Wine and Trading

The soil matters most. Without great soil, wineries cannot make great wine. Without big trends, traders cannot make big money. Wine-makers are at the mercy of their geographical location; traders, at the mercy of the markets. There’s a reason why wineries don’t exist in Nebraska and why trend traders don’t make money in stagnant markets.

Much of what contributes to making great wine lies outside of our control — location, soil and weather. If a guy in Iowa wants to open a winery, he knows he has to go to where grapes grow. He cannot force the issue in Iowa. He’s simply in the wrong place to make wine. This says nothing about his talent, will or hustle. He just has to adapt to the reality that running a successful winery cannot be done in Iowa. He’s gotta move.

In trading, we depend on trends to make money. Long-term traders, like myself, need months of price persistence to produce a profit. Outside of stocks, markets have been fairly stagnant for the last couple of years. Like a winery, a large part of what we need to succeed lies outside of our control. I have no control over what markets do and there’s nothing I can do to change them. I simply have to wait it out until the soil (markets) become more fertile.

This reality sucks, especially when the markets don’t give us what we want for long stretches of time. No one likes waiting and losing money, but sadly it’s the nature of markets and this business.

I wonder if wine-makers feel the pressure to change their business model when times get tough — like opening a brewery or distillery to diversify. I bet that’s what Robert Mondavi felt when the weather didn’t cooperate or when he felt the pressure to make money by selling cheaper albeit worse-tasting wine. Nope. He stayed the course and continued focusing on producing high-quality wine.

From Wikipedia: In 2003, Mondavi expressed regret and criticized his sons for the business strategy that emphasized the inexpensive Mondavi lines, Coastal and Woodbridge, over the premium wines, allowing the company name to lose its association with fine wine it held in the past. He said, “We’ve got to get our image back, and that’s going to take time.”

What patience, discipline and commitment to quality looks like. Also, some luck.

We all rely on factors outside of our control to perform well. A little luck often beats a lot of hard work. Traders can use every trick and hack in the book to maximize performance, but this often does more harm than good. Sometimes we just have to rely on good old fashioned patience and discipline until better market weather returns.


Past Performance is Not Necessarily Indicative of Future Results
There is always a risk of loss in futures trading.

This communication is for information purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy any financial product, an official confirmation of any transaction, or as an official statement of Melissinos Trading LLC. All information is subject to change without notice.