Martin, The Risk Takers

Individual traders are often told that they should view their activity as a business. But what exactly does this mean? After all, one business after the other fails; presumably these aren’t the best models. Renee and Don Martin, successful entrepreneurs themselves, come to the rescue with The Risk Takers: 16 Women and Men Share Their Entrepreneurial Strategies for Success (Vanguard Press, 2010). No, it’s not a new book, but I hadn’t read it and I suspect most of you haven’t either.

With two exceptions, the entrepreneurs founded their companies—Curves, Alvarado Construction, Kinko’s, Liz Lange Maternity, Geek Squad, The Corcoran Group, World Wide Technology, Build-A-Bear Workshop, John Paul Mitchell Systems, Spanx, Amy’s Kitchen, Trilogy, Invacare, Tova, The WW Group (Weight Watchers), and (the author’s own) The Cal-Surance Companies.

Many—actually, probably most—of the entrepreneurs were dreadful students. Many went from rags to riches, sometimes back to rags again before they ultimately triumphed, but I won’t recount any of these personal journeys. Rather, I’m going to pull out a few quotations that may have applicability to the trading business, although I’ll point out how some of them can steer the trader wrong.

“Risk taking is also about embracing change. …change takes you out of your comfort zone, but how else can a business grow? ‘I think people like me learn to like feeling uncomfortable…. In fact, we get comfortable with being uncomfortable.’” (p. 46)

The successful entrepreneur never stops reinventing his company to adapt to changes. “I have an appreciation for challenges…. You either go through a challenge or you’re stopped by it. There’s always opportunity at the end. If you give up, obviously, there’s no chance of ever having any hope of reaching that end where the prize is.” (p. 178)

“Not dreaming big enough is one of the biggest mistakes entrepreneurs make.” (p. 193) Yes, but risking too much is also one of the biggest trading mistakes. There should always be a significant gap between the risk actually taken and the dreams of major success.

“Successful people do all the things unsuccessful people don’t want to do. They’ll knock on ten doors, and even when every one is slammed in their face, they’re just as excited on door number 11—or door number 582.” (p. 223) In trading, however, by door number 582 you’d better understand that your trading system is broken; in fact, you’re probably broke yourself.

“Clearly, you either shy away from competition or you thrive on it. I’ve always loved competition and excellence. I’ve always said, ‘Show me a good loser, and I’ll show you a loser.’ I don’t always come in first, but I sure as heck try to get there.” (pp. 310-11) Losing is, of course, part of any trading business.

And finally, a few sentences about Barbara Corcoran that encapsulate several of the book’s themes: “Barbara had spotted a trend and pounced.” Even though both her competitors and her own advisors thought she was on the wrong track by paying so much attention to the West Side, which had historically lagged behind in property values, “she trusted her gut and did it anyway. In effect, she was positioning her company to hit ’em where they ain’t.” (pp. 143-44) Scrap the “trusted her gut” phrase. The Corcoran Group had done extensive market research that predicted a surge in demand for apartments on the West Side. She trusted the data.