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:
- 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?
- 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.
- 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.
- 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.
- 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.
- 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.”
