The Mental Strategies of Top Traders: The Psychological Determinants of Trading Success

4.1. CASE STUDY ON THE SATISFACTION OF CREATIVE THINKING

In this conversation, an experienced hedge fund manager named Peter explains the emotional and financial satisfaction that comes with thinking creatively.

Kiev:

Can you talk about variant perception and the discomfort of having an idea before it's right? Does just knowing that it's a variant perception kind of excite you in an uncomfortable way?

Peter:

If you could make forty percent in two names, one with the crowd and the other against the crowd, from a dollar perspective you should be totally indifferent. From an emotional perspective you should choose to make it with the crowd. It's just easier. You don't even have to think about it. But there is no question that I would rather make the other forty percent. Psychologically, I get a "Jones" out of being the only kid in the room to have figured out the problem. Everybody else is wrong, and I am right. I realize the dollars are the same. I realize the efficiency is easier on the other one.

K:

That's the satisfaction you get from being ahead of the crowd. How about the need to be ahead of the crowd to make more money? Is that a fallacy?

P:

Do you need to do it in order to make money? I think I do.

K:

Do you think everyone does?

P:

I just don't know. I look at the great investors who have made a lot of money, and I think more often than not they are contrary.

K:

What about being uncomfortable with knowing something that others don't know? Are you willing to take that pain, ...