I’m undertaking a 1000-day reinvention project, blogging here daily to track my progress. In Monday Musings, I write freely and wanderingly about some topic that’s on my mind.
Being human, we are our own worst enemy. Everything that goes on in the world and the market conspires to make people buy when things are going well and prices are high and sell when things are going badly and prices are low, and fighting that is the number one theme of… success.
Investor Howard Marks, interviewed by Tim Ferriss
“Emotion is one of the investor’s greatest enemies.” — Howard Marks
“Almost all the great investors I know are unemotional. Unemotionalism is one of the most important criteria for being a successful investor.” — Howard Marks
In my trading, I feel overly happy when I see green and overly sad when I see red. Friday’s continued decline in tech stocks had me feeling very, very sad, and agitated over the weekend.
More important, I attach too much emotion to my past successes and failures, ones from long ago, and ones that played out over years.
Perhaps the greatest skill I might develop through options trading and through my retirement portfolio management is to detach from my emotions — not to eliminate them, but to allow them to come and go, like the weather.
I want to execute on my trading plans not out of emotion, but based on systematic rules. I want to wake up to a bad down day like Friday and say to myself, who knows what’s good or bad?
A Tarot card for trading equanimity
I drew the Two of Swords card over the weekend in a reading around trading. I was feeling emotionally bad after Friday’s down day in the markets, especially as I had overloaded on tech in an episode of revenge trading.
Some Tarot interpreters read the Two of Swords card negatively, as confusion in making difficult choices, as indifference or detachment, as avoidance.
In Seventy-Eight Degrees of Wisdom, Rachel Pollack describes this card as one of setting up an emotional fence:
One method of handling problems or opposition is to push everything away beyond an emotional fence. If we let nothing approach us, then nothing can hurt us. In contrast to the Eight, the blindfold here shows not confusion, but a deliberate closing of the eyes. The figure has tied it on herself so that she will not have to choose between friend and enemy, for such choice becomes the first step in once again involving herself with other people. The swords remain ready to strike anyone who tries to come close. They represent anger and fear creating a precarious balance; the one wants to strike out, the other wants to hide, and so the person remains tensed between them.
In relationships, people are expected to be emotionally open; this is what Pollack seems to encourage (and does as she continues her interpretation of the card). But being open emotionally is not always helpful. Maybe it’s not helpful to be open in a relationship where the other person wants to harm you, for example.
In the context of trading, this card starts to look like something positive. I read her blindfold as reminding her she cannot predict the future. She doesn’t know whether the stock market or any particular ticker is going to go up or down in the next days, weeks, months or years. The swords act to protect her from euphoric or despairing feelings being expressed by market participants. But her slightly open legs and feet pointed outwards suggest an openness to what might come.
The moon above her channels intuition. The rippling water behind her suggests movement but not crashing waves or a storm. Her white gown is serviceable and practical, not luxurious but also not too spare.
This is the card I have leaning against my monitor as I move into the trading week.