Technical trading
Technical analysis is a way to trade stocks. There are different ways to trade. You get your way that match your personality.
This is a killer talk I came across from Hedge Fund manager Mark Sellers, speaking to some Harvard MBA kids on what it takes to make it in markets. Regardless of whether you consider yourself a trader or investor, Mark’s “seven traits” apply.
Enjoy…
First of all, I want to thank Daniel Goldberg for asking me to be here today and all of you for actually showing up. I haven’t been to Boston in a while but I did live here for a short time in 1991 & 1992 when I attended Berklee School of Music.
I was studying to be a jazz piano player but dropped out after a couple semesters to move to Los Angeles and join a band. I was so broke when I lived here that I didn’t take advantage of all the things there are to do in Boston, and I didn’t have a car to explore New England. I mostly spent 10-12 hours a day holed up in a practice room playing the piano. So whenever I come back to visit Boston, it’s like a new city to me.
One thing I will tell you right off the bat: I’m not here to teach you how to be a great investor. On the contrary, I’m here to tell you why very few of you can ever hope to achieve this status.
If you spend enough time studying investors like Charlie Munger, Warren Buffett, Bruce Berkowitz, Bill Miller, Eddie Lampert, Bill Ackman, and people who have been similarly successful in the investment world, you will understand what I mean.
I know that everyone in this room is exceedingly intelligent and you’ve all worked hard to get where you are. You are the brightest of the bright. And yet, there’s one thing you should remember if you remember nothing else from my talk: You have almost no chance of being a great investor.
You have a really, really low probability, like 2% or less. And I’m adjusting for the fact that you all have high IQs and are hard workers and will have an MBA from one of the top business schools in the country soon. If this audience was just a random sample of the population at large, the likelihood of anyone here becoming a great investor later on would be even less, like 1/50th of 1% or something.
You all have a lot of advantages over Joe Investor, and yet you have almost no chance of standing out from the crowd over a long period of time.
And the reason is that it doesn’t much matter what your IQ is, or how many books or magazines or newspapers you have read, or how much experience you have, or will have later in your career. These are things that many people have and yet almost none of them end up compounding at 20% or 25% over their careers.
I know this is a controversial thing to say and I don’t want to offend anyone in the audience. I’m not pointing out anyone specifically and saying that you have almost no chance to be great. There are probably one or two people in this room who will end up compounding money at 20% for their career, but it’s hard to tell in advance who those will be without knowing each of you personally.
On the bright side, although most of you will not be able to compound money at 20% for your entire career, a lot of you will turn out to be good, above average investors because you are a skewed sample, the Harvard MBAs. A person can learn to be an above-average investor. You can learn to do well enough, if you’re smart and hardworking and educated, to keep a good, high-paying job in the investment business for your entire career.
You can make millions without being a great investor. You can learn to outperform the averages by a couple points a year through hard work and an above average IQ and a lot of study. So there is no reason to be discouraged by what I’m saying today. You can have a really successful, lucrative career even if you’re not the next Warren Buffett.
But you can’t compound money at 20% forever unless you have that hard-wired into your brain from the age of 10 or 11 or 12.
I’m not sure if it’s nature or nurture, but by the time you’re a teenager, if you don’t already have it, you can’t get it. By the time your brain is developed, you either have the ability to run circles around other investors or you don’t.
Going to Harvard won’t change that and reading every book ever written on investing won’t either. Neither will years of experience. All of these things are necessary if you want to become a great investor, but in and of themselves aren’t enough because all of them can be duplicated by competitors.
As an analogy, think about competitive strategy in the corporate world. I’m sure all of you have had, or will have, a strategy course while you’re here. Maybe you’ll study Michael Porter’s research and his books, which is what I did on my own before I entered business school. I learned a lot from reading his books and still use it all the time when analyzing companies.
Now, as a CEO of a company, what are the types of advantages that help protect you from the competition?
How do you get to the point where you have a wide economic moat, as Buffett calls it?
