Some New Years (Trading) Resolutions from Jocko Willink that you need to hear – January 4, 2022
SPY
This is Scott with your Chart of the Day. I am not going to show you a setup that I am looking at going into tomorrow ( NYSEARCA: SPY ). But I thought I would use this time to implore you to consider what your New Year’s trading resolutions are for 2022.
When I look back at 2021 there are really only a handful of stocks that made a major impact on my account. The rest of them are really kind of noise. And my goal for 2022 is to cut down on the number of decisions that I need to make on a daily basis. I want to avoid over-trading stocks and getting in my own way.
Now, that doesn’t mean that I won’t take profits but it really means that I need to work harder at staying partially involved with stocks that are still trending. Dan Fitzpatrick will often call this holding stocks longer. He wants to hold stocks longer for the overall trend. For me, that just means taking a stock off of my front page and letting it work without my intervention.
I saw a great video from Jocko Willink over the weekend. He is a former Navy Seal turned author and podcaster. Someone asked him what his New Year’s resolutions were and he answered it in the most Jocko way possible, very intensely, he’s an intense guy and I love it. A lot of what he said can be transferred over to trading because he talks about strategic thinking and tactical thinking and that is what we try and do as active investors.
We are always thinking strategically, how can I enter this stock at the right time? And then we have to act tactically, what if the stock rolls over on me? Then, what is the long-term potential of this stock if it does continue to trend? And so, I feel like a lot of what he said in his New Year’s resolutions has a lot to do with trading.
I am going to play a clip of him from this podcast that he did. I hope that he is okay with it because, as I said, the guy is pretty intense and scary in a way, in a good way. I love Jocko Willink, I recommend you check out his podcast because a lot of what he talks about and preaches can transfer over to trading. So I hope that you listen to this and it resonates with you like it did with me and you can apply some of this strategic thinking and tactical thinking to your trading in 2022.
Jocko Willink: “When I do an assessment and look at my life I think I have benefited the most from one thing that I do, and that is, think strategic. Now, this is a military term, strategic in the military means, big picture, it means long-term. Strategic in military terms is where you are going to end up, that’s thinking strategic. And the opposite is tactical thinking. Tactical thinking, which again, in the military means short-term thinking, it means immediate action. It means what is happening right now. So there is a big difference, the differentiator for me is thinking long-term versus thinking short-term. And I believe that this thinking long-term, this thinking strategic is one of the most, if not the most, important concepts a person can consider in order to improve themselves and improve their lives.”
“Here are some examples: Short-term thinking, short-term thinking says, the donut tastes good, eat it. Short-term thinking says, one workout doesn’t matter, I can skip it. Short-term tactical thinking is the part of your brain that says, I should just finance this new car or this new watch or this new TV or whatever else, instead of actually saving and paying cash for something that you can actually afford. Short-term thinking encourages you to make short-term, emotional decisions that hurt you in the long run. And they definitely don’t move you toward your overall strategic goals. The more short-term decisions you make, decisions that are based on that immediate gratification, decisions based on quick emotional satisfaction and even based on involuntary chemical releases in your body, that dopamine hit, the further from the path you will stray.”
“So what I am saying is, don’t do that. Instead, think strategic, think long-term, act strategic. Take action that improves your long-term position and moves you toward your long-term goals. How do you do that? First, figure out where you want to go. Figure out who you want to be. Figure out what you are trying to do with your life. Write them down. What are you saving for? What are you working toward? What kind of physical condition do you want to be in? What kind of relationships do you want to have? What skills are you trying to develop? And just like any leader you have to explain to yourself the why. Why do you want to save money? Why do you want to be in that physical condition? Why do you want those relationships or why do you want those skills? You are your own leader, give yourself the mission and explain the why behind those goals. Write those things down in simple, clear, concise language.”
“Read it before you go to bed, read it when you wake up. Read it every day until it is embedded in your brain, consciously and subconsciously. And once you have written those things down, now with all of this talk about strategic thinking, also know this, you need tactical wins. You need to win battles in order to win the war. You need to get out of bed, you need to run, you need to work out, you need to read and study and practice. And you need to do things that you don’t necessarily want to do. And I know that can be hard, that’s why people lose the war. That’s why people never achieve their strategic goals, they lose the little tactical battles, the death of a thousand cuts. One missed workout at a time. One donut bypasses security and then another and then another, and it all adds up. Why? Because we don’t think about the big picture.”
“We don’t see the decay from altitude. We don’t see it from an elevated position. We are like the frog boiling in the pot as the temperature slowly increases one degree at a time, one degree at a time, one degree closer to death, one degree closer to failure. That is why to win tactically we have to think strategic all the time. Think strategic all the time. Now that you know what you are trying to achieve ask yourself this question, ask yourself this question; before any action, before any inaction ask yourself this question, what I am doing, what I am about to do, is it going to help me get where I am going? Is this action going to make me stronger or weaker? Is this action going to make me smarter or more skilled? Will this action move me toward the strategic long-term goals I am trying to achieve in my life? And do not lie to yourself. Don’t rationalize, don’t negotiate, you have to tell yourself the truth.”
Scott: I will just stop it right there. I highly recommend that you check out the Jocko podcast. But there is so much good stuff there that can apply to trading. Telling yourself the truth, not rationalizing holding a losing position. Acting, doing your research on the weekend. All these things that we don’t want to do and all these things we know we should be doing, you can get going now to kickoff 2022.
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