Saturday, April 25, 2009

The Weekend Trader - How Bad Do I Want It?

Well, I'm beginning today's weekend edition just before 6am on a Saturday, partly because I didn't sleep all that well on a night where I typically make up for all of the lost sleep for the week.

Yet this week was a bit different, with a number of distractions that included the flu, a continued battle with an increasingly troublesome pinched nerve that's now constant and has prompted visits to four doctors (including a neurosurgeon), non-market related business issues I've had to deal with (yes, don't forget I do have another income stream to pay the bills that requires daily attention), and my wife and youngest daughter completing a weeklong tour of several colleges in the Northeast while having van trouble on the way home on Friday.

btw, she's so far looked at Dartmouth, Marist, Vassar, and Yale ... with William & Mary and Boston University coming up on the summer tour if you have any feedback. She'll likely graduate as valedictorian unless she completely falls apart next year, and is looking to the sciences. This is our daughter who six years ago was struggling for survival before being diagnosed with Type 1 diabetes.

And if you want an article of true inspiration and a rare peek into my family life, check this one out which appeared on the front page of our local paper a year ago and was nationally syndicated, as she's already faced more from a life-challenging perspective than I'll ever face.


And speaking of family, a major tip of the hat to my wife Debra who is continuing on her journey to once again get healthy and fit after having spent the last two decades devoting her life to our kids and fighting her own health battles as she too was struggling for life just a few years ago with a massive appendix rupture and serious infection that required multiple surgeries. She's lost 55 pounds since December (she's allowed me to say this!) in Valerie Bertinelli fashion, and is finally seeing her own Bamboo Tree sprout this year. She is and will always be the love of my life.

And so what does any of this have to do with trading? Well, nothing ... and everything.

For trading and life will always remain forever intertwined. Recall this excerpt from last year's final post ...

"And if you haven't figured it out by now, this blog goes far beyond my trading race. It's about life's race. Trading is a game ... nothing more. It pales in comparison to life's true priorities, and simply provides us with the analogy of all analogies, and parable of all parables. It provides us with a unique practice field on which we can learn and then try to apply the principles to life. The better we trade, the better we live, and the better we live, the better we seem to trade. For me, the $1.6M score will mean nothing unless I can now apply the learned principles going forward, especially to life."

And so right now, aside from dealing with this dang pinched nerve which has undoubtedly affected my focus (I may have to start trading left-handed!), life is very good and comfortable for me ... which is the death knell for success in any sport, whether it be physical or mental. And yes, competitive trading is a mental sport. Forget the debates, it is and always will be.

And so the question for me right now is the same question I've asked to thousands of traders in public speeches over the years: How bad do I want it? Am I willing to continue to make the life sacrifices necessary to retain the around-the-clock sharp focus and skill required to continue a journey of profit maximization? Right now, it's pretty obvious I don't want it that bad ... for the moment anyway.

Most know that I could walk away from this and/or my other business at any moment, at any time, and never have to worry about working so long as I live. Thirty years of business toil topped off with a hard-earned $2 Million trading reward over the last five quarters will do that. As always, I share this not to boast ... simply to state reality. And if you're new to this journey or don't believe that, just do a blog search for "suck", "stupid", or "hell". As always, this blog remains a very open look into this trader's journey. The good, the bad, the successes, the losses, the days of disgust, the days of rejoice, the prolonged time in the zone, the flat periods ... they're all there and are all of course a part of the trading life cycle.

Last year, the cornerstone fictitious drawdown concept and this blog - with all the corny analogies to sports and movies - were new motivational tools that helped fuel the competitive fire. This year, I added the daily performance scorecard to continue to try to fan the flames. They all worked far beyond my expectations ... for a while.

Yet right now, the fire is dim and I have as much ambition as the driver in the photo to the right.

In a few days, despite a horrendous month for me in terms of earnings growth that will rank the lowest in a few years, our brief month-end check will likely show I'm still on pace for another $1M year (albeit barely) which of course remains my current annual goal. Yet another month of ambivalence and lackluster interest & performance will quickly end any hope of doing what few traders have ever accomplished in terms of back-to-back million dollar performances.

There's no doubt I'm seeing firsthand how difficult it is to sustain the mental fortitude that's required for sustained peak performance over the long run. It's why as I mentioned a few months ago that the top annual CTAs as published by Futures Magazine rarely repeat or do well is successive years. It's also why sports dynasties are so rare and characterized by continued rejuvenation with new players mixed with veterans. Even John Henry has had some recent terrible years.

