The First Requirement for Success

September 12, 2012
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“Sun Tzu said if you sit by the river long enough, you’ll see the bodies of your enemies float by. The key is “long enough.” If you live long enough, you have to be the survivor. When I was a kid, we didn’t have the video games you have today, so we used to listen to comedy records. One of the greatest ones was Mel Brooks doing the 2000 year old man. Carl Reiner says to him, “how did you get to be the world’s oldest man?” And he says, “Simple. Don’t die.” How do you get to be the world’s oldest investor? The answer is don’t crap out.

“So if you look at distressed debt where we started in 1988, I could tell you who our number one competitor was in every year through 1995 and not one is a main competitor today. And it’s not because of what we did; all we did is perform consistently. They crapped out. It sounds simplistic to say, but the first requirement for success is survival…”

- Howard Marks

JS Comment:

What steps do you take to ensure survival as a trader?

Do you think about markets from the perspective of wanting to be around for a very long time? How do you proactively make that happen?

Blowing up, bleeding to death, and grinding out are different ways to “die.” Imagine three failed traders, one for each of the ways. What might the postmortems look like?

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One Response to The First Requirement for Success

  1. saran on September 13, 2012 at 1:02 am

    This should be ingrained in every aspiring traders brain firmly.. Do not ph**kin die..As Larry in Tao of poker say, your job is to play solid poker. Traders need to trade based on solid trade plan to avoid bleeding to death in this CB/HFT driven crazy market.

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