these basics, you can excel in your money management.

Step 1 of WTMS is called “VISIONING”.  
It’s all about identifying a compelling and explicit vision.  It signals to the organization (in writing) what it is striving to become.  It must be engaging enough to rally efforts around its aspiration. 

Is your investment vision equally specific and compelling?  Or are you all over the markets?  Can you write it down? Is it written down?

Step 2 of WTMS is called STRATEGY.  
This is where you value engineer the vision and articulate the precise approaches, strategies and methodologies you’ll use to drive successful results. 

Is your investment strategy explicitly understood and written down? Do you know for a fact that it is consistently adding value to your investment vision? 

Step 3 of WTMS is called RELENTLESS IMPLEMENTATION. 
This is where the leadership team regularly and diligently checks if the strategies are being executed properly and if progress is being made to achieve the vision. At Ford, the team asked if the culture of the company was supporting those behavioral elements necessary to achieve success.  

In your investing efforts, this could be paraphrased as “Are you following your trading plan?” Do you have the behavioral control and discipline necessary to address your personal Investor Self issues?

As coaches often say in sports, “It’s all about the basics.” Alan Mulally turned around Ford by implementing his WTMS system.  The stock market acknowledged his success and rewarded Ford shareholders with a wonderful 250% run-up.  If the WTMS system can turnaround a huge company like Ford  with some 200,000 employees, just imagine what you can achieve with your portfolio as an individual investor who embraces similar principles.  A 250% return may just seem like child’s play!

Here’s the bottom line if you don’t adopt a strategic methodology such as WTMS.  Make sure your investment portfolio isn’t just a collection of dissimilar dogs herded together haphazardly — otherwise, it will fall apart at the first hint of a squirrel.

Trade well; trade with discipline!
Gatis Roze, MBA, CMT

StockMarketMastery.com

 

Gatis Roze
About the authors: , CMT, holds an MBA from the Stanford Graduate School of Business and is a past president of the Technical Securities Analysts Association (TSAA). He is also the co-author of Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016). A full-time investor for over 25 years, Gatis has taught sold-out investment courses throughout the Pacific Northwest and beyond since 2000. Learn More

Grayson Roze
is the author of Trading for Dummies (Wiley, 2017) and Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016). He has worked in the financial services industry for StockCharts.com since 2012, and now serves as the Business Manager for the company. He holds a Bachelor's degree from Swarthmore College. Learn More
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