The Kirk Report

Posted: 26 Jan 2011 10:46 AM PST

Stairway

This week I discovered this gem of a post called 12 steps to get things done. I’m a sucker for stuff like this, especially those produced from some of the better websites out there. However, I found this list particularly interesting and worthwhile to share as I think the same exact 12 steps outlined there are especially relevant to traders and investors who seek to improve their returns this year.

Here’s is that 12 step list and my own personal take on each…

Step 1. Don’t talk big. Big-talkers are notorious under do-ers, under-achievers and under-performers. They're also pains in the arse.

My View: There are really two types of traders and investors – those who quietly do their job and make money hand over fist in the markets and those who talk about it. It is a rare when you find someone who does both consistently. When you run into people who devote volumes of time and effort to show you how smart they are in the markets, run away. Also, it is true but unfortunate that so many investors and traders (especially the inexperienced and lazy among us) will always gravitate toward those blowhard “know-it-alls” who constantly make big, bold predictions and who are 100% confident in everything they say and do. These are the people really to be avoided at all costs as they are they haven’t figured out how dumb they really are yet and it is only a matter of time before the market shows them.

Step 2. Don't wait for things to work out. Idiots wait for things to work out. Rather than hoping things will happen, make them happen.

My View: The best way to make more money in the market is stop losing it. When a trade or investment goes awry, get out and move on. Only losers average down into losing positions hoping that they’ll break even “eventually.” More money has been lost by investors “trying to break even” sitting in bad investments more than any other thing. Remember, when (not if) you make mistakes, own up to them, take your medicine, and move on. There’s always a better trade just around the corner! Finally, if you’re not happy with your performance, no one is going to do the work for you. It is up to you to do what you need to do right now to reach your goals.

Step 3. Lose the bad attitude. Attitude is a choice. Better attitude equals better decisions, behaviors and outcomes.

My View: You can’t be a winner in the markets or in life if you don’t also have a winning attitude and surround yourself with those who offer the same. It is far too easy when the chips are down and our strategies are out of sync to start beating ourselves up and feel like a worthless moron. That comes with the territory. If it would be easy, everyone would be making loads of the money in the market and we know that isn’t true as most can’t even keep up with the S&P. Remember, trading and investing is not a precise science and a lot more luck is involved than many will tell you. So, in this business, when you fall down, you’ve got to dust yourself off and get back on the horse and, more importantly, keep plugging away. When you start thinking negative thoughts, and we all do, stop them immediately. You can’t consistently win in the markets if you can’t consistently foster and maintain a positive attitude in everything you do.

Step 4. Don't eat crap. Being unhealthy on a physical level means you won't function optimally on any level: mentally, emotionally, professionally or socially. Eat crap and you'll look, feel and function like crap!

My View: If you don’t take care of yourself, whatever you make in the market will be all for vain. It is true, when I exercise more and watch my diet, I not only feel better, I trade better. When I exercise more, my profits go up and there is such a tight correlation between the two that, if you don’t believe it, I double dare you to start tracking it and see what happens. As we all know, the markets can chew you up and spit you out routinely – the only way to be at your best is to be at both your top physical AND mental condition. One without the other is not going to get you where you want to be.

Step 5. Actually care about others. Being a self-centered idiot ain't a recipe for success.

My View: I’ve learned and improved far more by helping other trade and invest than any other thing. While this is a zero sum game, it is no secret that those who serve as mentors to others and help out whenever they can always find greater success in the markets. While trading and investing is a skill game, having loads of good karma on your side can never hurt the bottom line.

Step 6. Don't make life harder than it needs to be. Life's challenging enough without you complicating the simple. Suck it up, Princess.

My View: Trading and investing well is challenging and perseverance and tenancy are requirements if you plan to succeed. Moreover, most make this game far more challenging and complex than it needs to be. Remember, simple always works better than the complex. If you can’t describe why you are buying a stock to a 5-year old, then you need to reexamine your methods. Also, do whatever you can to focus your efforts on becoming an expert of one simple, but effective strategy. Do this and before long you won’t know what to do with all of the profits that flow your way.

Step 7. Do things early in the day. Being productive early puts you in a better place (mentally, emotionally and creatively) for the rest of the day.

My View: There’s a reason why I get up a 5AM every day and go to bed early. I know to be on top of the pack, I’ve got to get up and start the day running. Those traders who fall out of the bed 15 minutes prior to the opening bell are destined to seek short cuts that will sow the seeds of their future failure. Don’t let anyone convince you that you can trade successfully in just 5 minutes a day!

Step 8. Let go of your ill-conceived beliefs. It's time to lose those self-limiting, disempowering beliefs. They've run your life for long enough. You're good enough, talented enough and, yes, you deserve happiness.

My View: Many people don’t believe they have all of the skills and knowledge they need to be successful in the markets. This is simply not true! While much is to be learned and you have to have both skills and knowledge to develop and maintain a strategy that you understand and works for you, it always must start with a level of confidence and belief in yourself above all else. The secret to finding success in the markets rests really only within you and the knowledge and use of all of your strengths and weaknesses to your advantage.

Step 9. Bad things happen and life's not fair – deal with it. More often than not success or failure will be determined by the way you react to the situations, circumstances and events (good and bad, foreseen or not) of your world. Better reactions equal better results.

My View: You can do everything right and still be wrong in the market. This is why risk management and the reaction to wrong decisions is the most important thing. Remember, the market is never wrong. We all make mistakes, some of them really bad ones, but the truly great know how to limit the damage.

Step 10. Don't focus on (or obsess about) things you can't change. Wasting your time, talent and emotional energy on things that are beyond your control is a recipe for frustration, misery and stagnation. Invest your energy in the things you can control.

My View: How many traders and investors spend most of their time arguing with the market and trade their opinions rather than what they see? The answer is that most do and this is why so many struggle. Every day I receive emails from those who try to tell me how the market is corrupt, evil, and stacked against all of us yet I’ve always figured out a way to profit and have helped thousands of others do the same. As much as possible, I don’t waste precious time and energy on trying to control things beyond my control. Instead, I focus on building an edge and trading that edge. That has made all the difference. Finally, stop obsessing about your past success and failures. Learn the lessons you need and move on. Don’t let the past blind you to opportunities right in front of you today!

Step 11. Don't avoid things you fear. Putting your head in the sand just shows the world your arse. And none of us want that. Lasting change begins with awareness and acknowledgment. Step up and do what's necessary.

My View: Fear can be a powerful weapon in the hands of a skilled investor and trader. Not only in identifying and taking advantage of opportunities, but also being able to be aware and acknowledge our own fears so we can utilize those to our own benefit. Many have said that you should not “trade with emotion” but you are human and no matter how hard you try, with money on the line your emotion will be involved as well. The key is to use that emotion in ways that benefit you the most. Understanding yourself and your weaknesses is necessary to outperform over the long haul.

Step 12. Don't over-think things. Analysis paralysis is a painful, pointless and unnecessary condition. To think is good. To obsess is bad. Stop obsessing.

My View: There is indeed a fine line between “doing your homework” to “obsessing.” The key is to make sure your are doing what you need to do and no more than that. Many traders do everything they can to improve their edge and end up developing strategies that are simply impossible to maintain over the long-term. Meanwhile, those who do well, spend lots of time trying to reduce the complexity of their approaches so that the decision-making progress is one that can be both consistent and useful. Remember, more information and more analysis doesn’t mean more profits. There is a fine line between the two that you must discover.

Wednesday, January 26, 2011

The Kirk Report

The Kirk Report

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