Wednesday, October 15, 2014


As we've mentioned before, we're big promoters of the K.I.S.S. philosophy.  We're certain that we're not the smartest people in most rooms so we strive to keep our process streamlined and uncomplicated in order for it to best fit our personalities.     

However, we as traders must look at a ton of data.  Sometimes an overwhelming amount and that's when things can quickly go from simple to unnecessarily complicated.  All the data in the world won't do us any good unless we're processing it correctly and using it to either confirm or reject potential outcomes. 

Dr. Brett Steenbarger recently had another really insightful post on his Traderfeed blog. In Fluid Reasoning and Making Decisions the Right Way, Dr. Steenbarger observes that success is not so much a matter of making the right decisions, as it is making decisions the right way: fluidly, placing current observations into broader context.  
We're often looking at the exact same data as other investors.  There's only so much available and advances in technology have pretty much leveled the playing field.  However, those that can process information properly and have the ability to be flexible in their thinking are often set to outperform the crowd.  

To have continued success in trading, one must be willing to adapt as the markets are dynamic and expected outcomes can change rapidly.  An earnings report or economic number can change the shorter term trend while something like Ebola, war, or recession can have huge repercussions longer term.  While we have no clue if/how something like the current Ebola threat might impact the market's direction, it is something that we must account for.  This is all part of staying flexible within an ever changing market and world.

Ryan Worch is the Managing Director of Worch Capital LLC. Worch Capital LLC is the general partner of a long/short equity strategy that operates with a directional bias and while emphasizing capital preservation at all times.

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