Well one thing that isn’t a source of a moat is technology because that can be duplicated and always will be, eventually, if that’s the only advantage you have. Your best hope in a situation like this is to be acquired or go public and sell all your shares before investors realize you donít have a sustainable advantage.
Technology is one type of advantage that’s short-lived. There are others, such as a good management team or a catchy advertising campaign or a hot fashion trend. These things produce temporary advantages but they change over time, or can be duplicated by competitors.
An economic moat is a structural thing. It’s like Southwest Airlines in the 1990s, it was so deeply ingrained in the company culture, in every employee, that no one could copy it, even though everyone kind of knew how Southwest was doing it.
If your competitors know your secret and yet still can’t copy it, that’s a structural advantage. That’s a moat.
The way I see it, there are really only four sources of economic moats that are hard to duplicate, and thus, long-lasting. One source would be economies of scale and scope. Wal-Mart is an example of this, as is Cintas in the uniform rental business or Procter & Gamble or Home Depot and Lowe’s.
Another source is the network affect, ala eBay or Mastercard or Visa or American Express.
A third would be intellectual property rights, such as patents, trademarks, regulatory approvals, or customer goodwill. Disney, Nike, or Genentech would be good examples here. A fourth and final type of moat would be high customer switching costs. Paychex and Microsoft are great examples of companies that benefit from high customer switching costs.
These are the only four types of competitive advantages that are durable, because they are very difficult for competitors to duplicate. And just like a company needs to develop a moat or suffer from mediocrity, an investor needs some sort of edge over the competition or he’ll suffer from mediocrity.
There are 8,000 hedge funds and 10,000 mutual funds and millions of individuals trying to play the stock market every day. How can you get an advantage over all these people? What are the sources of the moat?
Well, one thing that is not a source is reading a lot of books and magazines and newspapers. Anyone can read a book.
Reading is incredibly important, but it won’t give you a big advantage over others. It will just allow you to keep up. Everyone reads a lot in this business. Some read more than others, but I don’t necessarily think there’s a correlation between investment performance and number of books read.
Once you reach a certain point in your knowledge base, there are diminishing returns to reading more. And in fact, reading too much news can actually be detrimental to performance because you start to believe all the crap the journalists pump out to sell more papers.
Another thing that won’t make you a great investor is an MBA from a top school or a CFA or PhD or CPA or MS or any of the other dozens of possible degrees and designations you can obtain.
Harvard can’t teach you to be a great investor. Neither can my alma mater, Northwestern University, or Chicago, or Wharton, or Stanford. I like to say that an MBA is the best way to learn how to exactly, precisely, equal the market return. You can reduce your tracking error dramatically by getting an MBA.
This often results in a big paycheck even though it’s the antithesis of what a great investor does. You can’t buy or study your way to being a great investor. These things won’t give you a moat. They are simply things that make it easier to get invited into the poker game.
Experience is another over-rated thing.
I mean, it’s incredibly important, but it’s not a source of competitive advantage. It’s another thing that is just required for admission. At some point the value of experience reaches the point of diminishing returns. If that wasn’t true, all the great money managers would have their best years in their 60s and 70s and 80s, and we know that’s not true. So some level of experience is necessary to play the game, but at some point, it doesn’t help any more and in any event, itís not a source of an economic moat for an investor.
Charlie Munger talks about this when he says you can recognize when someone gets it right away, and sometimes it’s someone who has almost no investing experience.
So what are the sources of competitive advantage for an investor?
Just as with a company or an industry, the moats for investors are structural. They have to do with psychology, and psychology is hard wired into your brain. It’s a part of you. You can’t do much to change it even if you read a lot of books on the subject.
The way I see it, there are at least seven traits great investors share that are true sources of advantage because they canít be learned once a person reaches adulthood. In fact, some of them can’t be learned at all; you’re either born with them or you aren’t.
Trait #1
Is the ability to buy stocks while others are panicking and sell stocks while others are euphoric.
