Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

4.1. THE PSYCHOLOGY OF SUCCESS LIES IN TAMING THE EGO

Ironically, one of the biggest causes of failure can be success itself. This may sound strange, but big initial success in the stock market, as defined by achieving a return well into triple-digit percentages, can easily give one a false sense of investment omniscience and omnipotence. However, it is an extremely destructive illusion rooted in the ego. As a trader, your ego is always your enemy, because as Eckhard Tolle wrote, "The ego is always on guard against any kind of perceived diminishment.... It is much more interested in self-preservation than in the truth." Bill O'Neil warned us as we have recorded in our trading diaries that we should "never let the truth become your enemy," and traders who operate within the realm of their egos set themselves up for exactly that.

This inflated sense of all-knowing invincibility was rampant in many investors during the dot-com mania of the late 1990s, and it eventually led to the demise of various colleagues of ours who had made piles of money during the bubble market and had sold out reasonably well near the top. However, some began to believe that it was due entirely to their "brilliance" and that they could make it happen with a wave of their newly found magic investment wand. Thinking that this "Midas touch" of theirs would last forever, many bought "monuments" to their investment genius such as fast cars, second homes, and NetJets memberships. All of this was then reinforced ...