Someone suggested last night that I'm not doing well this month because I've mentally conditioned myself to believe I usually do poorly in April. And while I can see how that conclusion can easily be drawn, it's not the case at all. It's certainly true that I have particular months where I've done well over the years (March, October, & November), yet data simply is what it is, and subsequent months usually simply reflect a mental "exhaling" that's natural after peak performance. For this is a business where a bulk of one's annual income is often made during a short period of time as was the case in 2008 where about 50% of the income was made over a 3-month stretch. You push when it's there, and back off when it's not. One day can make a month, one month a year, and one year a career. The goal of course remains to profit from every trade and every day, just as the goal of shooting baskets is to make them all. News to newbies ... they don't all go in.

No, the root of the current issue is lack of interest, focus, and motivation as I've fallen into a spell of preserving earnings as I did in late December.

In December of course, slowing down was clearly one of the best decisions I've ever made in my trading career. Time will tell if the same will be true for the last few weeks and whether I somehow find the stamina to complete the 2009 race which I may decide will be my last ... at least from a competitive perspective. I'll always trade for fun and part-time income probably until the day I die.

Right now, life is good. Perhaps too good.

And so perhaps it's best to look to a better writer, as we did on December 19 when we locked up last year's race:

... the race is not to the swift, nor the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned, but time and chance happen to them all. -- Ecclesiastes 9:12

Time will tell how long I'll be blessed with this phase of life's race before it's someone else's turn.

Yet right now, I'm still holding the baton and am not ready to pass it.

Frankly, you'd have to rip it out of my hands ... so perhaps that's a good sign.

Have a great weekend.

24 comments:

FX said...

Maybe it's that time in your life's journey, trading journey to get away from that competitive motivation. I know that you like it and that you achieved with it a lot. But that's it you achieved it, you don't need to do it again. Whole story with getting back from a hole mentality that worked well so far is maybe behind you. How about enjoying in creativity and self expression through trading work. Isn't that enough for you? Can that be motivation for you? Can you also succeed with that in your mind? Isn't that little higher on ladder of emotions that human being can feel? Why not try to get success on that other level and leave kind of struggle path when you don't need it any more.

Just a thought.

Mike said...

Don,
You have an exceptional ability to provide a portal that allows us to share your experiences as one dedicated to top performance as a trader. Perhaps more important is the fact that you share the internal struggle of one who desires to be a top performer in the more important game of life. Following your blog over the past few months has given me inspiration and ideas that have influenced my journey as a trader and as one who struggles with the issues of life as well. Your candid view into the good and bad has been refreshing. I wish you well on your journey. Thank you for helping me on mine.

MHFT said...

Don, if you take your "fictitious drawdown" chart and place "willingness to trade" on the y-axis, it sure sounds like you'll be at about the place the arrow's pointing to. I'm sure you'll be able to get through this stretch, especially if you apply to your life the same technique as you do to your trading.

Wish you all the best in your health challenges too.

Don Miller said...

FX -

Thanks ... good stuff. It's a good question as I've always been rather binary in my approaches to life ... full on and 150% committed or off as I've found the in-between an awkward and typically unproductive place with little accomplished.

Yet I think you may have something there, especially for 2010 and beyond. For this year (and for now) I'll likely maintain the competitive theme until it's fully exhausted itself.

I do know this. 2010 will be different, and likely along the road that you describe.

Don

Don Miller said...

Mike -

Humanity's race is certainly an interesting ride, that's for sure. As has often been said, it's the journey ... not the destination.

Don

Don Miller said...

Thanks MHFT.

bcecil said...

