Good Day All. This weeks blog is going to be different than what I am usually all about in this blog. I usually try to extole some wisdom gleaned from experience or my own education but this week is brought to you by the bragadocious of some participants in the game of trading. I usually kind of laugh things like this off but in this case I was so taken aback by what I saw that I just had to put it in this weeks blog because I think the concept and the reality are just to hard to pass up on. By now you must be asking yourself, what in tarnation is he talking aboot? No, thats not a typo I am Canadian and although we don’t actually talk like that it is kinda funny to my American friends.

Now, on with the show. Please take a moment to listen to the video below. I think it speaks volumes about the person speaking but I really wanted to add my take on this and compare some other situations to this particular circumstance in the hopes that it will prevent you from falling victim to your own hubris or the hubris of others.

The reason I had to write about this in this week’s blog is that I have seen this movie before. I have heard many guys just like this fellow who thought they were the greatest thing since sliced bread and that they were invincible. It is usually around this time that the market does what it always does and it punishes arrogance and hubris. You see when I first started trading/investing I had a friend of mine who started right around the same time. My friend has taken a pretty small account and almost tripled it in about eight months’ time. If we fast forward six months after that my friend was completely done with trading as he blew up his account and swore off trading/investing forever. Now, this sort of thing happens to a lot of people who delve into the trading realm if they go in with the wrong attitude or a lack of real understanding. You see, my friend thought he was smarter than the market and that there were $100 bills lying around everywhere, you just had to pick them up. Well, I know that stock market trading is not like that for most and there is no such thing as a free lunch from the markets. I have a sneaking suspicion that the gentlemen above will soon learn that as well. You and I may not hear about it but I would be willing to bet that it does happen. I can say this with conviction because of a number of factors. First, is personal experience. Every time I think I have everything all figured out, Mr. Market sends me a new lesson to be learned and I am very certain I am not the only one that experiences this. Second, is the wisdom of my mentors. One of my mentors used to say all the time, the moment you start thinking you are smarter than the market is the moment the market is coming for you!

Finally, is the experience of others. I don’t know if you guys remember but just recently there was an outfit called Optionsellers.com. The guy who ran that firm was quoted and published on several occasions as thinking he had a fool proof system for selling short strangles and for a while he got away with making very highly leveraged investments for his clients but as almost always happens the house of cards crumbled and unfortunately a lot of people lost a lot of money because of the hubris and the complete lack of understanding of what the world of trading is all about.

It would seem to me that anyone, like the guy above, who would call the greatest investor, by record, of this time in history an idiot might be a wee bit over-confident and may not fully understand the realm he currently is playing in.

One more little example of hubris brought to us by hollywood but still very true in nature is the movie Rounders. If you have seen the movie you will see where Mike Mcdermott played by Matt Damon is playing against Teddy KGB and he thinks he can’t lose because he thinks he has the game and in particular the hand all figured out. If you have seen the movie then you know how this ends and if you haven’t seen it I suggest you take a look.

From these examples I hope you are able to see that being too cocky when it comes to the markets or really anything for that matter usually turns out bad. As soon as I saw this video I just knew I needed to share it with the Tackle community in hopes that it will save you from the fall that inevitably comes after pride.

In closing, I want to echo a statement I heard recently from a very wise man that I have tonne of respect for. His words are this … always be bigger than your money. What I think he means is keep you ego in check and you will be doing yourself a favor in the long run. This is especially true in trading. Its ok to celebrate the wins and its equally ok to let go of the losses but make sure that you keep an even keel so that you don’t go overboard and start believing that you are smarter than the markets as I have rarely ever seen that turn out well in the long run.

Happy Trading,

Coach Holmes.