Eddie Lampert: How He Made Billions of Dollars from the Markets

LEARN FROM THE GENERALS OF THE MARKETS - PART 50

“I think one of the best ways to deal with the emotions of trading is to read books by other successful traders.” – Darrin Donnelly

Eddie (Edward) Lampert was born on July 19, 1962, in New York, USA. He got inspiration to trade from his granny who was an avid investor. He used to sit with his granny while checking the performances of certain stocks.

When Eddie’s dad died at a relatively young age, his mom, who used to be a full-time housewife, was forced to look for a job. He himself took up some odd jobs after school hours in order to ease the burden on his mom. Despite juggling school and odd jobs, he attained good grades. He was even able to participate in some extra-curricular activities and won an athlete award. With some effort on his part and financial assistance he received, he obtained a bachelor’s degree in Economics with a first-class degree. That was 1984.

In the same year, he began to work at Goldman Sachs and enjoyed a good career there. He later decided to start his own investment/trading business. One of his respected colleagues warned him against the possibility of failure in his business attempts.

He left that firm anyway; at the risk of failure. He was able to raise about $28,000,000 and he was also introduced to new clients. He founded ESL Investments. He’s also the chairman and CEO of Sears Holdings (SHLD).  His firms have become a huge success, with Lampert himself making a personal income of $1,020,000,000 dollars in the year 2004.  With some worth of $3,800,000,000, he was the richest man in Connecticut. In the year 2006, he made an income of close to $1,500,000,000.

He’s married to Kinga Lampert and they’re blessed with 3 children.

Lessons

These are the lessons that can be learned from Eddie’s life and trading strategies:

1. Some were inspired or encouraged to start trading by unusual persons. In Eddie’s case, it was his granny that inspired him to start thinking about trading. Oddly enough, I was inspired by my maternal uncle who hasn’t traded before, but who’s seen successful traders. Some were inspired by their dads, friends, and so on. Who’s inspired/encouraged you to start trading?

2. Once again, your poor background or past shouldn’t stop you from attaining financial freedom now or in future. Eddie’s dad was a lawyer, but his untimely death forced the family to start working hard to survive. Then, the future looked bleak. The fact that Eddie’s dad wasn’t around to pay for his education didn’t stop him from earning a bachelor’s degree at a prestigious school; neither did the fact stop him from becoming a multi-billionaire.

3. When Eddie Lampert wanted to leave the high-paying job he was doing at Goldman Sachs to found his own business, a colleague of his tried to discourage him. As you know, majority of people think that it’s better to do a job that guarantees a paycheck every week or month, than to rely on the uncertainties of the markets. Never be discouraged in trading. Although, the profession is full of challenges, they can be overcome. Some traders have done this and they’re living testimonies. Unusual people can also tell you to say ‘bye-bye’ to trading and go do something else. I was almost discouraged by someone whose opinions used to matter most to me in the past, but I’m thankful I didn’t go back. It was a big surprise that a well-known founder of a very popular online trading education and information company announced some years ago that it was impossible to attain permanent success in Forex. Wasn’t that very strange, a founder of a very popular Forex website telling people that they couldn’t make it from Forex? The website is still very active. However, that statement shows that some of the so-called experts behind certain trading websites can’t trade successfully on their own; yet they make the public believe that their websites can help people achieve their goals in the markets. Contrary to what “doubting Thomases” think, everlasting success is possible for traders.

4. Certain individuals have been denouncing Eddie as a bad CEO/investor. In spite of this, he’s a victorious market player. When you become somebody, you’ll have many critics – some of whose criticism would be destructive rather than constructive. No matter what you do, some people will complain. Just let the complainers keep on doing their job while you continue doing your best and succeeding.  

5. What about Eddie’s investment strategies? He sells things at retail prices and buys them at wholesale prices. The cheaper the prices, the more bullish Eddie would be. He doesn’t also hold too many positions at once: he only holds a few to several positions which have to do with the stocks he understands fully well. Rather than speculating on too many trading instruments that you don’t fully understand, it’s better for you to specialize on trading instruments that you understand very well, even if they’re few.  Over the time, you’ll master them and make money with them.

6. Eddie believes that long-term performances are better than short-term results.

Conclusion: Common sense is required in trading. This is one of the reasons why a robot cannot make consistent profits indefinitely. There are no perfect trading approaches, for wizards like Eddie lose sometimes. Orders ought to be placed logically, since no-one knows for sure what the market would do next. We all hate negativity, yet experienced traders know that it’s an indispensable part of trading.  We make gains in spite of negativity.

This article is concluded with a quote from Eddie Lampert:

“You can’t wait for an opportunity to become obvious… In investing, you constantly make decisions under conditions of uncertainty.”

Source: www.tallinex.com 

 Learn from the Generals of the Markets: Market Generals