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Trade Like General Patton
One of my all time favorite wartime movies is “The Guns of Navarone” which tells a quasi-biographical story of an attempt to sabotage a seemingly impregnable German fortress in Greece that threatens Allied naval ships in the Aegean Sea, and prevents the rescue of 2,000 stranded British troops.
It starts a motley crew of British and American actors, including Gregory Peck, but by far my most favorite actor in that movie is Anthony Quinn who plays Colonel Andrea Stavrou from the defeated Greek army. There is a scene in the movie where the whole team is captured by the Nazis and Quinn begins to grovel obsequiously in front of the German officer. The imperious officer lets down his guard as he pushes away Quinn with disgust, but he lets Quinn get a little too close to him and is instantly stabbed to death.
It’s one of the greatest fight scenes in the movies precisely because it is not heroic. Quinn essentially lets go of his ego and as a result, he saves the whole team and the mission. It shows that in life you win by wile rather than force.
That same idea is also present in another great war movie -- Patton. The film starts with George C Scott playing the famed US general, staring directly into the camera as makes a devastatingly simple proclamation, “No bastard ever won a war by dying for his country. He won it by making some other poor dumb bastard die for his country.”
What does this have to do with trading?
Just about everything.
Both movies are about winning. And their message is that winning is the exact opposite of our romantic view of heroism. Heroes don’t win because they get slaughtered running straight into a stream of bullets. Heroes may be noble, they don’t achieve their goals.
How many times have we played “the hero” with the market? How many times have we tried to sell rallies or buy dips and kept on doing it to the bitter end? How many times have we played Tony Montana taking on bullets (or in our case losses) until we bleed out in the end?
Has that “hero” fantasy ever worked? Maybe once or twice, but in the end you go down bigger and harder than ever. The market always wins because we are never willing to grovel.
Lately, however, I’ve started to let go of the hero mentality. Not only have I started to trade much more with the flow rather than against it, but I have been willing to walk away from bad trades rather that try to “repair” them. The net result is -- yes I do have more stop losses -- but they are basically harmless scratches now rather than life threatening wounds.
To paraphrase General Patton, “No bastard even made money in the market by blowing up his account. He won by making some other dumb bastard blow up his.”