Thanks for sharing some of your deeper personal reflections. As always, very insightful, and thought provoking, for all of our own lives, and decision making processes. For those of us, lucky enough to have found your blog, I"m sure I can express immense gratitude for all that we have learned from you, in this short time you have "gone public" with what you do, both in trading and in your life in general. I selfishly hope you will continue this public discourse of your work and life since it is, beyond a doubt, the best trading advice I have ever had access to in over 30 years learning how to trade. Also thanks for the great story about how you have been able to help develop and guide your daughter into the outstanding individual she is today and congratulations to her, as well, for learning those lessons so completely, choosing to believe in them and living her life to the fullest. Don, If you do decide to "hang 'em up", because of the type of individual you appear to be, I think you will have a very big gap to fill in terms of your emotional, creative instincts and energy levels you possess. Something I'm sure you have, or will, think about a lot. As a suggestion, again somewhat selfish, even if it took a year or more to complete, and lots of it can come right out of the blog history, you could definitely do an excellent book on your current trading knowledge, based on your non-systemic, qualitative probability approach. I have no doubt it would be a best seller and you could make your next million or more from it, and it can be one of your legacy's for your time on the planet for future generations.
Anyway, thanks again for all that I have learned from you, and I sincerely wish for you all best for the rest of this most precious life we all have, whatever decision you come to. We were all so incredibly lucky enough to be born into it, against almost infinite odds of infinite time and space. I truly believe the best thing any human can do with their life is help other humans, which you have done in spades here. Nothing else makes much sense in the long run.
Bob Cecil

Don Miller said...

Wow Bob ... not sure I can respond to that.

One sidebar along the line of being born against "infinite odds" is that I really shouldn't even be here, as my parents were going to have two kids, and their initial second was a devastating still birth.

Yet thankfully they didn't give up ... so I know where some of my tenacity must come from.

Don

James Stollenwerck said...

Don,

On the lighter side, just like fret tapping Eddie Val Halen, you play lead guitar, is all.

And despite virtuoso runs and rifts you both do so well, there’s still structure of the underlying song to consider.

The most basic is each tune is made up of two choruses, a bridge, and a third chorus. I bet after 2008 you’re at the bridge, so don’t worry about it and get ready to go back out front and give those 50,000 ticket paying fans the Arena Sound they came to hear.

Also, each show is more than one song, so it follows there will be periodic bridges as the performance moves from song to song. It’s great there will always be more choruses, to be sure.

Finally, when you’ve risen to the top of the charts, this isn’t the last gig. There are going to be more concerts to be played and it’s only a question of how much you like to be on the road.

Can’t wait until you’re available on iTunes.

Don Miller said...

James -

Wow, Valerie and Eddie back together again, even if just via two blog references on the same day.

I forgot the audience was still in the building ... I guess I'd better not disappoint.

Don

Severino said...

To state the obvious you do have a talent to write and express yourself. If you really are irked by the men (or woman) behind the curtain. (Which is evident throughout)
And I do believe that you do have a strong tie to your faith, you know that you
have an obligation for the rewards bestowed upon you to give back. Which you have.

The problem is, (if there was one) is not to enough people.
I really like what Bob had to say above, and can tell he is also wise. A book
would be a good legacy. If not a book from scratch, maybe one on your recent journey.
That would serve as the meat with a beginning and a conclusion with some condiments thrown in.

If not a book, then I wish you could or someone else would put your 2008 journey
In a PDF form so it could be read with ease. Naturally including the hidden gems in the comments and responses.

Be well,

Sev

Ps You could have a contest to who ever comes up with the best name can sit with
you for 1 day. (Just wishing) I guess with out a lot of thought my suggestion would be.
“Debunking the myth’s and one mans million dollar journey.”

EK said...

Don,

Your heartfelt, bare-all post really gets to me on many levels. I agree with Bob and Sev about a book. If you were to simply put this blog into print, it would end up next to Darvas and Livermore on every trader's bookshelf.

JE said...

Hi, Don,

Since you solicited feedback, a happy Vassar alum (1994) here. Can't say enough good things about my experience there. My brother is also a happy Vassar grad (1999). We were both liberal arts/social sciences students, so I can't speak to the quality/overall experience of Vassar's hard sciences programs. I did have a housemate who majored in Biology. He went on to a good medical school no problem.

I grew up near Poughkeepsie, so I can tell you that Marist is really not even in the same league as the other schools on your daughter's list. The quality of student is totally different (I know that sounds self-serving; I really don't mean for it to come off that way.)

One potential caution about Vassar. The endowment was completely gutted last year. I think over 50% was lost. Hard to say whether or to what extent that will show in the quality of services going forward.

JE

noego said...

Dear Don,

I just encountered your work, your blog, and your journey through the LBR site. It’s riveting, personal, and so pertinent to this endeavor we call trading. I met Linda probably 15 years ago, attending one of her seminars. I too traded once upon a time on the Pacific Stock Exchange.

