bluebird’s moral hazard
In the finance world, people make the same mistakes in different ways. I (like others) say that I learned from every mistake. That is lying by omission.
The real problem is my disconnect between learning and repeating mistakes, and the accountability that comes with error repetition is extremely painful.
Others seem to have avoided the accountability problem, to the point where they believe in invincibility. Despite moral hazard benefiting very few in the long run, many have now conditioned themselves to take “free shots”. Unfortunately, wanting things risk-free and without penalty can and often result in social self-destruction.
My wanting free passes and shortcuts have yielded a different and convoluted result. Like many, my judgement gets impaired, and I start to slip. I do not notice that I make correct (lucky) decisions based on poor logic and evidence. Then one day, “luck” falls on the other side and the bottom falls out.
However, I experience something illogically recursive in nature. I notice that making seemingly poor choices directly result from me not liking what I do and what I have. I always want alignment between the way I trade and how I feel about trading. I often wonder what makes me do this.
Moral hazard attracts the herd because it’s free. I get attached to moral hazard because I do not trust things that are free. In other words, moral hazard signals me to NOT do something. Noticing that I want to do it helps me to change direction and avoid it like the plague.
The very first economics lecture I had in college showed the implications of TANSTAAFL (apparently, not many were paying attention that day.) Looking back, I notice everything that I “received for free” did not work out very well, and everything I worked in earnest for paid off dramatically in some way. I was not born lucky — I have to work for it.
I work on this process more diligently-how to align my thoughts, feelings, ideas, and instincts and integrating them into sound trading practices and methodologies. Structurally, it seems to morph into a different form than what I imagine.
My systems and methodologies show remarkable improvements. I have more comfort in feeling uncomfortable, especially when I move against the tides of sentiment and financial media force-feeding.
Historically, I have been the most profitable through market crashes and downturns — with a tremendous amount of struggle. I now see that it doesn’t have to be that way.
I see tops and bottoms more clearly. Trends are just trends: I follow them. Reversions are only wiggles, and I do not have to be shaken out of them. I make sure when to keep gunpowder dry. Above all, I manage risk, cut losses, cut losses, and cut losses.
This trading process improvement has one very interesting side-effect: I now consider strongly starting a family. I experience an extremely serious side of me that I rarely feel. I do not have anyone now and I do not know where to start. I feel nervous, and I enjoy the positive intentions that come with this process, and I am willing to go all the way.
Just start, and it comes. In the end, maybe trading is about happiness.