the mathematics of persistence

whoodi · Dec 7, 2005

Great post dark horse. This is really common sense but it is the awareness that makes the big difference. I would like to share a quote which gave me a wake up call, it ties in well with this topic.

" Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of educated derelicts. Persistence and determination alone are omnipotent..."

- President Calvin Coolidge
30th president USA

Some one else also said " learning is a process not an event"

I suppose this explains why people who are academically can be so stupid, they lack the ability to connect the dots

oddiduro · Dec 7, 2005

Quote from murdog:

Darkhorse,

Thanks for posting that. While everything in it is common sense, following the principals of it seem to escape many of us. Ego, impatience, and greed often wreck what time and experience are trying to hand to us.

That's a very interesting paragraph. On the outside looking in we can see the genius of Jordan and Buffett. We also would probably agree that both have a high degree of self-confidence, not to be confused with being ego-maniacs. Furthermore, we would also agree that the confidence that both of them have is deserved and productive toward their own desired ends.

However, what is missing from the equation is at what point did their accumulated experiences justify their confidence in their own abilities? Surely, it is a journey and not a single moment of enlightenment.

To make it relevant here, at what point can an investor/trader become aware of the true level of their own awareness? Does it ever happen? Are some bound to forever be overly confident and foolish? Are they prone to always conclude that they have just put in enough new relational facts to finally conquer? I see these people as ones that gain some new fact, and are so high on their own abilities to tie it into something else that they don't realize they are missing so many other parts of the gross relational fact puzzle.

Are some contained by enough self-doubt to frequently miss out on opportunities?

I would think an honest appraisal of one's self, including the obvious facts of success and failure would be enough to tune people in, but looking around it sure seems to me that people keep falling into the same traps over and over again. They are either way too high on themselves, or they languish in the world of self doubt and end up paralyzed.

At what point can you know what you know, and yet have a good enough picture of what you don't know to keep everything in perspective. It's tough to know what you don't know, although not impossible.

Just something to think about.

murdog
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Two words:

Stop

Loss

oddiduro · Dec 7, 2005

Quote from RandomEvents:

Some statements raise some obvious flags:

So if a new born child is put through the exact same regiment as a Michael Jordan, Warren Buffett, or Yo-Yo Ma then they too will possess the same extrodinary skills? I doubt it.

This is a contradiction. If something is autonomous it cannot be altered by an outside force.

This is all fine and dandy, but when will I know that I'm using self-coercion? Is knowing really possible because I'd really like to know so I can catch myself and decide (at will) that from this point on I'm going to use a loving force instead of a devitalizing one.

Ain't gonna happen...
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Self co-ersion is doing the same thing over and over without iterative refinment.

RandomEvents · Dec 7, 2005

Quote from dandxg:

RandomEvents, I can tell you don't believe in NLP, that's fine, but I am living proof it works. I used to work in telecom sales, when the going was good ,but you still had to have skill. I modeled the best in the sales dept and guess what, I made president's club twice. No, believe it or not, I am not trying to toot my own horn, I am just trying to explain that if you model success you can have similar results, not the same, but similar. Right now I am modeling a pro trader of 22 years and getting some mentoring and my trading is improving 1000% in the last couple of months. Why do think prop firms exist?

That post by Darkhorse is one of the best I have ever seen on this forum, the Confucius of Elite Trader, lol, seriously though a great post Darkhorse!
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I do believe that using a systematic approach will yield consistent results (at least for a while). By mimicking what the top sales people do (i.e. call more people, work longer hours, say the same things) you ended up with similar results. This does make sense to me. If that's what NLP is then I believe in it.

What I don't believe is that one can be taught to see things the way that the person you are modeling is seeing things. For example, I know by experience that I don't possess the salesperson mentality, so if I worked in the same telcom sales dept and even made the presidents club by modeling the top sales people, I don't think I would last very long because these activities I find very stressful and will probably conclude at some point that it's not worth it. Whereas the top sales people are probably experiencing enjoyment.

barney_collier · Dec 7, 2005

Unfortunately the role of luck is under-represented in this exposition. Just as it is over-represented in the aphorism

" I'd rather be lucky than smart. "

jts · Dec 8, 2005

Quote from darkhorse:

For anyone with further interest: this book -- a third of the way through now -- is phenomenal.
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Thanks darkhorse I've bought this one - plus several others on similar themes!

dandxg · Dec 9, 2005

Thanks for clarifying your post Random Events, I agree with your last post. At that time I did have the same drive, mentality, as those top sales people, now it has shifted to trading. Trading for a living is something I have wanted to do for 4 years, I quit my job to do my best to be sucessful so back to chart reading I go, lol! Best of trading to everyone.

andrasnm · Dec 10, 2005

This is a very dumb notion. You discount/ignore family money. Given Education (some parents actually pay for their kid's Harvard MBA) and family connections.

Quote from darkhorse:

This guy really nails it (see below).

