Monday, March 15, 2010

Smackdown over expertise

I have no idea whether David Varadi was challenging Brett Steenbarger’s webinar. I respect both bloggers enormously, but of course there’s no way to avoid taking sides. So here’s my very personal response to what might be an invented confrontation.

Back when I decided I needed a single-word trading mantra I chose “competence.” A friend who is a lot snarlier than I saw the mantra and, in typical ironic fashion, said that I had really high ambitions. (Dr. Brett would obviously agree.) Well, yes I did, and yes I do. And here’s my lexical reason why. “Competence” means being adequately or well qualified; it defines a specific range of skill, knowledge, or ability. Importantly, it is also used to describe a “sufficient means for a comfortable existence.” To my mind, competence is a worthy goal since it gives the trader both a monetary reward and about a “B” for skill. If the trader is getting a grade that shows she is not truly exceptional, it means she is still learning or at least should be. Competence both defines a level of accomplishment and, for me at least, provides a prod to move higher.

I have a personal aversion to much that goes under the rubric of expertise. Perhaps because so many experts are self-styled. They promote themselves more effectively than do people who consider themselves merely competent. Who are these so-called experts? Mark Twain described an expert as “an ordinary fellow from another town” and Will Rogers said that he was “a man fifty miles from home with a briefcase.” Whom would you rather have on a panel—a self-styled expert or someone who’s just plain vanilla competent?

I realize that true expertise is laudable; it is an appropriate developmental goal. We all know the drill: study, practice, measure, here and there become creative. After a long process (10,000 hours is now the accepted norm) an expert may emerge. Since expertise entails mastery and a high level of skill we would be foolhardy to opt for a competent surgeon when we could have an expert surgeon. Similarly, we would undoubtedly hire an expert trader over a competent trader.

But what is the best way to view oneself after having put in the requisite 10,000 hours of rigorous training and having acquired both knowledge and skill—as a competent trader or an expert trader? I know that no matter how good a trader I might be there will always be countless others who are better. This horde of faceless traders makes me paranoid. I also know that no matter how well I read a particular market today a paradigm shift will occur that will transform me into an illiterate. Another reason for paranoia. Famously, Andy Grove didn’t say “Only the experts survive” but “Only the paranoid survive.”

If I am only competent I must keep improving to compete successfully against the exceptional. I also know that I’m not “expert” enough to withstand a financial tsunami so I must keep up my defenses. And there are always the wannabes nipping at my heels. In my own mind I’ll never be an expert and that doesn’t bother me in the slightest. I’ll just keep trying to get better, a process that will cease only when I stop trading. In brief, I remain happy with my mantra. (And if I ever set myself up as a trading expert, this is an open invitation to knock me down.)

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