As you'd expect in a Colbert segment, there is lot's of 'truthiness' mixed in with the humor.
For example:
Some say all this computer trading is dangerous, but I say it's actually safer. Because if the stock market ever crashes again, instead of brokers jumping out of windows in a panic they'll simply turn on their computer and see the soothing message, 'error 404, economy not found.' What's the worst that could happen?
Doing the same things, the same ways, has predictable results. Sometimes it is important to do things differently.
Here is a photo of me at the National Society of Black Engineers' Professional Development Conference, where I had the opportunity to present and participate in several panel discussions.
I'm neither black, nor an engineer, and they aren't traders; so why would they ask me to present… and why would I say yes?
Value is often added at the edges. Likewise, good things often happen when you travel outside your comfort or habit zone.
I gained a lot from the experience. For example, I had a discussion with the nuclear physicist who talked about how they use computer simulations to model the effects of a nuclear explosion. That gave me great ideas about how to measure the effect of a particular trading system or algorithm on a market.
Luck does favor the prepared. That conversation could just as easily have been me simply saying 'hello,' shaking hands, and moving on to the next person. To some extent, the ability to take advantage of opportunities comes from the intent to find them.
Is Luck Something That You Can Maximize, Or Would You Consider It Random?
It's possible that luck is both random and something you can maximize.
Here is an example. Many people consider the stock market to be random. Nonetheless, there
are groups of people who consistently beat the market and trade
profitably. How is that possible?
To explain, let's examine the
decision to purchase Apple Computer stock. Regardless of whether that
decision was based on gut instinct, fundamental analysis,
or a technical chart pattern … whether price moves up or down the
moment after that purchase is for the most part random.
However, if you
make 10,000 trades over time, then your ability to make and keep money is about how you manage risk and opportunity. At that point, your
system is not necessarily random. Consequently, it is something that you can
improve.
Transform Results By Getting Un-Stuck.
Improvement means getting better and different results. And, as you already know, it doesn't make sense to continue to do the same thing, yet to expect different results. So, a key skill is learning to recognize when things are "stuck" in rut.
The trouble with many "ruts" is that you don't know you're in one, while you're in one. Consequently, it often takes a different perspective to become aware of new possibilities, opportunities, or best next steps.
Implications.
The interesting thing that this implies is that those opportunities were always there … they just weren't there for you in your current state of awareness.
Similarly, recognize that many of the processes that we rely-on limit our "luck" or opportunities precisely because they limit our choices. When this is done consciously it can be helpful. However, when it's an unconscious act, it can be dangerous.
In general, you can categorize many tools as either being multipliers or diminishers. Neither one is good or bad in and of itself. The trick is to recognize that you have a choice, and that not choosing is still a choice.
Do
you want sprouts with that? A former McDonald's boss would like to welcome
you to his new restaurant. No butter, cream, white flour, or additives. (Wired)
In addition, he has a popular interview series where he talks with great traders and about a wide range of topics. We are honored that he chose to interview our portfolio manager, David Stendahl. Here is a link to the Interview.
The interview is simple enough for a novice, but nuanced enough for advanced traders. Some of the topics include:
Stendahl's world is 100% systematic, and he has been involved in conceptualizing and thinking up systematic approaches to trading the market for decades. But what is a system? Stendahl's explanation may surprise you.
Stendahl's approach is that a system should have as few moving parts as possible; it should be simple enough to be explained on the back of a cocktail napkin.
Stendahl explains that your system doesn't have to be complex to work. Sometimes the best system can be only four lines of code.
Covel and Stendahl make an analogy to cars, and how you can easily fix a simpler car in your garage as opposed to a complex Lexus.
Stendahl explains that everyone is using a system in one way or another: every time you make a decision to buy or liquidate, whether it's based on a real system or based on advice from someone on the television, it's systematic in some regard.
If you can talk it, you should be able to quantify it. If you can't quantify it, it might not really be there.
Find out how Stendahl's dyslexia played a role in his technical trading, and how he turned this disadvantage into an advantage.
Covel and Stendahl discuss Ray Dalio of Bridgewater, who says that he is 100% systematic, but doesn't use any technical information.
