Culture Conquers All

Sept. 29, 2021

Why does Alabama always win?

We’ve heard the statistics about trading.

96% of all traders fail.

96% of all mutual funds underperform.

Stock-picking is impossible, especially for a regular person.

However, I’ve seen something different with my own eyes. In my coaching career, I worked with several hundred kids and trained over a hundred ranked players.

And not one of those ranked player’s ranking ever got worse while I worked with them.

In other words, 100% of the players I saw with my own eyes were successful.

So, what’s going on? Am I lying or is something off?

How many Warren Buffett acolytes are successful? A large number. How many original Turtle traders are still out there managing multi-million dollar funds profitably? A crazy high percentage.

Yes, there seems to be a lot of failure out there. But there are also pockets that are extremely successful.

Which reminds me of a story.

Back in the old days, a firm was training a new group of salespeople. They divided them up into two groups and gave both groups the same script.

One group was told that about 70% of the people will respond affirmatively. The other group was told that only 30% of the people will say yes.

Again, it was exactly the same script.

Then they sent both groups out. Can you guess what happened?

The 70% group got a yes 70% of the time and the 30% group only got 30%.

The results exactly mirrored the expectations set BEFORE they started.

In other words, the culture created the results.

Which leads us back to Alabama. Alabama has been successful in American college football for many decades. It’s inevitable.

How is this possible?

They expect to win. EVERYONE expects to win. No matter what problems or limitations the university, coaches, players, and fans have, they are all united on one thing.

Alabama wins college football games.

And so they do.

The reverse is also true. The University at California Berkeley never wins championships. It mostly has losing seasons. Why is that?

No one wants to win football games. The campus is for thinkers and academics. Football barbarians are not important and not celebrated.

Cal doesn’t care about winning football games.

And so they don’t.

This is the biggest obstacle with our trading system: our culture.

If we think 96% of traders fail and every online email is a hustle and all robots are bogus and everyone’s a liar, guess what will happen?

Even if the system is legitimate and it produces profit in the long run, it won’t be successful.

Unfortunately, the internet is a place of distrust and scams.

I wonder what would happen if that changed?

I wonder what would happen if there was a small corner of the world where people traded fundamentally-sound systems with positive long-term expectations and generously shared with others?

In that culture, would the small portfolio of trend following systems work?

In our next email, we’ll look deeper at the numbers and see if we can find any landmines.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.