Channeling Teddy Ballgame

• Posted by Derek
• on October 22nd, 2009

We often hear the terms discipline, patience, and confidence when discussing what makes a great trader/investor.  Are those traits inherent, or can they be learned?  While the answer probably lies between “born” vs. “bred”, I am a firm believer that the most common learned skill amongst winners is a dedication to their EDGE.  Of all the great speculators I’ve observed over the years, what stands out is their willingness to ignore areas outside of their wheelhouse.

Think about our own StockTwits community…do you see @alphatrends or @annemarie2006 offer opinions on the long-term merits of an idea?  Does @toddsullivan concern himself with Fib ratios and moving averages?  Do forex whizzes @alaidi or @kevinmhughes spend their days offering swing ideas on small-cap stocks?  It’s not that they couldn’t; it’s that they DON’T.  They’ve wisely chosen the path that both interests them and makes them money.

Sure, we all reach on occasion, just like the great baseball hitters.  We all go through stages in our development as speculators, as Bill Luby displays in this outstanding post http://vixandmore.blogspot.com/2009/10/trader-stage-development-model-version.html.  Warren Buffett pursued both technical analysis and Graham-style value investing before Philip Fisher and Charlie Munger influenced him towards buying and holding brands with a moat.  The point is, he found his market niche, honed his methods, and ignored opportunities outside his focus.

What’s wonderful about the art of speculation is that we can look at the body of work left by others living and dead, fundamental and technical, long  and short term, and craft our own style.  The blogosphere and Twitter give us an even more real-time lab to see who performs and who doesn’t.  Just remember that each of the winners has spent countless hours settling into a time frame and style that works for them…we can learn a ton from them while also defining our own EDGE.  Executing that edge is when we become the winners we’ve read about.  As @weeklyTA discusses http://ibankcoin.com/chart_addict/2009/10/22/a-lesson-on-concentration/, it’s the concentrated approach that is most likely to get us to our goals.

Ted Williams, in his book  http://www.amazon.com/Science-Hitting-Ted-Williams/dp/0671621033, discusses how he broke the strike zone into 77 spots, and focused 100% of his efforts on the ones that had proven successful.  Have you reviewed your journals to see what works and what doesn’t?  Chances are you’ll find patterns emerge indicating where your focus should lie.  So follow, trade, post, chat…do everything that furthers your personal evolution in this business.  Just stay aware enough to recognize when your edge is appearing, and swing away…seems to be working for A-Rod these days.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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