Covel and Stendahl also discuss position sizing and money management, and how you can approach this systematically.
There is a lot of good stuff in the interview. Hope you enjoy it.
While talking with traders, one of the topics that keeps coming up is how much the markets and trading have changed recently.
One
of the primary catalysts to such change has been the amount and
frequency of government intervention and stimulus. Another big driver of
change has been the massive shift to algorithmic or program trading.
Recently, the piece of this getting the most press and attention
is high-frequency trading.
Below is an interesting video where Mark Cuban, Dallas Mavericks
owner and high-profile entrepreneur, shares some thoughts about why high-frequency trading
terrifies him.
Here is the video. The market related comments start about 30 seconds into the clip.
Some people may watch that video and assume that
high-frequency trading is a bad thing, or something to be regulated and minimized. However, there is another side to the argument.
Let me digress for a moment. If I talked to an entrepreneur, and asked them what the biggest constraint on their business was … some might say it's the Obama administration and their policies. This is absurd, because they don't have any control (or at least meaningful control) of that supposed constraint. Instead, that is simply a "reality" of the current competitive environment for them and others.
What that means is the thing they control is how they respond to that competitive environment. For some, what they perceive limits their options or thwarts their strategies. For others, it is a catalyst for new action, new strategies, and new ways to win.
So, why is Cuban afraid of high-frequency trading? First, he believes we are likely to see another "flash crash". Second, an increasing percentage of market action is a result of algorithms trying to outsmart algorithms (and he recognizes that the decisions they are making happen faster than humans can respond to our comprehend). As a result, human intervention isn't the answer because any actions would occur too late.
Some people recognize the advantage algorithmic traders are gaining and seek to weaken it (or at least slow it down), while others pull their money out of the market because of their disadvantage and the new risk. Contrast that with those that see the advantage and try to figure out how to extend it or get some of it for themselves.
It's like most things in life, it's not as much about what happens, it's about what you do.
Energy flows where
focus goes … and questions are a great way to direct focus.
Planning is one
thing, “real life” is another.So, how do
you give stakeholders a clear picture of what’s happening, the relevant business
terrain, and the best path for them to navigate given their daily challenges
and objectives?
15Five is a
management tool that can help with those issues.It consists of a few simple questions that
each of your direct reports has an opportunity to fill out each week.
The name, “15Five”, comes
from the concept that it should take someone 15 minutes to think about and fill
out their answers to these questions; while it should take you about five
minutes (per person) to review those answers and give feedback. These responses
can be public or private, as you see fit.
The good news is that
15Five is simple and usable.You’ve
probably heard the phrase “Garbage in, garbage out.”More importantly, though, “Nothing in,
nothing out.”If people don’t use a
tool, it is tough to benefit from it, regardless of how “good” it is.
So, How Did Our Team Respond to This New
Tool?
Predictably, after a
week or two of using it, several members of the team approached me to ask how
long they'd have to do this. However, just a few weeks later, some of those
same people shared how much they're enjoying the process.
Ultimately, they
recognize that it's helping them raise their focus from the immediate to a
chunk higher. They also recognize that it's a chance to have a one-on-one
conversation with their boss about what they want to talk about … without
taking time away from their work or interrupting their focus time.
The 15Five process
also gives respondents a chance to think about and prepare worthy answers
(rather than to feel tongue-tied or regretful that they failed to mention
something when they had the chance).The
result is something they are likely to be proud of – and something to build
upon.
For the manager, it
is a chance to give individual attention to each respondent. It also provides
an easy way to comment (or ask for additional information) about specific
ideas. Just click a button and write your note. The other party gets an email
that they can respond to directly, or they can see it in the conversation
thread for that week’s report.
Where Is Value Added?
15Five helps people
think about the business (rather than simply working through their daily grind).
It helps them recognize why what they are doing matters, and how what they are
doing helps move things in the right direction. As a result, using the tool builds confidence and momentum. Ultimately,
15Five helps people steer themselves to take appropriate actions and make
better decisions.