Critical addition: to get the compounded value of old efforts + new efforts, ongoing growth and observation is required. Seems an obvious point, but many miss it. Going over the same old ground with a closed mind -- like the trader whose seven years of experience are actually just one year, repeated seven times -- doesn't count. (In fact stagnation can kick it at any point; it takes conscious effort to fight entropy.)

http://thinkingapplied.com/persistence_folder/persistence.htm

The Mathematics of Persistence

Lee Humphries

Everyone is born with an empty wallet and no skill. Yet some go on to acquire means and expertise. How likely is that?

Your prospects for a quick financial windfall are not good. Accounting fraudâonce a popular approach to fast cashâhas fallen on hard times as escalating legal costs and prison sentences erode its benefits. Inheritance has never been reliable: There are far fewer wealthy relatives than willing heirs, and the ones that exist have a selfish fixation on their own longevity. Powerball is a sucker's game. Imagine a string stretched from Owatonna, MN to Orlando, FL. A one-inch segment represents your odds of hitting the jackpot; the remainder, your odds of continuing your present lifestyle.

If your chance of instant riches is minuscule, your chance of instant expertise is zero: Nobody acquires skill in a day. Still, for those who persist, the long-term prospects are good. Both money and knowledge can compound over time.

To understand the compounding of money, consider a "five-dollar" experiment. Each week put five bucks in a cookie jar. Once a year, pull out $260 and invest it at 8.5% (a reasonable market return over the long haul). Do this year after year.

You'll need a dozen years to build up your first $5000âthat's quite a whileâbut you'll need only six additional years to accumulate your next $5000. You'll have your third $5000 in another four years, and your fourth $5000 in just three more. In the early stages of compounding, gains are meager. Significant gains don't occur until later. But once they appear, they start to snowball.

How about becoming an expert? Within their areas of competence, experts have many more categories of awareness than novices. The perception of subtleties is what Michael Jordan, Warren Buffett, and Yo-Yo Ma have in common. Not only have experts gathered many "elemental" facts about their field; they have linked them to one another to produce a vast array of "relational" facts.

In simplest terms, a relational fact is the knowledge gained when you combine two elemental facts. To picture this, draw two dots and connect them with a line. The dots represent elemental facts; the line, a relational fact.

Add new dots, connecting each to all the others. With three dots, you'll have three connecting lines. With four dots, six lines. With five dots, ten; etc. Every new dot compounds the number of connecting lines. Likewise, every new piece of information compounds the pool of available relationships.

With a knowledge base of one hundred elemental facts, you have at your disposal about 5000 potential connections. Double your knowledge base and you will increase the potential connections to nearly 20,000. Learn a thousand things and the potential connections approach half a million.

It is these latent relationships that the mind processes in its search for insight. The processing is autonomous and subliminal, but you can encourage it. Each day use your powers of observation and reasoning to learn some new thing about your field. Reflect on its connection to what you already know. Reflection compounds knowledge.

With a sufficient knowledge base, you can start to build a portfolio of noteworthy workâproblems solved, know-how acquired and applied. To the extent that your growing portfolio is valued by others, your income is likely to increase. This, in turn, can accelerate the growth of your financial base.

The power of dollars and of facts is collective, not individual. Before either can generate really large returns they must reach a critical mass. Mass grows as the accumulating returns on your past efforts are enhanced by the on-going contributions of your new effortsâin short, as you persist.

There is no persistence without discipline. But self-coercion is fools' discipline. A devitalizing force at heart, it will eventually burn you out. Far better are the attractive forces of love, desire, and fascination. These are rejuvenating; their objects, energizing. The wise recognize this and harness them to travel to the City of Good Luck.
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ElectricSavant · Dec 10, 2005

thanks for the post

darkhorse · Dec 10, 2005

Quote from andrasnm:

This is a very dumb notion. You discount/ignore family money. Given Education (some parents actually pay for their kid's Harvard MBA) and family connections.
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When assessing an idea / essay / observation, there are at least two motives one can bring to the table.

1) A desire to discredit, i.e. what flaws can I find in this observation. How can I show it to be wrong (or 'dumb').

2) A desire to profit, i.e. what intellectual / emotional / personal gain can I take from this observation, regardless of its flaws.

The first motive is costly over the long run. In seeking to habitually discredit rather than seek benefit, one invariably misses out on profitable insights. Useful connections will often appear one-sided in their presentation; when a connection comes to light, most of the time it only illuminates one specific corner of the bigger picture. Thus no matter how thought provoking an observation is, a motivated discreditor can always find a way to nitpick and say "Well that's clearly stupid / wrong / valueless because you left out X or forget to address Y or glossed over Z," etc.

In contrast, the second motive is hugely profitable over the long run. By seeking to extract value whenever and wherever possible, regardless of how flawed or marred the source, one is able to gain insight from some pretty surprising places.

A fool cannot learn much from a wise man, but a wise man can learn much from a fool. Even the most painful and pointless exchange can sometimes bear fruit if one knows how to harvest it... at the very least the lesson of 'choosing one's battles' is a good one to reinforce... and there are many off-topic lessons worthy of examination, such as those that speak to communication and psychology and the general human condition.

The value-extracting mindset has another hidden benefit: personal satisfaction. I am often tempted to say 'thank you' to those who seek harm, for whatever reason, but actually wind up making me wiser / smarter / stronger instead.

cheers