Monday, July 02, 2007

Monday Series: Part 1 - The Castanza Problem

The Jerry Seinfeld sitcom often featured George Castanza, a character who was a serial loser by his own admission. George was frequently unemployed for long periods of time and was forced by his poor financial situation to live with his parents whom he found every opportunity to denigrate and demean. Although George tried almost every job imaginable, he always found a way to get fired, often under embarrassing (and hilarious) circumstances. His personal relationships and his professional pursuits were a series of unending blunders. George’s inability to make either personal or professional commitments doomed him to a world of constant conflict between Relationship George and Independent George. As George was fond of saying, "A George divided against himself can not stand”.
George was a comic success because of his personality quirks, but a deeper analysis of his multiple character foibles provides an insightful look into the types of behavior and attitudes that can help traders succeed.
While George frequently acted like the poster boy for deviant behavior, he was merely displaying an over the top version of many of the negative traits that traders must avoid in order to become consistent winners. Failure to be honest with one’s self, lack of training, lack of a professional attitude, lack of self-discipline, lack of patience, lack of focus, poor capitalization, poor planning and/or the inability to formulate and follow a plan are all examples of self-destructive behavior that traders must overcome.
In a particularly watershed episode George experiences a glorious epiphany that everything he has ever done in his life has been wrong and that to rectify his failures and now become successful he must behave exactly opposite to the way he has behaved in the past. George undergoes this realization while in a tavern and immediately approaches to the back of a very attractive, apparently unattached blonde perched at the bar. Completely contrary to his usual attempts at gaming and deception he openly declares, “Hi, my name is George, I’m unemployed and I live with my parents”.
The anticipated result of this encounter is, of course, that the blonde will turn away from George in disgust and disdain. But with an inviting smile she turns to George, extends her hand and says, “Hi, I’m Victoria, it’s so nice to meet you.” It is in this moment of brilliant clarity that George ceases to be divided against himself and presumably later reaps the benefits of his new persona off camera with his new lady friend.
In like manner, a mantra for traders might be, “A trader divided against himself cannot survive”. How can a trader formulate and effectively utilize a unified mindset and attitude that will enable him to emulate George’s awakening and trade with calm, clarity and consistency? The ability to successfully answer this question is fundamental to a trader’s longevity and the shape of his equity curve.
Next Monday.....The Game

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