As a trader, I
understand that price is the primary indicator of the market. However, to get a
better understanding, many traders use secondary indicators (like sentiment,
momentum, rate of change, or even the response to good or bad news). Beyond a direct communication tool, these are
the types of insights that the 15Five feedback mechanism makes possible.
For example, don't
just look at one week's set of responses in a vacuum. Instead, notice the tone
and the amount of care that someone uses when they send you their information.
Coachable Moments.
Here is another
example.If someone typically writes
three or four sentences to respond to a particular question, but this week they
only responded with three words, that might be an important thing to pay
attention to and note.
Sometimes a
non-answer is important. Last week one of the questions was “What
challenges are you facing? How are you going to fix it, and where do you need
help?”Someone answered that
they were not facing any new challenges that week. Great, right?Or, is that really an opportunity for
coaching?
In that situation, my
response was: “There are always challenges. Sometimes they are easy to spot
because they clearly present themselves as problems.Other times they can show up as opportunities
or choices … Sometimes, however, they are harder to identify because they could
stem from something as subtle as conflicting desires. Remember that the goal of the question to look above the
day-to-day activities to focus on your higher level intent and purpose.”
The point is that 15Five
gives you great opportunities to add value – and the time to notice coachable
moments. Here are some examples:
Is
somebody telling you what they “don't
want” rather than what they
intend to do?
Are
they so focused on the obstacles and challenge that they forget to recognize the opportunity or potential
competitive advantage?
Are
there opportunities to include other
people to create a unique ability team rather than a solo effort?
Are
there things that you can express
gratitude about or help the other person to feel proud about?
Are
they focused on the forest for the trees? If so, what is a quick compass check to ensure that we are moving in the
right direction?
Are
they focused on the right part of the problem; and have they right-sized it into chunks small enough to work on
effectively?
What does this
accomplishment make possible? And
how can we continue to build confidence and momentum?
From my perspective, the
thought process and preparation may be more important than the answers
themselves.
So, Is It Worth Paying For?
15Five helps avoid
communication problems by creating and preserving appropriate context for
decision-making.In addition, it is a
tool you can use to effectively direct focus and “steer” the company.
It is also worth
noting that 15Five feels like a separate tool. Because of that, I suspect people respond differently to it than they would
to a simple email or a discussion thread on the corporation’s private intranet.
Ultimately, this
process is something that people like better and gain more value from as they
do it more and do it better.
Energy flows where
focus goes … and questions are a great way to direct focus.
Planning is one
thing, “real life” is another.So, how do
you give stakeholders a clear picture of what’s happening, the relevant business
terrain, and the best path for them to navigate given their daily challenges
and objectives?
15Five is a
management tool that can help with those issues.It consists of a few simple questions that
each of your direct reports has an opportunity to fill out each week.
The name, “15Five”, comes
from the concept that it should take someone 15 minutes to think about and fill
out their answers to these questions; while it should take you about five
minutes (per person) to review those answers and give feedback. These responses
can be public or private, as you see fit.
The good news is that
15Five is simple and usable.You’ve
probably heard the phrase “Garbage in, garbage out.”More importantly, though, “Nothing in,
nothing out.”If people don’t use a
tool, it is tough to benefit from it, regardless of how “good” it is.
So, How Did Our Team Respond to This New
Tool?
Predictably, after a
week or two of using it, several members of the team approached me to ask how
long they'd have to do this. However, just a few weeks later, some of those
same people shared how much they're enjoying the process.
Ultimately, they
recognize that it's helping them raise their focus from the immediate to a
chunk higher. They also recognize that it's a chance to have a one-on-one
conversation with their boss about what they want to talk about … without
taking time away from their work or interrupting their focus time.
The 15Five process
also gives respondents a chance to think about and prepare worthy answers
(rather than to feel tongue-tied or regretful that they failed to mention
something when they had the chance).The
result is something they are likely to be proud of – and something to build
upon.
For the manager, it
is a chance to give individual attention to each respondent. It also provides
an easy way to comment (or ask for additional information) about specific
ideas. Just click a button and write your note. The other party gets an email
that they can respond to directly, or they can see it in the conversation
thread for that week’s report.
Where Is Value Added?
15Five helps people
think about the business (rather than simply working through their daily grind).
