Speculating in Life and Markets

Trading and life are both unavoidably speculative ventures. The future is always unknown and every choice is made in uncertainty. It stands to reason that dealing with life and with trading and investing should be very similar. Yet it often doesn’t work out that way. As Josh Brown wrote in Nine Financiers, “…The life of a professional speculator is an unpleasant one, filled with highs and lows but ultimately unsatisfying and, in all probability, mentally ruinous…” It’s not a very alluring sales pitch. But even though life beyond the market can be quite brutal as well, relatively few people view it in similarly stark terms. Are people overlooking the difficulty in life, or focusing on the wrong things in trading?

The most likely answer is both. Perceptions, and the resulting emotions, make all the difference in the quality of experience. Humans have an inherent optimistic bias in life. Evolution favors those that keep trying despite the facts in order that a few may get lucky. That bias can get derailed in trading and investing because the market is in some sense designed to prey upon our inherited decision-making heuristics. But that doesn’t mean it should be an inherently intolerable place. Life can be made as hectic as any trading day, or trades can come as rarely as you wish. Responsibility can mean burden and blame, or the freedom of controlling your own destiny. A loss can be a mortal wound to your inner self, or simply the act of buying an admission ticket. Money can be the focus of your life, or just the means to enhance it.

People bring the same basket of personal qualities to all of life. Troubled trading means a troubled life; a troubled life means troubled trading. They are both a reflection of you. At the most fundamental level, markets of all kinds exist to facilitate getting people what they want. If that’s not happening, the solution to your troubles is most likely to be found by looking in the mirror.

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4 thoughts on “Speculating in Life and Markets

  1. Pingback: Wednesday links: troubled trading | Abnormal Returns

    • Thanks for the link. A lot of the moralistic tales seem to take leave of the truth for a better story. I think Livermore remains a sad, and instructive, case since few people would imagine they’d kill themselves with $82 million in 2012 dollars in the bank.

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