I heard someone the other day say the "wrong route be easy" whereas the "right path will be hard." I challenged them to defend this principle!!! This is an annoying empty platitude. Both in markets and in life.

If you want to be a poet, please recite the rhyme of the ancient mariner instead. If you want to be an ascetic, please get your philosophy correct. If you want to be a trader, recognize that pain means you were WRONG.

On what basis do you argue that "on the wrong road, you find success and happiness initially but in the end you lose; whereas on the right path, you suffer but eventually win."

By this standard, if you allow me to hold your head underwater for the next 2 hours, it's a winning "position".


Perhaps I should go back into my brain hibernation — from which you awakened me 50 hours ago!!!

Leo Jia writes:

Thanks for the wonderful argument, Rocky.

On a single trade, I am totally with you in that one should quickly recognize and correct mistakes. But on an entire trading career, this is generally not the case. I don't know how you learned to trade, but along my experience, which I believe is also quite similar for many successful traders, there have been a lot of difficulties. Should I or those many others have better quit early along the way? One simple example that perhaps best reflects this in life is on choosing careers. The easy (and likely the wrong) route is to get employed. The hard (and likely the right) route is to start one's own venture.

Stefan Jovanovich adds: 

I am the 3rd generation of Jovanovich to subscribe to the belief that "good business happens quickly". Depending on how you would include joint ventures/partnerships in the count, Eddy's Mom and I have started between 8 and 12 businesses and run them until they were either sold, shut down or the Peter principle applied to our management skills. In every one the test was the same: you made money within a matter of a few months or you never made it at all. These rules do not apply to venture capital or any other start-up where the loss of the money invested would make no difference to the lives of the investors. They apply absolutely to the opening of noodle stands ("broth runs deep in our veins, son") and other enterprises that start from scratch without any scratch.

The other rule is that sick businesses cannot be cured or "turned around"; they can be liquidated, as Secretary Mellon advised; but they cannot be saved as enterprises once the rot has set in.





Speak your mind

4 Comments so far

  1. Bastiaan Agtereek on April 29, 2013 2:22 pm

    First Mr Humbert and Jia, i underwrite what i assume what both of you mean. But its what Mr Jia in the last sentence means about employement and your own business.

    Now i can check all the best traders or the bosses of these traders, which are nearly all hedgefundmanagers. Lets not and pick the best of the best yes, Mr Buffett and Mr Soros (i believe Mr Slim is doing quite well also). Both are looked upon and ‘we’have the romantic idea that they traded with a couple of Thousand dollars, with brokers taking positions against them, if the markets are not difficult enough to begin with. We all know they are insiders and worked for app. 10 years on different jobs in the industry. Both began there trading or funds with inflation adjusted maybe or at least 10 million dollars, so they could spread there risk, and try different techniques. Sorry i have a dog who must go out…but in short this is what i wanted to say. maybe come back on the subject later

  2. SillyWilly Wonder Why on April 29, 2013 5:05 pm

    I would say this is more of an aesthetic rule of ethics that is hard to verbalize with the certainty of science. Also I would make a small but important point in what you said:

    wrong route be easy” whereas the “right path will be hard”

    What you said is binary. A way of thinking that wants to simplify the world and compartmentalize people so we can make better predictions on human behavior. It isn’t that simple, like what Aristotle says about ethics, we don’t have the same certainty in this area as others. It might be better to say that when it comes to ethics this be so:

    often the wrong route be easy” whereas often the “right path will be hard”

    I would say it applies more to the ethical realm and not the scientific. Science is about utility, the path of least resistance. In ethics, if something doesn’t seem to agree with what we feel to be right, should one resist? I guess this is the question.

    You said:

    By this standard, if you allow me to hold your head underwater for the next 2 hours, it’s a winning “position”.

    This seems to be an argument of extremes. A straw man.

  3. Ed on April 29, 2013 10:22 pm

    Building on what appears to be easy or natural also has the benefit of helping one to find a natural talent or competitive advantage. So perhaps, “work hardest at what comes easy” might be a useful cliche?

  4. Bastiaan Agtereek on April 30, 2013 3:22 am

    Further on: if you compare trading with playing soccer. In Bubbles i assume you think earlier about or anticipate about Quantum or the Family Fund than for instance Berkshire, thats probably right and also what we were conditioned too (press,13F etc)But it is also known that Mr Soros hires(ed) traders to look how they traded and after a couple of years they were fired or they were enthusiastic enough to try it on there own. One can think they were replaced with even better traders (or talented).Now Messi is the best, but maybe even better if he played with Bayern, who knows. Also the team is important. What i hear is that traders are sometimes pushed to take even bigger bets, while the other way around they get fired or become rogue traders. Better be right. If one reads what Mr Soros has done on investing and trading, than the markets are not about ethics or science.


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