After my daughter was born my life changed in my ways, one of which is that I started to hang out (when COVID-19 allows) almost exclusively with other first time parents. It happened seamlessly, like when you are a teen and stop playing games and start to be interested in girls: you are not free as before to travel across London for hours, wait that your friend change plan 10 times and decide to move when your daughter just started to sleep, come back smashed only to wake up to a screaming baby with a massive headache. You did not plan to change your habits, you simply do.
One of these parents is ten years younger than me and his career is progressing like Elon Musk rockets: up and up. He seems like a movie cliche’, pretty face, hair always perfect…that Christian Bale in American Psycho look…without the psycho part since he is a really nice guy. You meet him and inevitably think he was meant to be successful; then I started to know him better and realised he bootstrapped himself in that position, having a simple middle class upbringing. One day this brought me to think about myself: why I did not have that drive?
To climb the corporate ladder you need two things: hard work and political skills. I realised already in my teens I had neither. At school and university, I advanced via talent, sometimes passion (if I had to study something that I liked, like math or coding, working hard-ish came easy) and cheating, when the first two options were not enough. I am good at a lot of things but I am not in the 1% of anything. As Kevin Durant said: “hard work beats talent if talent does not work enough”; I came out of the best Engineering school in Italy mid-pack, because everyone was working hard and I was playing Magic (even that not hard enough to qualify for the Tour).
I decided that trading would be my path to success (= being rich). I was, and still am, passionate about it, so reading and studying was not hard…quite the opposite, I ended up dedicating to it way too much time, sometimes to my own detriment. My passion would take care of working hard and my P&L will make political skills useless. After 25 years, I can say I was right about the first part, quite wrong about the second: in an industry where you should live and die by your performance, your storytelling ability matters a lot. If you consider that a 10 years under-performance does not mean long term under-performance (Warren Buffet wink-wink), the ability of a money manager to avoid being fired during a slump is as important as their ability to pick the right stocks.
My issue was that Robinhood came 25 years too late. I attended Engineering school during the .com bubble, my friends were trading and discussing various stocks while I could only watch CNBC (the Italian equivalent) because I had no capital to trade with; and even if I had, my studies told me that trading commissions would kill me: I needed a big trading capital. And what about diversification? I needed an even bigger pot! The only thing I could do was to live other trader lives reading their stories and to study Technical Analysis about set-ups I was never going to action on.
It is true that paper trading will never teach you a lot because only having skin in the game you will feel fear and greed, emotions that will dictate a big part of your P&L. I somehow developed the inverse of that: reading how many times Jesse Livermore became rich only to lose it all, I started to be fearful of not having the guts to jump back on the horse after experiencing a big loss. In my case was even more irrational because I actually did horse riding in my teens and had my fair number of instances where the horse stop before the obstacle and I flew after it (or took it down with my back when I was unlucky). They tell you to jump back on the saddle immediately otherwise the fear will stop you forever and that is what I did every time; same thing snowboarding years later, every time I was landing a jump on my back or on my face, I was back at it.
When I finally had the opportunity to trade professionally, that voice in the back of my head reminding me that in the future I would experience a slump and I would be fired was always there. I was 27 and single and yet I was asking myself how I would provide for my family on those occasions. In a period of my life where it would have made sense to take risk and go for it, I took the ‘easy path’ and went to work for corporate treasury.
Many years later, a colleague of mine was married with an hedge fund trader. She told me that one year he was losing so much, and therefore he was so depressed, she had to download Bloomberg and his portfolio on her phone, so that she could monitor each day how it was going and try to cheer him up; she works in marketing, she did not have a clue about the FED, interest rates and company balance sheets but she learned what she could to stay close to him. That reminded me (again) how wrong I was: first, whatever career you choose, you will have your ups and downs; second, people around you will actually help to go through those moments, you care about them as much as they care about you.
Lot of young guys started to (day)trade on Robinhood in recent months and this is fu***ng good. They have the chance to lose money when there are no consequences, their actions will dictate their results and not a platform that is taking 10 Euro per trade or that only offer funds with 5% entry fee and 4% annual costs. They can make their own experiences and build their own story. Some of them will move on once sport will start back but some will stay, this experience will make better investor in the future. I wish I had this opportunity at their age.
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