Author Thomas Friedman paints a picture all too real for turbulent times:

“Don’t be fooled by the calm. That’s always the time to change course not when you’re just about to get hit by the typhoon. The way to avoid being caught in such a storm is to identify the confluence of factors and to change course even though right now the sky is blue, the winds are gentle, and the water seems calm…After all look how calm and sunny it is outside.”

That’s not easy to do and when it comes to money and markets it has been even harder for a long time now. Millions of investors screwed up big time in the last decade (i.e. buy and hold).

I am not afraid to say that.

Brokers, TV financial news, banks, and 26-year-old writers fresh out of school, the ones who literally make up the fundamental financial news everyday (“This happened, so it means this nonsense”), have been horrendous for everyone’s portfolio.

Those players have all been a scam, wittingly or unwittingly.

People don’t like that bluntness. They lash out. They bark. They bite. They yell. I have seen it all. They criticize trend following. They criticize my firm. They criticize me.

That is great because it means I am doing my job. Consider a line from a top trader: “When I don’t receive criticism from finance people & empty suits I feel I am doing something wrong.”

Myself, and my firm, could very easily avoid criticism, do nothing, say nothing, and be nothing, but what good is that. Consider why criticism is a good thing in our book:

• Doing anything remotely interesting will bring criticism. Attempting to do anything large-scale and interesting will bring armies of detractors and saboteurs.¹
• Being responsible sometimes means pissing people off.²
• Trying to get everyone to like you is a sign of mediocrity: you will avoid the tough decisions and you will avoid confronting the people who need to be confronted.³
• Going through life with kid gloves on is pointless. The stakes are too high, and it is oftentimes more important to give people what they need, rather than what they want.⁴
• Be criticized for doing small ‘safe’ things, or be criticized for doing big things that we are passionate about. That is the choice. The criticism will come either way.⁵
• History doesn’t remember those who feign neutrality. It’s a gutless cop-out and a shallow attempt to never be wrong. Picking sides, choosing whom you want to be associated with, and sticking with your true beliefs, is what it really comes down to.⁶
• Agreeability is overrated and irrelevant. Ruffling feathers initiates change. It gets people thinking and snaps people out of self-absorption and unhealthy amounts of positivity. Saying what’s accepted isn’t worth saying. Why would it be? It’s already been said.⁷
• Doing anything that others are too afraid to do themselves will draw criticism towards you. It’s their own insecurities and crushed dreams boiling to the surface.⁸
• People of genuine merit are criticized or resented because their talents or achievements elevate them above or distinguish them from their peers. Naysayers aim to bring others down to their level. It is a backwards approach to achievement.⁹
• Disgruntled folks need to release their anger in some way and if you are in the spotlight you’re the perfect some way. Criticism parallels the amount of influence you have.¹⁰
• We aren’t perfect. We will make mistakes and at times we deserve criticism. We are grateful that people are willing to take the time to disagree with us.¹¹

Having laid down the gauntlet of why we do things differently, think about some very important questions that every trader must answer (inspired by Market Wizard trend follower Larry Hite):

• What can I win?
• What can I lose?
• What do I know?
• What don’t I know?
• Why am I making a given decision?
• Who am I? Am I, for example, the guy who needs to make $100,000 this year or my family leaves me?
• Where am I in relation to my goals?
• Where do I need to be to achieve my goals?
• When will I start? Now or tomorrow or next year. Knowing when affects the next step I take.

One of the great things about the market is that it doesn’t give a damn about you. The market doesn’t care what color you are or if you are short or tall or if you live or die. The market doesn’t care whether you play or leave.

Again, that bluntness brings critics. Thoughts like that are too in your face. Are they true? Of course, but the human condition loves to avoid truth (read: pain).

The characteristics and traits that have come to be embedded in the DNA of Wall Street’s entrepreneurial trend following traders are starkly different. Their view of success and how to achieve it is miles apart from conventional wisdom of let’s say the lunatics who want to ban dodge ball.

It is about taking calculated risks in the face of unknown (in other words facing down your ‘fears’). For example, top trend following traders have come to understand that taking a calculated risk is rooted in ‘odds’. What do I mean? Play blackjack in Vegas and if you play right, you have a fighting chance. Play roulette, over time you will continually lose. Period.

There is much to learn from trend following traders who smartly bet the ranch when the odds are in their favor, and walk away when the odds make it clear that they are about to lose their shirt. My firm’s training demystifies what up until now has always been thought of as a game limited to those with God-given talent. Trend following trading rules can be copied and applied by anyone.

However, unlike typical lazy media portrayals, Wall Street trend followers are not magicians, charlatans or necessarily pedigreed investment bankers. They are almost all self-starter entrepreneurs who through concentration, drive, and fierce independent streaks, have cultivated that knowledge to mint money. It takes courage (to ‘bet your left nut’ as they say) and an ability to see things for what they are, not what you want them to be.

The great traders, the trend followers, are motivated by possibility and opportunity unlike the crowds of panicky sheep who often seek out only what is already known and familiar to them, unwilling or unable to leave the herd. They seek options, experiences, choices and paths. They always innovate and they never quit. They know the definitions of a sunk cost (‘costs that have already been incurred and which cannot be recovered to any significant degree’) and an opportunity cost (‘the cost of something in terms of an opportunity forgone and the benefits which could be received from that opportunity’).

Bottom line, every bet (action) we make with our money involves the decision to risk something of value (time, money, emotional involvement) for an uncertain prospect of gain. Placing winning bets over the long run requires constant decisions in the face of innumerable trade-offs (‘Do I buy this stock or that’ ‘Do I sell that car or not’). Most of us falter when we don’t consider the true nature of trade-offs in our choices.

The inability to grasp these simple truths has led to a panicky sheep culture, but it doesn’t have to be that way for your investment account. There are ways out through a trend following education (we are not the only source for that, but we are the most comprehensive/best value).

It has been said, “Let the critics criticize, but it’s the builders who count.”

We agree.

Sources: ^{1,2,3,4,5 and 6,7,8,9,10,11}