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Every “guru” advice about the “secret of success” is pure bullsh-t.
Every success in life is an accident.
No, I really mean that.
Penicillin – the first antibiotic that literally changed life expectancy on earth?
“Sir Alexander Fleming, a Scottish researcher, is credited with the discovery of penicillin in 1928. At the time, Fleming was experimenting with the influenza virus in the Laboratory of the Inoculation Department at St. Mary’s Hospital in London.
Often described as a careless lab technician, Fleming returned from a two-week vacation to find that a mold had developed on an accidentally contaminated staphylococcus culture plate. Upon examination of the mold, he noticed that the culture prevented the growth of staphylococci.”
An accident. Steve Jobs was trying to create a tablet computer. Only when he shrunk it down to palm size did he realize that he had a smartphone on his hands which became the best selling product of all time. Steve Jobs did not invent the iPhone. It was an accident of an open mind.
Warren Buffett’s wealth?
“GEICO, for most of its storied history, was considered a high flying expensive growth stock. Buffett occasionally got interested in growth businesses, more so as his career evolved, but Graham was basically allergic to stocks selling for high price to earnings ratios or high price to book ratios.
So it was ironic that Graham ultimately made far more money in this single GEICO investment than all of the other investments he made during the course of his lengthy career… combined. It was also strange that Graham invested nearly 25% of his partner’s capital into GEICO in 1948, acquiring 50% of the growing enterprise for the small sum of just $712,000. This would eventually grow to over $400 million 25 years later!! That is a 500 bagger. To make an understatement: For a guy who made a living hitting base hits, this was a home run.
Around this same time, a young 21-year-old Warren Buffett became interested in GEICO after learning that Graham was chairman of the board. Buffett famously took the train to DC on a cold winter Saturday morning and luckily met Lorimer Davidson, an executive at GEICO who spent 4 hours with this “highly unusual young man”.
Buffett began buying stock the next Monday after being “more excited about GEICO than any other stock in my life”. He put 65% of his small fortune of $20,000 into Geico (the initial seedlings that would grow into his massive fortune). He also tried to sell the stock to every one of his clients and wrote this excellent research report called The Security I Like Best.
So GEICO caused Graham to put 25% of his capital into the business when no other security ever represented more than 5% of his well-diversified portfolio. And it caused a young Buffett to put the majority of his capital into the stock, also violating his mentor and role model’s investment policy.”
So basically the Buffett value approach investment myth is pure bulls-t. He rolled the dice on one great play and it paid off in spades.
My point is that all great ideas in life are bottom up not top down. They are all a result of trial and error process and those of us who are open to the possibilities we never even imagined existed stand a much greater chance of success that those of us who plan every waking moment of our day.
For us as traders, that means that every part of our trading plan is subject to revision. Constantly, adjusting and refining your trading setups is a sign of strength, not weakness.Adapt or die is both the rule of savannah plain and capital markets. Nothing remains constant. That’ why entries, exits, trailing stops are never sacrosanct. Always question and refine your approach and remember that the best ideas will likely be an accident. So never fear to experiment.