Everyone thinks they can do this, but then when October 19, 1987 comes around and the market is crashing all around you, almost no one has the stomach to buy. When the year 1999 comes around and the market is going up almost every day, you can’t bring yourself to sell because if you do, you may fall behind your peers.
The vast majority of the people who manage money have MBAs and high IQs and have read a lot of books. By late 1999, all these people knew with great certainty that stocks were overvalued, and yet they couldn’t bring themselves to take money off the table because of the ìinstitutional imperative, as Buffett calls it.
Trait #2
The second character trait of a great investor is that he is obsessive about playing the game and wanting to win.
These people don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they’re still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they’re going to neutralize that risk.
They often have a hard time with personal relationships because, though they may truly enjoy other people, they don’t always give them much time. Their head is always in the clouds, dreaming about stocks.
Unfortunately, you can’t learn to be obsessive about something. You either are, or you aren’t. And if you aren’t, you can’t be the next Bruce Berkowitz.
Trait #3
A third trait is the willingness to learn from past mistakes. The thing that is so hard for people and what sets some investors apart is an intense desire to learn from their own mistakes so they can avoid repeating them.
Most people would much rather just move on and ignore the dumb things they’ve done in the past. I believe the term for this is repression.
But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career. And in fact, even if you do analyze them it ís tough to avoid repeating the same mistakes.
Trait #4
A fourth trait is an inherent sense of risk based on common sense.
Most people know the story of Long Term Capital Management, where a team of 60 or 70 PhDs with sophisticated risk models failed to realize what, in retrospect, seemed obvious: they were dramatically over leveraged. They never stepped back and said to themselves, “Hey, even though the computer says this is ok, does it really make sense in real life?”
The ability to do this is not as prevalent among human beings as you might think. I believe the greatest risk control is common sense, but people fall into the habit of sleeping well at night because the computer says they should. They ignore common sense, a mistake I see repeated over and over in the investment world.
Trait #5
Great investors have confidence in their own convictions and stick with them, even when facing criticism. Buffett never get into the dot-com mania though he was being criticized publicly for ignoring technology stocks.
He stuck to his guns when everyone else was abandoning the value investing ship and Barron’s was publishing a picture of him on the cover with the headline “What’s Wrong, Warren?”
Of course, it worked out brilliantly for him and made Barron’s look like a perfect contrary indicator.
Personally, I’m amazed at how little conviction most investors have in the stocks they buy. Instead of putting 20% of their portfolio into a stock, as the Kelly Formula might say to do, they’ll put 2% into it.
Mathematically, using the Kelly Formula, it can be shown that a 2% position is the equivalent of betting on a stock has only a 51% chance of going up, and a 49% chance of going down. Why would you waste your time even making that bet? These guys are getting paid $1 million a year to identify stocks with a 51% chance of going up? It’s insane.
Trait #6
Sixth, it’s important to have both sides of your brain working, not just the left side (the side that’s good at math and organization.)
In business school, I met a lot of people who were incredibly smart. But those who were majoring in finance couldn’t write worth a damn and had a hard time coming up with inventive ways to look at a problem. I was a little shocked at this.
I later learned that some really smart people have only one side of their brains working, and that is enough to do very well in the world but not enough to be an entrepreneurial investor who thinks differently from the masses.
On the other hand, if the right side of your brain is dominant, you probably loathe math and therefore you don’t often find these people in the world of finance to begin with. So finance people tend to be very left-brain oriented and I think that’s a problem. I believe a great investor needs to have both sides turned on.
As an investor, you need to perform calculations and have a logical investment thesis. This is your left brain working.
But you also need to be able to do things such as judging a management team from subtle cues they give off. You need to be able to step back and take a big picture view of certain situations rather than analyzing them to death. You need to have a sense of humor and humility and common sense. And most important, I believe you need to be a good writer.
