NOVEMBER 24, 2006

The worst lies are the lies we tell ourselves. We live in denial of what we do, even what we think. We do this because we're afraid… Richard Bach

Many years ago when I first started to trade, I went to a trading guru. In fact, I went to a several gurus. I asked them to help me, to teach me, to mentor me. Every one of them said "No.” Some refused more emphatically than others. The refusals took various forms, ranging from "I'm retiring soon," to "Come back when you have a Ph.D. in losses and maybe we'll talk." In the interim, I got a Ph.D. in losses, but I never returned to any of them. Call it rejection sensitivity, call it stubbornness or call it anything you like, I did not go back to the gurus. I learned the hard way: by teaching myself. I made every possible mistake that a trader or investor can make,  including gaffes like making lousy stock picks, bad execution, not cutting losses, not letting profits run, not listening to the market.... and on and on.

There were times when I had major losses and stayed up night after night worrying. Can you imagine that? Have any of you stayed up all night worrying? Have any of you had insomnia-inducing positions that threatened your sleep, that destroyed your relationships and that eroded your self-esteem? I have, and I can tell you right now that holding and hoping is a recipe for disaster, both financially and personally.

S-E-L-L is one of the nicest four letter words you can learn. BUT...if you are already over your head in unrealized losses, when do you sell? Do you sell? What if you do and what if you don't? These are the types of questions that take us into states of dis- ease. That's DISEASE. Nothing seems to go right, the world looks different somehow, colors are muted, food doesn't taste the same, you find it difficult to smile and you lose your sense of humor, you find it increasingly even more difficult to smile and your eyes become more narrow and sad, you are angry and irritable, you feel horrible about yourself and what you are doing, you hide this from your loved ones and then you feel even more guilt and shame. You can't admit that you have done this, that your losses are mounting daily and that you can't get out now because you are down too much.

This is when the lying starts. It's called denial, but it is lying. You use every cortical neuronal trick (otherwise known as pathological defense mechanisms) to talk yourself into holding losses. You know some of them: the markets are wrong, they don't see the “real value” in this stock; I know that the story is really good and the markets just don't "get" it; news will be coming out any day or month now and this whole thing will turn around and so it goes, on and on. The more you deceive yourself, the more you deceive others. The more you trick yourself by using denial, rationalization, projection and all the other fancy “shrink” terms for lying and not taking personal responsibility, the worse it gets. I know, because I have been there and done that.

NOW is the time for each of us to look squarely at ourselves and make the decision to get out of denial and disease and into reality. The truth sets you free, and absolute truth brings absolute freedom. “The Burning Bed” taught me more lessons about life and the markets than I will ever be able to tell you in all of my writings and that is why you will keep hearing about it from me.

Was it fun? No. I was uprooted, displaced, despondent, disoriented, living in a hotel, could not find anything, every day had my home overrun with dizzying numbers of workmen who could access my home any time of the night (and did). It all HAD to fall apart for me before it got better. In a way, this is like an addict hitting bottom.

When you're sick and tired of being sick and tired, the growth can start. When your attitude becomes, “Out with the old; in with the new,” the evolution of yourself to true authenticity begins. When it all falls apart, you have two choices: lie in the corner and let them kick you to death as you bleed out, or start bouncing back. First you bounce a little, and then you bounce harder and harder until you are so resilient that no one and nothing can ever stop you again. Life is not about what happens to you. It is about who you are.

There will come a time when you believe everything is finished. That will be the beginning...
Louis L'Amour (Great American Storyteller)
 

Until next time,
Good Trading and Brain On!

Janice Dorn, M.D., Ph.D
Prescriptions for Profits
www.thetradingdoctor.com