Jan

4

Does anyone have any comments or suggestions on breaking through psychological barriers? I have been stuck at a particular equity level now for an extended period and each time I start to break through I get sucked back down. So everyone can thank me for yesterday’s volatility, as I came in long the NASDAQ ran up to my wall, so I then sold at the peak, only to buy back too soon or else too heavily into the decline. I have tried sneaking through this wall with small trades. I have tried jumping through with larger trades. I have tried not even looking at my equity for a while.

I am beginning to feel as I did when I was a little kid and my brother (who is five years my senior) used to play goal line defense against me. I would try to make it over the couch while he pushed me back, but I never could.

Dr. Mark Goulston adds:

I think one of the keys to overcoming psychological barriers is to have a clear and specific a vision (vs. merely the desire) of where you want to get to, that is both compelling and convincing to you over a prolonged period of time. That is usually necessary to generate the requisite commitment (i.e. focus, concentration, persistence and perseverance when you hit walls). Then have a step by step plan for getting there with back up plans for any and every setback you can imagine. Then re-evaluate periodically whether you’re staying with that plan and don’t change it without good reason (especially true for plans you have checked with trusted advisors whose input you listen to).

My personal vision is to develop deep, sustained and mutually rewarding relationship with some of the most respected and powerful people and then influence them in a way to make the world better. Maybe a little idealistic, but I’ve become friends with Warren Bennis from USC and am working on relationships with Jim Sinegal from Costco, Bob Eckert from Mattel, Frances Hesselbein from the leader to leader institute (formerly Peter Drucker Foundation), and Marshall Goldsmith the internationally renowned executive coach, so I think I’m off to a pretty good start. A big help has been my partnering with Keith Ferrazzi, author of best selling book, Never Eat Alone which I urge all of you to buy and read.

Grandmaster Nigel Davies Comments:

I believe the key to psychological barriers in most fields is down to our expectations of ourselves. Kids and adolescents haven’t learned ‘their limits’ so they tend to improve very rapidly. Older folks (20+) have a problem in that they ‘learn their place’. So typically you see acts of self-sabotage by players who are outperforming (see Icarus) whilst those having a bad tournament will fight like tigers to reach their norm.

The feedback one gets from one’s peers can tend to reinforce these feelings. So to improve it’s useful to acquire an excellent peer group for whom success is normal. For this reason I always tried to hang out with the Russians rather than the weak Westerners, and they normally tolerated me because of wanting to improve their English. And I posit that we are in the right place for similar reasons.

But what you may be experiencing may not be this kind of psychological barrier. The problem I’ve found with markets is adjusting to the ‘phase shifts’ when it starts to behave quite differently. A model which suggests that individual striving is the key may be too one dimensional, and perhaps what is required is to dance.

Jim Sogi offers:

The New Year kicked off a new phase shift, or a return to the old. Anecdotally, regular people are starting to get interested again in the new market highs and small cap techs after having stayed away during the steady but slow gains of the last 4 years of worry. Even the hoodoo who lost all his money is getting people at the beach to trade on hot tips. Things that make you go Hmmm.

Different tactics may need to be considered and tested. The issue may not be psychological.

Steve Ellison adds:

In “Secrets of Professional Turf Betting,” Bacon proposed varying tactics through the year based on the improvements of 3-year-olds, variances in weight allowances, effects of mating season, etc. For phase shifts such as the shift from winter to summer tracks, Bacon proposed general methods that could be used at any time, but were particularly useful at times when data was insufficient to evaluate the new regime. One such method was to pick the horse with the highest percentage of races won in the past year. Another was to note which horses had begun working out earliest at a new venue and study their workout times.


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