Look at Buffett; he’s one of the best writers ever in the business world. It’s not a coincidence that he’s also one of the best investors of all time. If you can’t write clearly, it is my opinion that you don’t think very clearly. And if you don’t think clearly, you’re in trouble. There are a lot of people who have genius IQs who can’t think clearly, though they can figure out bond or option pricing in their heads.
Trait #7
And finally the most important, and rarest, trait of all: The ability to live through volatility without changing your investment thought process.
This is almost impossible for most people to do; when the chips are down they have a terrible time not selling their stocks at a loss. They have a really hard time getting themselves to average down or to put any money into stocks at all when the market is going down.
People don’t like short term pain even if it would result in better long-term results.Very few investors can handle the volatility required for high portfolio returns.
They equate short-term volatility with risk. This is irrational; risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss.
But most people just can’t see it that way; their brains won’t let them. Their panic instinct steps in and shuts down the normal brain function.
I would argue that none of these traits can be learned once a person reaches adulthood. By that time, your potential to be an outstanding investor later in life has already been determined.
It can be honed, but not developed from scratch because it mostly has to do with the way your brain is wired and experiences you have as a child. That doesn’t mean financial education and reading and investing experience aren’t important.
Those are critical just to get into the game and keep playing. But those things can be copied by anyone.
The seven traits above can’t be.
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Do you possess these 7 traits?
