Wednesday, August 29, 2007

Thoughts On Trading, Discipline, and Integrity

Pondering this piece of wisdom from, I began to contemplate:

* Websites, seminar providers, and software developers who tout their trading products and services with no objective evidence of their value;

* Brokerage houses that create endlessly inventive ways to make it easier for people to trade, knowing full well that the vast majority will lose their money within a year;

* Management coaches who have never managed businesses; trading coaches who don't trade; life coaches who, to all appearances, are mediocrities in their personal and professional lives;

Good physicians make a referrals if they believe that they cannot provide needed care for a patient. How many vendors of trading products and services would make a referral for people who don't really need their products? How many coaches? How many brokerage houses?

How much self-deception is necessary for such people to justify their life work? How much integrity must they sacrifice to willingly offer such garbage to the public?

And it's not just in the trading world. There are people who justify selling tainted toothpaste to the public and who rationalize the destruction caused by their own pollution. There are those who throw integrity to the winds to support dictators in support of their own self-interests, even as they profess a love of freedom elsewhere. There are leaders who squelch freedom of expression and choice with the deceptive rationale of protecting national security or social order.
And how about those smaller, day-to-day compromises? Cheating the diet. Spending the money we should be saving. Mistreating those who depend on us. Taking the easy way out. Perhaps integrity dies the death of a thousand cuts.

I recently heard from a person who worked for a dishonest firm. He knew the business took advantage of customers, but could not change the owner's ways. Now the firm was in legal jeopardy and shutting down. My acquaintance wanted me to provide a reference so that he could get a new job. A reference?? All I wanted was to ask him was how he could willingly suspend his judgment and work for a firm that actively hurt people.

But violations of integrity are everywhere you look:

* You know the family can't pay off the mortgage you're selling them, but you need to make quota.

* You know that the system you're selling is curve-fit, but you can't make money in the markets any other way.

* You know your soldiers have inadequate support, but you send them into battle anyway.

And in those smaller, day-to-day ways, we cheerfully go through life, chip, chip, chipping away at what's left of our integrity. We postpone and procrastinate. We don't make that extra effort. Perhaps worst of all, we live life without outrage, without confrontation.

And then, one day, we open our eyes a bit.

We ask the trading psychologist why it is that we cannot stick to the plans we've made, why we aren't faithful to our own intentions.

What can the psychologist say?

After the habit patterns and psychological toll of a thousand cuts, how could we possibly expect to muster fidelity to purpose?

Trading discipline begins with personal discipline. And personal discipline begins with integrity--and doing the right thing even with the little things.


AnaTrader said...

Your say:
Management coaches who have never managed businesses; trading coaches who don't trade; life coaches who, to all appearances, are mediocrities in their personal and professional lives;

How true and yet we see this in our daily ads of trading coaches who promise unrealistic returns, and who don't trade!

Yet, the good money from ads blind the dailies from scrutinizing the ads for half truths.

James said...

"After the habit patterns and psychological toll of a thousand cuts, how could we possibly expect to muster fidelity to purpose?

Because it's the right thing to do?

Because it's the right thing to do.

As a community, we all must needs get along. It's the right thing to do to sacrifice 5 seconds on your way home to let someone get out of a parking space or into traffic.

Start there and erase one of those thousand cuts.

Flatwallet said...

Sadly there is too much of this in our society. Service with a phony deceitful smile. The monetary incentive is too much for many people to stand against such practices. It's a shame. Great post as it makes me think what life is all about.

mOOm said...

This is a philosophical question. If the Ayn Rand perspective is that one shouldn't seek a sense of meaning and worth in serving others then isn't the converse that dis-serving others shouldn't neccessarily undermine ones sense of meaning and self-worth?

bzbtrader said...

Amen to that. Too many folks have dropped out of a world characterized by honesty, pride, integrity and a willingness to discover themselves and dropped into a world characterized by a sense of entitlement, making money at any cost, loss of a moral compass and a general ME,ME,ME attitude that one encounters daily while driving, shopping, and otherwise interacting with the public. Truth be told, the daily scandals that the media profile regarding sports heros, politicians, bussinessmen and other traditional role models only promotes and reinforces this malaise as folks see it as the norm, rather than the exception. If folks expect no better from themselves than this, how do we ever regain a real life of honesty and true quality?

james said...


I believe this might be your most insightful post to date. I have often made many mistakes in the course of my life, often times being the one who was dishonest, often times suspending judgement in cases that were certainly questionable. I'm relatively young (25 years old), but i'm well aware that being a better person is a constant process and should always be on the top of ones list. I want success in the financial industry, but never at the expense of my ethics.

great post,


Scott G said...

Taking a fearless moral inventory is never easy. Just last week I admitted for the first time that my moral character was very suspect. There is always a way to rationalize...

You provide such great inspiration. Thanks again for another great wakeup call.

bruce said...

You forgot about the politicians and their backers who profess to love america while they do everything imaginable to undermine their troops in a time of war, and unbelievably, ACTUALLY HOPE THAT AMERICA LOSES said war.

heywally said...

In the end, when you're taking your last breath, living a life with some ethics will be worth an infinite amount more than the few bucks you made taking advantage of someone else.

Bank on it.

jsp9999 said...

The current society takes performance over integrity most of the time. Integrity is a value that needs to be highly valued yet if you see around they are too many cases where integrity is overshadowed by performance. We take such examples to our experience and use them next time we encounter similar moral hazards. The issue will never go away yet individuals have choices to make with consequences that are in God's, or Mother nature's, hands.

Carol said...

In defense of Ayn Rand, I would say she is not opposed to serving others when that service results from a tireless pursuit of excellence. The Looters and Moochers in Atlas Shrugged destroy their society by trying to profit at the expense of everyone else. Only the honestly achieving characters display a sense of meaning and self-worth. The Moochers who dis-serve others ultimately have no self-esteem or wealth either, once there is nothing left to loot.

niklaskoehler said...

Dear Brett,

I love your writing and honesty.
One thing is clear, in the end, the truth will be our judge, if not at our lifetime then later. There is just too much fear and ego out there at all levels. Always we should strive to open our mouth and speak the truth loudly.


nicker said...

My experience in corporate life suggested that nearly all employees prefer keeping a job to standing up against immoral corporate managers or policies. The rare ones who stand tall against corruption and coercion are subjected to every imaginable way of making an employee look bad among their peers, their organization, even to prospective new employers. It was the hardest year of my life, and took a severe toll. For me to have handled it otherwise, to have caved in or walked away, when other workers' health was at stake, would have taken a worse toll....I'd have given up my integrity. But this cost of staying the course is far, far too high for most.


Brett Steenbarger, Ph.D. said...

Thanks to all for the excellent comments. Ayn Rand emphasized an important element of integrity: fidelity to one's values. Her portrait of Howard Roark in the novel "The Fountainhead" is a great study in integrity.


jh said...

It is really sad how many people are out there trying to rip you off. I've learned this in the trading business and also working for a small retail internet business. We get bogus chargebacks all the time and when we investigate, we see people will try to lie, cheat, and steal there way to such a small amount of money.