Alden Cass
Get Over Yourself and Get Out of Your Own Way
To achieve football immortality, the team's coach, Bill Belichick, had to instill rigid discipline in a group of highly paid egos. Consequently, the Patriots have overcome the one pitfall often faced by teams striving for perfection: arrogance. How they did it: Regardless of how impressive their recent stats have been, for each of his superstar players, Coach Belichick spotlights any areas of weakness. No player is immune from this daily scrutiny by the coaching staff. Belichick's philosophy is that there is more to be learned by drilling down on mistakes and holes in performance than by praising his players for their successes. To maintain perfection requires serious introspection, tune-ups and hard work off the field. In active trading or long-term investing, this lesson also holds true. One can never be complacent -- no matter how well (or poorly) you did last quarter
or last week.
Notes From Inside the Action
A couple weeks ago, a seasoned trader came into my office, disoriented, after he took one on the chin earlier that day. He incurred a significant loss when a trade involving a major Dow (DJI Quote - Cramer on DJI - Stock Picks) (DIA Quote - Cramer on DIA - Stock Picks) component blew up in his face. He had put his portfolio at risk because he was unable to recognize important data points that would have impacted his strategy. Consequently, he lost tens of thousands of dollars over the course of the day, along with his winning attitude.
A man who was typically confident with his formula for success was now feeling confused and hopeless because of the way one stock was behaving.
His initial theory about the trade was that he would make some money on an expected uptick. However, it dropped over the next two trading days, propelling him to pull out of the trade with a big loss. He was overwhelmed when he watched the stock go up to his predicted price point on the third day. In essence, he should have perceived the trade as a longer-term opportunity rather than a short-term trade. But his market radar was still a bit foggy after a rough fourth quarter. He was still experiencing a trading hangover.
Three Hangover Remedies
As you attempt to correct your mistakes from last year and make improvements to how you approach the market, here are a few hangover remedies and daily drills to help you remain confident, focused and disciplined in 2008.
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