Early in my business life, I learned a rule the expensive way: marketing is senior to sales.
I was proud of the work my businesses did. We did it well, and I assumed doing it well was enough. Good work would find its customers.
Meanwhile, a friend of mine was selling work that was simpler than ours. But he understood his market. He knew who was buying, what they wanted and where to find them. And he just kept doing it, over and over. He made a lot more money than I did.
It took me a while to accept what that meant. I had been studying my product. He had been studying his market.
In typical fashion, I learned this lesson again, this time in the market!
I remember buying long calls on Nvidia after it had already made its move. The news was great. The hype was everywhere. The stock had been running hard, and everything I was hearing said it was going higher. I was sure. I was committed.
The chart didn’t agree. Price was already far above where the buying had started, and I was buying near the top of the move instead of near where big money had stepped in.
The buying that drove it was behind us, not in front of us. But I wasn’t reading the chart. I was reading my own conviction.
I got smashed. And the crazy thing is, I knew better. Knowing and doing are two different things. We are all human. (I wrote about that in We’re All Human.)
Looking back, I was doing the same thing I did in business. I fell in love with my product, which this time was my opinion about Nvidia, and I expected the market to pay me for it. The market didn’t care how sure I was.
One of my mentors had me read Mark Douglas’s Trading in the Zone. One idea from it has stayed with me ever since: anything can happen.
It sounds almost too simple. But it goes straight at the mistake I made. The news, the hype, the momentum and my own certainty all pointed the same way, and none of it mattered.
When I put on that trade, I wasn’t treating it as one possible outcome. I was treating it as a sure thing.
Today my analysis starts in a different place. I’m not asking what I think should happen. I’m asking where the market is right now: where big money has been buying, where it’s been selling, and where the imbalance sits.
And even after all that work, I go in knowing anything can happen. The analysis gives me a reason to act. It doesn’t give me a guarantee.
I used to study my product. Now I study the market.
My friend figured that out in business long before I did. I had to learn it twice.
Just like a good cigar, stay patient, let it burn.
— Chris
