I have a love/hate attitude towards great artists, probably because I wish I was one myself.
The first time I ever saw Neil Peart of Rush play the drums I wanted to throw my kit away because I figured, “what’s the point?” I mean how could I ever get that good? Then almost immediately I wanted to rent a cabin in the woods, fill it with Mountain Dew and Buggles, and practice drumming 24/7.
I feel the same way about writers like Josh Brown, James Altucher, and my still alias fixated friend Dinosaur Trader. These guys crank out posts that make me wonder if I have any idea what fuck I am doing here.
Josh crushed it yesterday with a post I wish I had written entitled “No One Is Ever Wrong Anymore,” It began like this…
I’m beginning to notice a very disturbing trend and I bet you are as well – Nobody is ever wrong anymore and admitting to any failure at all has become forbidden. It’s almost like these people have forgotten (or have never learned) about how powerful the admission of wrongness can be. Mea culpas are fantastic, they clear out the inner insecurities and demonstrate both emotional and intellectual growth. They also show courage and honesty.
This post hit home with me for a number of reasons, the most significant of which was the fact that I pretty much spent the first 40 years of my life trying to show the world how “right” I was.
Although a bit too young to remember at the time, I’m pretty sure that as I was coming down the birthing canal, I was trying to tell the doctor how to do his job.
“No….No…No, you friggin’ quack, rotate my shoulder and ease me out. Watch the umbilical cord…watch it, WATCH IT….!!! Jesus Christ, where did you get your degree, the University of Belize?"
This trait only intensified as I got into the already dicey adolescent stage of life. Nobody wants to hang around with a "know-it-all" who is always "right" on every subject, but fortunately a subconscious survival instinct must have kicked in, helping me to develop a quick and self deprecating wit that made my company bearable.
God only knows how many nights I would have sat alone at home during my teenage years had that not happened.
Later on I ran my own business, which is the WORST thing in the world for someone who always thinks they are right to do, unless they happen to be a fantastically arrogant genius like Steve Jobs.
A parentally induced sense of responsibility and work ethic, and the cold hard pragmatic realities of keeping the lights on tempered me as a business owner, but more times than was advisable, I dug in against a customer and told them how "wrong" they were, and subsequently never heard from them again.
And my wife"¦.?
Oh God, my lovingly patient angel from above. How she was able to look at that insecure young man, past the veneer of infallibility, and recognize the dormant seeds of maturity and humility, I have no idea.
Let face it, there are many terms that we associate with someone who thinks they are always right and never admits they are wrong;
Arrogant"¦..pompus"¦..pretentious"¦.concededed"¦..jerk-off"¦..asshole.."¦.dipshit"¦…Newt.
But the bottom line is that none those terms are flattering.
Years from now, scientists and academics will gather in great numbers, in vast halls of learning, in order to unlock the mystery of how I managed to get to age 40 and still have the amount of quality friends and family that I did.
I'm four years on from that turning point in my life. I have worked to upgrade myself along the way and Brian 7.0 has a much different outlook on life. I better understand my strengths and my weaknesses and I no longer feel I have to be right all the time.
The events that led me to that turning point are very personal and only appropriate to discuss with my psychiatrist and thousands of people on a blog"¦.so you'll just have to stay tuned.
But that is neither what you are here for nor what I pimped in this post's title, so let's cut to the chase.
Josh's post took a macro view on admitting your wrong; how it is viewed by the public, by society, by investors, and how objective evidence highlights when somebody is blatantly wrong.
As an individual trader, you don't have the spotlight of CNBC or Annual Reports to help force you to admit when you are wrong. Nobody will know when you are wrong except you. This is a dangerous situation if you are not objectively honest with yourself and if don't follow my man Quincy Jones admonition to "check your ego at the door," (I'm looking at you Prince).
There is no way around this fact, and you MUST learn it or fail at trading;
You will be wrong more than you will be right…!!!
Being wrong the majority of the time is just part of the game, and you negate its effect by using money management, cutting your losses quick, and only entering into trades with a favorable risk/reward ratio, something I talked about in "The Most Important Concept For Successful Trading."
The higher the risk/reward ratio you have on your trades, the fewer times you have to be right, and still make money, as this chart below illustrates.
You can see that if you only take trades that have a 1:3 risk/reward ratio, and you are correct just 50% of the time, you will have a 10R profit on ten trades.
I can only imagine how different the first part of my life would have been had I realized that I wasn’t always right and had been brave enough to admit when I was wrong. The great thing about life though, and fortunately for me, is that you sometimes get a second chance. The markets however are not always as forgiving.
No One Is Ever Wrong Anymore (The Reformed Broker)
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(Note: If you are new to my blog, I post about all sorts of things. Sometimes it involves something extremely personal, like creating a 30K baby or my Monster Trades. Other times it deals with hot ex-porn stars who trade stocks. And sometimes it’s about how to avoid “suicide”. But a good place to start is The Best of bclund. If you like what you read, please tell a friend. If you don’t, please tell two friends.)
When I read your posts I feel like I should hang it up. Knockout great piece my friend. Glad to know Brian 7.0
Hah….you are way too kind. I feel that way after each post I do
Thanks for your support buddy, it is greatly appreciated.
Baa©
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Great piece of work! Got me to thinking, I should make a great trader my wife says I’m wrong a lot lol. Seriously though I enjoy the information you put out there. Thanks
Enjoyed the article. I agree w/part of the trading analogy that you have to accept losing trades but I dont think anyone can predict their ‘Reward’ targets w/any degree of certainty. I believe there are a few things occurring which causes what you wrote about. The influence of social media+internet on society which allows people to say what they want because in essence they “cant be seen” or held accountable. It is and has always been acceptable to be wrong predicting market directions or turns because no one in trading can be right the majority of time over time. How many times have you heard this? How many times was Livermore bankrupt? So in essence the trading arena is a salesman’s dream. Imo, we are becoming a nation of ADHD where anything that is more than a few moments old is forgotten and anything longer than a page is never read.
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Great father. Good friend. Decent trader. Lacking husband. Solid drummer. Sometimes funny. Often A-hole. Shitty poker player. Too smart.
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