There’s a great deal I’d enjoy chatting with you about. From passing along some pointers for your daughter’s Ivy League college applications in the fall, (my girlfriend’s daughter just participated in the Ivy League application marathon, and will attend Princeton in the fall). To us just sharing some observations from 23 years of trading. Kindly tell me the best way to contact you if I may. My email is chris@dipseacapital.com.

Regardless of the outcome, I am so appreciative of your openness and altruistic efforts in the sharing of your trading and personal journey.

Best wishes,

Chris Antonio

pkmaui said...

Don,

If i had only been so fortunate to have parents like you & your wife...

Your best writing to date filled with Emotion & Honesty!!

Very refreshing Don and Congradulations:)

pk

pkmaui said...

And I “re-raise & go all-in” to bcecil, severino, and ek:

Write a book…

pamela said...

"Even John Henry has had some recent terrible years."

Except that utterly humilating Yankees-twice in a row this weekend must ease some of the pain as well as firmly planting the Sox as the dominant team in the AL east "also in recent years". Maybe his creative forces found another outlet too.

Problem solved: Buy a baseball team!

nursebee said...

DM, Good for your daughter and your family re: properly managing DM. How is her A1c? That is the key. My wife can't stand a pump.

If your trading is lagging and you have a system that works, I recall a good trader said that one should find what works and lock themselves in a room. While one can certainly blog for oneself, it can just as well be done in a journal. Maybe take a blog hiatus?

Don Miller said...

nursabee -

Yea, I've thought about it, but the blog is essentially my journal and I usually write it after hours, so there shouldn't be any loss of focus from keeping it up.

A vacation from trading for the first time in several years may be more the real debate, which I'm considering.

Definitely agree on the "trading in a locked room" theory though ... and I'm going to have to find a way to overcome recent distractions.

Don

Don Miller said...

pamela -

Yes ... it also seems like the Sox have perfected the "comeback from drawdown" scenario to perfection in recent years ... including this past weekend.

Don

Don Miller said...

On the book suggestions, it's ironic because before 2008, many told me to do just that ... only I thought an ongoing unpublicized reality diary/blog sharing daily blow-by-blows that people would have to literally stumble across would be better and something that's rarely, if ever been done.

There's just something about challenging the status quo, industry information overload, and frankly -- fiction -- that's out there, that gets me pumped.

Maybe down the road, but not now as it's hard to write when you're still swimming in the race ... the paper would get all wet.

Don

Benjamin said...

Hi Don, Having read the article on your inspirational daughter and as a father of two young daughters myself I thought you might be able to start mixing some parenting advice in with the trading advice on the blog. You obviously have some skill in that area as well!
All the best
Benjamin.

Trader Steve said...

Hi Don,

William & Mary feedback...although I can't offer any insights from an academic perspective, I can provide some observations of the area. My wife and have lived in Williamsburg, VA (James City County)for 3+ years. We have always said what a great place/area it would be for a young adult to go to school.

The campus is compactly located in a predominately residential area and within short walking distance to several B & B's, churches, city library, restaurants, small shops and of course Colonial Williamsburg (CW). We see many W&M students jogging through the streets of CW as well as the track team which sounds like and activity Chelsea is interested in.

One tip...you DO NOT need to purchase a ticket in order to walk through the streets of CW. You only need a ticket if you want to experience the events/exhibits. Residents and students can purchase an annual pass for $10 which will provide unlimited access to CW.

Williamsburg is a somewhat quiet town and is within about 1 hour drive to VA Beach or Richmond, 45 min. to Norfolk, 25 min. to Newport News and about 2 1/2 to Wash. DC. The airports at Richmond, Newport News and Norfolk offer non-stop flights to the major northeast cities and there is an Amtrack station near campus.

Cost of living is certainly cheaper than Northern VA and people are generally friendly. Many retirees reside in the area. There are some good biking paths throughout the city/area and of course its a tourist magnet with not only CW, but within 10-15 minutes of town is Busch Gardens, Water Country and various other attractions.

There seems to be many job opportunities for students who might be looking for work during various times of the year.

Hope this info is useful and let me know if any additional information is needed. I'd be happy to assist.

Steve K.
Williamsburg, VA

Don Miller said...

Thanks Steve ... appreciate the insights.

Don