Who is John Galt?

“Happiness is not to be achieved at the command of emotional whims. Happiness is not the satisfaction of whatever irrational wishes you might blindly attempt to indulge. Happiness is a state of non-contradictory joy—a joy without penalty or guilt, a joy that does not clash with any of your values and does not work for your own destruction, not the joy of escaping from your mind, but of using your mind’s fullest power, not the joy of faking reality, but of achieving values that are real, not the joy of a drunkard, but of a producer. Happiness is possible only to a rational man, the man who desires nothing but rational goals, seeks nothing but rational values and finds his joy in nothing but rational actions. Just as I support my life, neither by robbery nor alms, but by my own effort, so I do not seek to derive my happiness from the injury of the favor of others, but earn it by my own achievement. Just as I do not consider the pleasure of others as the goal of my life, so I do not consider my pleasure as the goal of the lives of others. Just as there are no contradictions in my values and no conflicts among my desires—so there are no victims and no conflicts of interest among rational men, men who do not desire the unearned and do not view one another with a cannibal’s lust, men who neither make sacrifices nor accept them. The symbol of all relationships among such men, the moral symbol of respect for human beings, is the trader. We, who live by values, not by loot are traders, both in manner and spirit. A trader is a man who earns what he gets and does not give or take the undeserved. A trader does not ask to be paid for his failures, nor does he ask to be loved for his flaws. A trader does not squander his body as fodder, or his soul as alms. Just as he does not give his work except in trade for material values, so he does not give the values of his spirit—his love, his friendship, his esteem—except in payment and in trade for human virtue, in payment for his own selfish pleasure, which he receives from men he can respect. The mystic parasites who have, throughout the ages, reviled the trader and held him in contempt, while honoring the beggars and the looters, have known the secret motive of the sneers: a trader is the entity they dread—a man of justice.”

First, watch this 8-minute video:

Many people come through our sites and ask common questions:

“How did you figure this all out?”

Followed by:

“How do I know I can do this?”

And followed by:

“How do I know you can help me to do this?”

Great questions and what follows is an explanation from many different angles and vantages, along with many resources. Let me start with a personal story. I have had the chance to learn from some of the greatest traders of our generation. No hyperbole there, just a fact. However, it did not start that way. It all started while I was in London finishing graduate school in 1994. A book by Anthony Robbins (first published in 1987) convinced me that to break into money-making, I had to get close to the great ones. Sounds easy, but how was I going to do it? One part of Robbins’ book really hit me:

“Consider Steven Spielberg. At the age of thirty-six, he had become the most successful filmmaker in history. He’s already responsible for four of the ten top-grossing films of all time, including E. T., The Extra-Terrestrial, the highest-grossing film ever. How did he reach that point at such a young age? It’s a remarkable story. From the age of twelve or thirteen, Spielberg knew he wanted to be a movie director. His life changed when he took a tour of Universal Studios one afternoon when he was seventeen years old. The tour didn’t quite make it to the sound stages, where all the action was, so Spielberg, knowing his outcome, took action. He snuck off by himself to watch the filming of a real movie. He ended up meeting the head of Universal’s editorial department, who talked with him for an hour and expressed an interest in Spielberg’s films. For most people that’s where the story would have ended. But Spielberg wasn’t like most people. He had personal power. He knew what he wanted. He learned from his first visit, so he changed his approach. The next day, he put on a suit, brought along his father’s briefcase, loaded with only a sandwich and two candy bars, and returned to the lot as if he belonged there. He strode purposefully past the gate guard that day. He found an abandoned trailer and, using some plastic letters, put Steven Spielberg, Director, on the door. Then he went on to spend his summer meeting directors, writers, and editors, lingering at the edges of the world he craved, learning from every conversation, observing and developing more and more sensory acuity about what worked in moviemaking. Finally, at age twenty, after becoming a regular on the lot, Steven showed Universal a modest film he had put together, and he was offered a seven-year contract to direct a TV series. He’d made his dream come true. Did Spielberg follow the Ultimate Success Formula? He sure did. He had the specialized knowledge to know what he wanted. He took action. He had the sensory acuity to know what results he was getting, whether his actions were moving him closer to or farther from his goal. And he had the flexibility to change his behavior to get what he wanted. Virtually every successful person I know of does the same thing. Those who succeed are committed to changing and being flexible until they do create the life that they desire.”

Robbins added:

“Bunker Hunt, the Texas oil billionaire, was asked once if he had any one piece of advice he could give people on how to succeed. He said that success is simple. First, you decide what you want specifically; and second, you decide you’re willing to pay the price to make it happen — and then pay that price. If you don’t take that second step, you’ll never have what you want in the long term. I like to call the people who know what they want and are willing to pay the price to get it “the few who do” versus “the many who talk.”

That Spielberg story was all the motivation I needed in 1994 to go straight to the top dogs — to learn. No starting on the ground floor, etc. I went straight to the great traders (I do share my specific techniques for getting close to top traders in my seminars and some of my start is also here with the Turtle story).

