Janice Dorn, MD, PhD
Neuropsychological Trading Coach
Janice Dorn, M.D., Ph.D., has been a full-time futures trader since 1994. Doctor Janice holds an M.D. in psychiatry and is board-certified by the American Board of Psychiatry and Neurology in general psychiatry and addiction psychiatry. She holds a Ph.D. in brain anatomy. A graduate of Coach University, she is a pioneer market psychiatrist and financial neurobehaviorist. Doctor Janice has written over 500 articles on the financial markets and coached over 600 traders worldwide. She is the Global Risk Strategist for Ingenieux Wealth Management Group, Sydney, Australia.
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Tell me that you played it safe
Coz you're afraid to hurt your neck
On the rollercoaster train,
Never knowing what you get
…from Celine Dion, “Coulda, Woulda, Shoulda”
Tom and Jerry met in high school and almost immediately became best friends. They did everything together, including basketball, morning runs, double dating, studying and just hanging out. Although there was some subtle tension between them, much like in most friendships, they told each other everything and were inseparable. They made the decision to go to the same local college and study to become lawyers.
Things went really well for about two years, as they got an apartment together, kept up their morning jog and studied together. About three months into the second year, Tom’s grandmother died and left him with a large amount of money. No one knew that the grandmother had anything like the million dollars she left to Tom, nor did the family know that all of it would go to Tom.
Initially, Jerry seemed really happy for Tom, who was now a millionaire and able to do pretty much what he wanted to. Tom got a fancy car and some cool new clothes, and he started flashing his money around for everyone to see. None of that really bothered Jerry all that much (at least Jerry didn’t seem to be any different in his attitude toward Tom), until Tom decided that he wanted to move out of the shared apartment and get a fancy house in a nearby town. Jerry, who was working part-time to pay his tuition, couldn’t afford to move, but he seemed happy for Tom and assumed that things would go on pretty much the way they were, i.e., running and studying together and living out their plans for law school.
That was not to be. Tom dropped out of school, leaving Jerry alone and confused. Tom started to travel and date lots of different women. There was no more morning jogging and, of course, no studying together. Jerry had to adjust and keep going, and he did well for a while.
Then, one day, Tom called and told Jerry that, on the advice of a couple of new friends he met during his travels, he had taken about three-quarters of his inheritance and placed it with a broker to invest. Since Tom was out of the country so much, he trusted his broker would do well for him, and didn’t really pay much attention to the funds. From time to time, Tom called Jerry to tell him how well the broker was doing for him, and that he was making more and more money from his initial investment. Tom was elated that things were going so well for him, and all the while, Jerry was becoming more and more angry. Actually, Jerry was getting really jealous of the success Tom had. It was not so much the inheritance that bugged Jerry, rather it was the fact that Tom had found this place where he could put his money, forget about it, and let the broker do all the work.
Slowly, Jerry became livid and insanely jealous. He decided that if Tom could make money that way, so could he. Why not? Jerry was at least as smart as Tom, and had a pretty good head on his shoulders. Jerry stewed and fretted and finally managed to convince a couple of family members to lend him some money so that he could get into the stock market. Reluctantly, they lent him about fifty thousand dollars. (Jerry was a really good salesman, and he talked up the broker and the way that Tom’s funds were growing so rapidly).
Jerry called Tom’s broker and made no secret of the fact that he wanted to play “catch-up” with Tom. He wanted the broker to pick stocks that were going up! He wanted to be really aggressive so that he could show his family and Tom that he could do just as well, at least percentage-wise, as Tom was doing.
The broker listened and did as Jerry instructed him. He bought aggressive, highly speculative stocks for Jerry. Some of these he picked himself, and some of them Jerry picked by watching a couple of TV shows and reading some financial papers. These were the hot stocks that were going to rocket for Jerry.
Then, something happened. It seemed that as soon as the broker bought a stock for Jerry, it went down. After a few months, the stocks were down about 20%. Suddenly Jerry’s attitude changed. He no longer wanted to beat Tom. He wanted to get his money back. Suddenly, the markets rallied, and all of Jerry’s stocks came up in price again. The problem was that they were still below the price he paid for them. But Jerry was OK with this because he knew that all he had to do was wait a little longer to get out of most of the positions at break-even. He seriously wanted out, because he realized that he was over his head and his family was disgusted with him. He kept on holding and hoping, knowing that they would come back. They had to come back. He had to be successful. He had to sell his stocks for at least what he paid for them.
While Jerry was waiting, the markets took a pretty big tumble, and now his stocks were down 40% from what he paid for them. The hoping and expecting and knowing and having had all been in vain. Jerry could no longer take the pain, frustration, humiliation and shame. He sold out, took a 40% loss and made a vow never to put money in the markets again.
This is a story about how attitudes affect beliefs and actions.
I will continue with this story and its many lessons next time. For now, I would like you to think about this:
- In what ways did Jerry’s attitudes contribute to his losses?
- What thought processes contributed to Jerry’s losses?
- What did you learn about Jerry in this story?
- Have you had any similar experiences where your attitude told you that you absolutely had to have something and had to have it in a hurry?
- How did that work for you?
Please put your thinking caps on, because there are many lessons in this story, and let me know your experiences and how you relate to Jerry and his attitude.
This time we almost made the pieces fit
Didn’t we?
This time we almost made some sense of it
Didn’t we?
This time I had the answer right here in my hand
And I touched it and it had turned to sand
This time we almost sang our song in tune
Didn’t we?
This time we almost made it to that moon
Didn’t we?
This time we almost made our poem rhyme
This time we almost made that long, hard climb
Didn’t we almost make it this time?
…from The Supremes, “Didn’t We?” (Jerry Cobb)
Until Next Time,
Good Trading and Brain On!
Janice Dorn, M.D., Ph.D.
janice@thetradingdoctor.com
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