It helps them recognize why what they are doing matters, and how what they are
doing helps move things in the right direction. As a result, using the tool builds confidence and momentum. Ultimately,
15Five helps people steer themselves to take appropriate actions and make
better decisions.
As a trader, I
understand that price is the primary indicator of the market. However, to get a
better understanding, many traders use secondary indicators (like sentiment,
momentum, rate of change, or even the response to good or bad news). Beyond a direct communication tool, these are
the types of insights that the 15Five feedback mechanism makes possible.
For example, don't
just look at one week's set of responses in a vacuum. Instead, notice the tone
and the amount of care that someone uses when they send you their information.
Here is another
example.If someone typically writes
three or four sentences to respond to a particular question, but this week they
only responded with three words, that might be an important thing to pay
attention to and note.
Sometimes a
non-answer is important. Last week one of the questions was “What
challenges are you facing? How are you going to fix it, and where do you need
help?”Someone answered that
they were not facing any new challenges that week. Great, right?Or, is that really an opportunity for
coaching?
In that situation, my
response was: “There are always challenges. Sometimes they are easy to spot
because they clearly present themselves as problems.Other times they can show up as opportunities
or choices … Sometimes, however, they are harder to identify because they could
stem from something as subtle as conflicting desires. Remember that the goal of the question to look above the
day-to-day activities to focus on your higher level intent and purpose.”
The point is that 15Five
gives you great opportunities to add value – and the time to notice coachable
moments. Here are some examples:
Is
somebody telling you what they “don't
want” rather than what they
intend to do?
Are
they so focused on the obstacles and challenge that they forget to recognize the opportunity or potential
competitive advantage?
Are
there opportunities to include other
people to create a unique ability team rather than a solo effort?
Are
there things that you can express
gratitude about or help the other person to feel proud about?
Are
they focused on the forest for the trees? If so, what is a quick compass check to ensure that we are moving in the
right direction?
Are
they focused on the right part of the problem; and have they right-sized it into chunks small enough to work on
effectively?
What does this
accomplishment make possible? And
how can we continue to build confidence and momentum?
From my perspective, the
thought process and preparation may be more important than the answers
themselves.
So, Is It Worth Paying For?
15Five helps avoid
communication problems by creating and preserving appropriate context for
decision-making.In addition, it is a
tool you can use to effectively direct focus and “steer” the company.
It is also worth
noting that 15Five feels like a separate tool. Because of that, I suspect people respond differently to it than they would
to a simple email or a discussion thread on the corporation’s private intranet.
Ultimately, this
process is something that people like better and gain more value from as they
do it more and do it better.
Bottom Line: It
clearly adds value. Give it a try.
Imagine being a performing artist who has a song what's on the top of the charts. Now imagine how much time and effort you put in to getting that song "just perfect." The perfect phrasing; when to breathe just a little bit deeper in order to hit that note; the gestures and dance steps to make it even that much more special …
Now imagine the other side of artistry … The fact that it's "perfect" means that it's no longer challenging. How do you convey something special if it's no longer special to you?
It's just as true for business person is it is for a performing artist; there's always something new — and there is always a possibility of something more.
Below is a music video put together by the artist called Gotye. You probably know him from his “Somebody That I Used To Know” video, which has now been played more than 300 million times.
The version below isn't the music video that made him famous. Instead, he put this video together solely from clips that he found on the Internet of people either imitating, innovating, or parodying his original work of art.
Watch Gotye's "Somebodies" … In some ways, it may be better than the original.
What a great reminder that you can always find "just a little bit more" if you're committed to searching for it hard enough.
Have you ever seen a funny photo that was captured just before a "something bad" happens? The tag-line is usually something like … "This isn't going to end well". Here's an example.
The photo is funny unless you're the guy about need a dentist.
In related news, a giant debt clock was featured at the Republican Convention. Why? To capture the moment our national debt crosses the $16 Trillion dollar level.
To give you some context for this issue, here is an interactive U.S. Debt Clock.
Click the picture and you'll see a version that updates in real-time. There are a number of very cool features and facts (including a "time machine" to rewind the clock to a prior date, so you can compare what happened since then).