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前兩天有一位讀者向投投推薦了馬克·塞勒爾先生的這篇文章，盡管這是馬克·塞勒爾先生於2008年在哈佛大學所做演講的文稿，算是一篇舊文了，但讀完文章後，仍讓投投感觸頗深，於是便想著做一期微信與你分享。 記得前段時間有人評論，這可能是一個投資人的數量大於創業者的數量，創業者明顯不夠投資人用的時代，泡沫不僅在創業一端，亦在投資一端。許多並不具備相應的資曆、判斷能力乃至思考能力的人，在過去幾年的洪流中，都進入了這個行業。 馬克·塞勒爾先生是對衝基金Sellers Capital Fund創始人，曾在晨星公司擔任首席股權戰略師。在這篇文章裏馬克·塞勒爾先生不僅給哈佛的高材生們潑了一盆冷水，或許也給我們很多置身在雙創大潮中的投資人都潑了一盆冷水。
對衝基金Sellers Capital Fund創始人 1 你將不會成為一個偉大的投資人 我知道這裏（哈佛大學）的每一個人都有超越常人的智力，並且是經過艱苦的努力才達到今天的水平。 不過，你們至少應該記住一件事：你們幾乎已經沒有機會成為一個偉大的投資人。這已經考慮到你們都是高智商且工作努力的人，並且很快就能從這個國家最頂級的商學院之一拿到MBA學位的事實。 其原因是，你的智商是多少、看過多少書報雜誌、擁有或者在今後的職業中將擁有多少經驗，都不起作用。很多人都有這些素質，但幾乎沒有人在整個職業生涯中使複合回報率達到20%或25%。 一個人能學會如何成為一般級別之上的投資人？ 如果你們聰明、勤奮又受過教育，就能做得足夠好，在投資界保住一份高薪的好工作。不用成為偉大投資人，你們也可以賺取百萬美元。因此無須為我今天說的話而沮喪，即使不是巴菲特，你們也將會有一份真正成功且收入不菲的職業。 我不確定「能夠賺取20%的複合回報率」是天生的還是後天習得的能力，但如果你到青少年時期還沒有這種特質，那麽你就再不會有了。你讀完每一本關於投資的書不會，多年的經驗也不會。那些隻是你超過其他投資人的必要條件，因為它們都能被競爭對手複製。 作個類比，想想企業界的各種競爭策略吧。你們或許會研習邁克爾·波特的文章和書籍，現在，作為公司的CEO，什麽樣的優勢才能使你們免受殘酷的競爭？
*邁克爾·波特是哈佛大學商學院著名教授，被譽為「競爭戰略之父」 2 建立自己的「護城河」 第一、建立巴菲特所說的「經濟護城河」(economic moat)？ 如果技術是你唯一的優勢，那麽它並不是建立「護城河」的源頭，雖然它是可以、但它最終還是會被複製的。這種情況下，你最好的希望是被收購或者上市，在投資人認識到你並沒有可持續性優勢之前賣掉你的所有股份。 科技所給你帶來的優勢是非常有限的。還有比如一個好的管理團隊、一場鼓動人心的廣告行動，或是一股高熱度的流行趨勢。這些東西製造的優勢都是暫時的，因為它們與時俱變，而且能被競爭者複製。 經濟護城河是一種結構性（structural）的優勢，即如果你的競爭者知道你的秘密卻不能複製，那就是就是一條「護城河」，一種結構性的優勢。 在我看來，實際隻有四種難以複製且能持久的「經濟護城河」。
就像公司要麽建立一條「護城河」，要麽就忍受平庸，投資人也需要一些超越競爭者的優勢，否則他就淪為平庸。 3 「護城河」由何而來？ 首先，大量閱讀書籍、雜誌、報紙並不是建立「護城河」的有效方式。 投資界的人都有大量閱讀的習慣，但是我不認為投資表現與閱讀數量之間呈正相關關係，你的知識積累達到某個關鍵點後，再多的閱讀就會呈收益遞減效應。事實上，讀太多新聞反而會傷害你的投資表現，因為那說明你開始相信記者們為了報紙銷量而傾瀉的所有廢話。 另外，任憑你是頂尖學校的MBA，或者擁有注冊金融分析師資格、博士學位、注冊會計師證書等等數十種可能得到的學位和證書，都不可能讓你成為偉大的投資人。隻是讓你更容易獲得進入這場賭局的邀請而已。 經驗是另一件被高估的事情。雖然經驗的確很重要，但它並不能幫你獲得競爭優勢，它僅僅是另一張必需的入場券，一定程度的經驗是玩這個遊戲所必需的，但到了一定時候，它就不再有更多幫助。它不是投資人的「護城河」。查理·芒格說過，你們可以辨別出誰能正確地「理解」，但有時這個人可能是一個幾乎沒有投資經驗的人。 4 偉大的投資人該必備的七個特質 就像一個公司或者一個行業，投資人的「護城河」也應該是結構性的。它們與一些心理學因素有關，而心理因素是深植在你的腦子裏的，是你的一部分，即使你閱讀大量相關書籍也無法改變。 我認為，至少有七個特質是偉大投資人的共同特征，是真正的優勢資源，而且是你一旦成年就再無法獲得的。事實上，其中幾個特質甚至絲毫沒有學習的可能，你必須天生具備，若無就此生難尋。 