This interview marks the start of Jack Schwager’s third interview book, Stock Market Wizards. The first interview is with Stuart Walton, who trades a hedge fun in San Francisco. His only employee is a part-time secretary. His office sounds like the kind of quiet, relaxed place that I imagine myself trading from one day. He spent a lot of time focusing on how he can be influenced by other people’s opinions even after years of experience. I believe Walton and I are cut from the same cloth in the respect.
Top Five Quotes From Market Wizard Stuart Walton:
“I believe anyone can do this job; I don’t think you have to be born to do it.” – Stuart Walton
I love when successful traders make it a point to say that trading skills can be learned. If trading was a talent that you are born with, we would not have any hope of improving over time and would be better off to just give up now. The fact that many successful traders have discussed that anyone can learn these skills is very inspiring.
While you can learn to trade pretty much any style out there, I do believe that the best way to be successful is to find a trading style that matches well with your personality. Seeing as I prefer to work with firm numbers and systems, discretionary trading did not work well with my personality.
“Sometimes the opportunities are so obvious that you almost can’t lose when they come around; the only problem is that they don’t come around that often. The key is not to lose money in the times in between.” – Stuart Walton
I am still waiting for one of these opportunities. This blends well with looking for those few trends each year that are really strong and staying away from the markets when they aren’t moving.
“Someone who has never made a mistake is dangerous, because mistakes will happen. If you’ve made mistakes, you realize they can recur, and it makes you more careful.” – Stuart Walton
This is an excellent point. To build on it, you also have to be able to admit your mistakes. I have seen many traders blow up because they simply couldn’t imagine the possibility that their research was wrong. The number one most commonly repeated rule for success is to cut your losses. If you can’t admit your mistakes, you won’t be able to cut your losses. You may not even be able to admit that you have losses.
“I think a lot of successful traders are unemotional, hardworking, and disciplined. Ironically, I find myself lacking on each of those counts. I get very emotional; I really don’t work that hard; and I’m not as disciplined as I should be. I would attribute my own success to having both conviction about my gut feelings and the ability to act on them quickly. That is so critical.” – Stuart Walton
I thought it was interesting that Walton points out that he doesn’t have what it takes to be a successful trader. I also struggle with those three things, however I stubble with he things Walton is good at too.
“Either go at it full force or don’t go at it at all. Don’t dabble.” – Stuart Walton
This is a lesson I think could be applied to most of the people I would see at monthly Meetup groups. They would show up once a month, doing no homework between meetings, and wonder why they weren’t successful. This business takes quite a bit of hard work and dedication, it’s not a part time side project or hobby.