Once our trend following educational business started more and more interesting people appeared. Two who heavily influenced our business in early 2001 were Ed Seykota and Charles Faulkner. While we had successfully taught many for years, while Robbins’ influence was always front and center, Seykota and Faulkner brought ‘Neuro-Linguistic Programming’ even more forcefully into our teaching methods:

“Many commentators refer to the field of Neuro-Linguistic Programming as the Science of Success. The reason for this epithet is that people engaged in Neuro-Linguistic Programming concern themselves with modeling what it is about the ‘leaders’ in every field of human endeavour that sets those leaders apart from everyone else. Why is it that one actor can walk on a stage, stand absolutely still, and yet have an audience transfixed, when another actor can jump around and barely command our attention? What is it about some sports competitors that makes it so impossible for an adversary to beat them? How is it that in a war some people appear to have a sixth sense that enables them to avoid danger? How is it that some detectives can intuit when someone is telling lies? How is it that children respect one teacher and yet misbehave for another? Now, via a range of NLP techniques, everyone has access to a simple set of methodologies by which to derive the answers they need to improve performance in any area of life — both personal and professional.”

How can we do this for clients? Ultimately, the judge has to be our clients and we have had that judge since 1996 across 72 countries. Bottom line, our web sites are filled with client stories, testimonials, endorsements, reviews, videos, descriptions. interviews, books, an 85-minute documentary film and even criticism. Have a question not addressed? Drop us a line!

Resources:

Video: Enroll Yourself in the Genius Factory
Book: The Complete TurtleTrader
Book: Talent Is Overrated
Book: Unlimited Power: The New Science Of Personal Achievement
Book: The Talent Code: Greatness Isn’t Born. It’s Grown. Here’s How.
PDF: Neuro-Linguistic Programming, The Key To Accelerated Learning
PDF: Stress
PDF: Power
Speech: Life Value and the Paradoxes of Risk
Blog: Critics
Blog: Business Principles
Blog: It’s Not How Good You Are, It’s How Good You Want to Be

To the trend following skeptics who have whined up a storm here in the last week, I offer a quotation from Paul Arden:

“Nearly all rich and powerful people are not notably talented, educated, charming, or good-looking. They become rich and powerful by wanting to be rich and powerful. Your vision of where or who you want to be is the greatest asset you have. Without a goal it’s difficult to score.”

I bet there are some people who have arguments why that is not true!

Let me take it a step further with controversial Mark Cuban:

“With every effort, I learned a lot. With every mistake and failure, not only mine, but of those around me, I learned what not to do. I also got to study the success of those I did business with as well. I had more than a healthy dose of fear, and an unlimited amount of hope, and more importantly, no limit on time and effort…The point of all this is that it doesn’t matter how many times you fail. It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and either should you. All you have to do is learn from them and those around you because all that matters in business is that you get it right once. Then everyone can tell you how lucky you are.”

Larry Hite extends:

“Most of the Ivy League guys I know are so used to being ‘right’ they get very uncomfortable dealing with uncertainty – when there is no right answer. Their ego often makes them so afraid of being ‘wrong’, that they’re unable to make good bets. They are not comfortable with the idea of risk, because they don’t know how to assess it or measure it. [They have been] taught to absorb knowledge, not what to do with it.”

And Hite takes brings it home with even more clarity:

“There are just four kinds of bets. There are good bets, bad bets, bets that you win, and bets that you lose. Winning a bad bet can be the most dangerous outcome of all, because a success of that kind can encourage you to take more bad bets in the future. You can also lose a good bet, but if you keep placing good bets, over time, the law of averages will be working for you.”

Lots of fear and confusion in posts recently. I am reminded of some great philosophical standards:

***

A man with one watch knows what time it is; a man with two watches is never quite sure.
– Lee Segall

Begin at the beginning and go on till you come to the end; then stop.
– Lewis Carrol, Alice in Wonderland

There’s more to the truth than just the facts.
– Author Unknown

The obscure we see eventually. The completely obvious, it seems, takes longer.
– Edward R. Murrow

When the student is ready, the master appears.
– Buddhist Proverb

Before enlightenment - chop wood, carry water. After enlightenment - chop wood, carry water.
– Zen Buddhist Proverb

I tell you everything that is really nothing, and nothing of what is everything, do not be fooled by what I am saying. Please listen carefully and try to hear what I am not saying.
– Charles C. Finn

Don’t miss the donut by looking through the hole.
– Author Unknown

You can’t wake a person who is pretending to be asleep.
– Navajo Proverb

Alice came to a fork in the road. “Which road do I take?” she asked.
“Where do you want to go?” responded the Cheshire cat.
“I don’t know,” Alice answered.
“Then,” said the cat, “it doesn’t matter.”
– Lewis Carroll, Alice in Wonderland

If you chase two rabbits, you will not catch either one.
– Russian Proverb

Sometimes the questions are complicated and the answers are simple.
– Dr Seuss

When the pain is great enough, we will let anyone be doctor.
– Mignon McLaughlin, The Neurotic’s Notebook

There’s no earthly way of knowing /
Which direction we are going /
There’s no knowing where we’re rowing /
Or which way the river’s flowing /
Is it raining? /
Is it snowing? /
Is a hurricane a-blowing? /
Not a speck of light is showing /
So the danger must be growing /
Are the fires of hell a-glowing? /
Is the grisly reaper mowing? /
Yes, the danger must be growing /
‘Cause the rowers keep on rowing /
And they’re certainly not showing /
Any signs that they are slowing!

Starting at 1:18:

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}

Great point. Not happening!