第一個特質是，在他人恐慌時果斷買入股票、而在他人盲目樂觀時賣掉股票的能力。每個人都認為自己能做到這一點，但是當1987年10月19日這天到來的時候（曆史上著名的「黑色星期一」），市場徹底崩潰，幾乎沒人有膽量再買入股票。 而在1999年（次年即是納斯達克大崩盤），市場幾乎每天都在上揚，你不會允許自己賣掉股票，因為你擔心會落後於他人。絕大多數管理財富的人都有MBA學位和高智商，讀過很多書。 到1999年底，這些人也都確信股票被估值過高，但他們不能允許自己把錢撤離賭台，其原因正是巴菲特所說的「製度性強製力」(institutional imperative)。 第二個特質是，偉大投資人是那種極度著迷於此遊戲，並有極強獲勝欲的人。他們不隻是享受投資的樂趣——投資就是他們的生命。 他們清晨醒來時，即使還在半夢半醒之間，想到的第一件事情就是他們研究過的股票，或者是他們考慮要賣掉的股票，又或者是他們的投資組合將麵臨的最大風險是什麽以及如何規避它。他們通常在個人生活上會陷入困境，盡管他們也許真的喜歡其他人，也沒有太多的時間與對方交流。 第三個特質是，從過去所犯錯誤中吸取教訓的強烈意願。這點對於人們來說是難以做到的，讓偉大投資人脫穎而出的正是這種從自己過去錯誤中學習以避免重犯的強烈渴望。大多數人都會忽略他們曾做過的愚蠢決定，繼續向前衝。 我想用來形容他們的詞就是「壓抑」（repression）。但是如果你忽略往日的錯誤而不是全麵分析它，毫無疑問你在將來的職業生涯中還會犯相似的錯。事實上，即便你確實去分析了，重複犯錯也是很難避免的。 第四個特質是，基於常識的與生俱來的風險嗅覺。大部分人都知道美國長期資本管理公司（1990年代中期的國際四大對衝基金之一，1998年因為俄羅斯金融風暴而瀕臨破產）的故事，一個由六七十位博士組成的團隊，擁有最精妙的風險分析模型，卻沒能發現事後看來顯見的問題：他們承擔了過高的風險。 他們從不停下來問自己一句：“嗨，雖然電腦認為這樣可行，但在現實生活中是否真的行得通呢？”這種能力在人類中的常見度也許並不像你認為的那樣高。 我相信最優秀的風險控製係統就是常識，但是人們卻仍會習慣聽從電腦的意見，我看到這個錯誤在投資界一再上演。 第五個特質是，偉大的投資人都對於他們自己的想法懷有絕對的信心，即使是在麵對批評的時候。巴菲特堅持不投身瘋狂的網絡熱潮，盡管人們公開批評他忽略科技股。 當其他人都放棄了價值投資的時候，巴菲特依然巋然不動。《巴倫周刊》為此把他做成了封麵人物，標題是「沃倫，你哪兒出錯了？」當然，事後這進一步證明了巴菲特的智慧。 就個人而言，我很驚訝於大多數投資人對他們所買股票的信心之微弱。根據凱利公式，投資組合中的20%可以放在一支股票上，但很多投資人隻放2%。從數學上來說，運用凱利公式，把2%的投資放在一支股票上，相當於賭它隻有51%的上漲可能性，49%的可能性是下跌。 為何要浪費時間去打這個賭呢？這幫人拿著100萬美元的年薪，隻是去尋找哪些股票有51%的上漲可能性？簡直是有病。 第六個特質是，左右腦都很好用，而不僅僅是開動左腦（左腦擅長數學和組織）。一些非常聰明的人隻用一半大腦思考，這樣足以讓你在世上立足，可是如果要成為一個和主流人群思考方式不同的富有創新精神的企業投資人，這還遠遠不夠。 另一方麵，如果你是右腦占主導的人，你很可能討厭數學，通常就無法進入金融界了。所以金融人士很可能左腦極其發達，我認為這是個問題。我相信一個偉大投資人的兩邊大腦都發揮作用。 最後最重要的，同時也是最少見的一項特質：在投資過程中，大起大落之中卻絲毫不改投資思路的能力。這對於大多數人而言幾乎是不可能做到的。當股票開始下跌，人們很難堅持承受損失而不拋出股票。市場整體下降時，人們很難決定買進更多股票以使成本攤薄，甚至很難決定將錢再投入股票中。 很少有投資人能應對高回報率所必須經曆的短期波動。他們將短期波動等同於風險。這是極不理性的。風險意味著你若押錯了寶，就得賠錢。而相對短時期內的上下波動並不等於損失，因此也不是風險，除非你在市場跌到穀底時陷入恐慌，被損失嚇得大亂陣腳。 我必須申明，人們一旦步入成年期就無法再學到上述特質了。 這個時候，你在日後成為卓越投資人的潛力已經被決定了。這種潛力經過鍛煉可以獲得，但是無法從頭建立，因為這與你腦組織的結構以及孩童時期的經曆密切相關。 金融教育、閱讀以及投資經驗很重要，但隻能讓你夠資格進入這個遊戲並玩下去。那些都是可以被任何人複製的東西，而上述7個特質卻不可能。 作者：馬克·塞勒爾（Mark Sellers） 來源：投資人說 |
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