Friday, October 03, 2014

Making Trading Serve Your Life and Not the Reverse

Josh Brown asks some pointed questions about the time we have left and how we want to use it.  Building on Josh's post, Abnormal Returns raises an important point:  our trading and investment returns are meant to be funding the things important to our lives.  They should not stand in the way of our life's fulfillment.  I was struck by Charles Kirk's recent decision to step back from day to day trading, move to the location of his dreams, and devote more time to his mentorship of traders.  Years of sitting, staring at screens, and clicking the mouse had taken a toll on his health.  His decision was to make his market-related activities serve his life and not the reverse.

Check out this very well-done video on the one thing you can do to improve your life and health.  I'll give a hint:  it doesn't involve sitting in front of a screen all day.  To be sure, trading can be challenging and it can be personally and financially rewarding.  The question worth asking is, "What would you be doing if you weren't trading actively?"  After all, that's the opportunity cost of an active trading career.  Do the rewards you receive from your trading justify that opportunity cost?

Many years ago, I stepped down from a full-time position as a psychologist to pursue full-time trading.  I enjoyed the challenge and made reasonable money from it.  But after a short while, I could not sustain the trading as a full-time endeavor.  I desperately missed my interactions with people and my work as a psychologist.  I knew I was on the wrong path when I found myself chatting online with people about markets--and missing trades as a result!  Quite simply, the opportunity cost of ongoing market involvement was too high for me.

I think Josh is right:  We should start with the assumption that we have, say, 10 years left to live.  Given that constraint, how do we want to be spending our time?  How much of that time do would we want to be spending on markets?  Who would we want to spend that time with?  What would we want to accomplish?  Experience?  

It's great to climb the ladder of success.  We just need to make sure that ladder is propped against the right building.   

Further Reading:  What It Means to be Free