Chapter Fourteen


No Loyalty

Loyalty is a good trait—in family, friends, and pets, but not in a trader. For a trader, loyalty is a terrible trait. As a trader, loyalty to an opinion or position can be disastrous. The absence of loyalty is flexibility—the ability to completely change your opinion when warranted. It is the trait Michael Marcus points to when asked what makes him different from most traders. As Marcus explains, “I am very open-minded. I am willing to take in information that is difficult to accept emotionally. . . . When a market moves counter to my expectations, I have always been able to say, ‘I had hoped to make a lot of money in this position, but it isn’t working, so I’m getting out.’”

“The Market Was Telling Me I Was Wrong”

In April 2009, in the aftermath of the financial collapse of late 2008 and early 2009, Colm O’Shea was still very pessimistic about the markets and positioned accordingly. “But,” says O’Shea, “the market was telling me I was wrong.” O’Shea described his thought process at the time: “China is turning around, metal prices are turning higher, and the Australian dollar is moving up. What is that telling me? There is a recovery somewhere in the world. . . . So I can’t stick with the-whole-world-is-terrible thesis. What hypothesis would fit the actual developments? Asia actually looks all right now. A scenario that would fit is an Asian-led recovery.” ...

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