How Does Business Networking Mesh with a Trading Business? (Part 3)
Posted by Mark on July 28, 2014 at 07:38 | Last modified: February 3, 2015 07:56I have begun to discuss the title in the last two posts. What better way to learn about networking then to start practicing it?
Today I will begin reading The 29% Solution: 52 Weekly Networking Success Stories by Ivan Misner. This may not be the best book on networking and it certainly isn’t the only one. I did a brief scan and came up with it. The author is founder of BNI, which either gives him credibility or makes him suspect that the book may offer little aside from referrals to his premium organization. Time will tell as I progressively make my way through.
I will continue to post periodically with discussion of networking and/or weekly tasks from the book. Yes, the book does assign weekly homework. Some appear to be writing tasks and those may work well as blog posts.
As always, if you have any feedback or comments then please feel free to share. Also feel free to join me on this networking adventure: especially if it is something new to you as well!
Categories: Networking | Comments (0) | PermalinkHow Does Business Networking Mesh with a Trading Business? (Part 2)
Posted by Mark on July 25, 2014 at 06:42 | Last modified: February 3, 2015 07:30As mentioned in my last post, I’m new to marketing probably somewhat because I find it hard to understand where it can fit in with my business.
In my previous career, one thing I always lamented especially when talking to colleagues was the lack of business education taught in pharmacy school. I worked retail pharmacy and one promotion above “staff pharmacist” was “pharmacy manager.” I knew other pharmacists who had opened their own pharmacies or were looking to do so. Whether managing a pharmacy or owning one, some sort of business savvy would have been useful.
Networking is certainly part of this savvy and without any business education I also had little insight into networking. My intuitive understanding of “business networking” was handing out business cards to a prospective customer in hopes of generating sales.
Fast forwarding to my current career, the lack of business training has left me befuddled about a potential role for networking in the life of a full-time trader. I’m not looking for customers. I buy and sell product on stock and option exchanges. I have no employees. I do run a business and I am an entrepreneur but I just don’t seem to fit the mold. What could I possibly gain from networking?
In an attempt to update my understanding, this website defines “business networking” as:
> …a skill and a low cost method of marketing that is used
> to build new business contacts through connecting with other
> like minded individuals.
The mention of marketing is of no help to me. Again, whether it be trader education, an investing newsletter, or tools for traders/investors, I am not selling anything.
The rest is more interesting, though: “like minded individuals.” With other traders I could develop or improve my business. With other traders I could share ideas and trading experiences. With other traders I could develop new strategies. With other traders, I could establish a foundation for accountability that I don’t have when working by myself.
Now we’re getting somewhere.
Categories: Networking | Comments (0) | PermalinkHow Does Business Networking Mesh with a Trading Business? (Part 1)
Posted by Mark on July 22, 2014 at 05:41 | Last modified: January 29, 2015 11:03I’m taking a break from my previous post to discuss networking.
Last year I did an 18-part blog mini-series on trader Meetups. In many of those posts, I bashed the idea of the Meetup for trader networking purposes and even considered it a disguised ploy to get my business since the Meetup organizer ran a premium online subscription service.
I’ve recently joined a dedicated, local networking group. In that group we’re reading and discussing a book focused specifically on business networking. Since it is net-WORK-ing, the book recommends many homework tasks to ensure time spent is time returned.
For many reasons, I’ve already come to realize that networking can be an important tool for me and much of that stems from the fact that trading is such a solitary pursuit. I miss my co-workers and patients from the pharmacy. Most of my trading day is spent at home in front of my computer. I know I’m not alone on that, either. Pretty much every trader I have ever crossed paths with has said something like “I’m so happy to finally be able to speak with someone who knows what I do. None of my friends or family have any clue what trading is all about.”
Since I know there are others like me out there somewhere, why not spend some time trying to find them? In the process, networking can give me the opportunity to help others, to teach, to share knowledge, and maybe even to have some laughs and good times.
With this post I am creating a new blog category. I will periodically discuss networking efforts and perhaps use this blog as a means to get some of that networking homework done.
Categories: Networking | Comments (2) | PermalinkDoes My RIA Need Live-Trading Experience? (Part 4)
Posted by Mark on July 17, 2014 at 06:09 | Last modified: January 28, 2015 08:48Today I continue the stream-of-consciousness sidebar that I began in the last post.
In Part 1 I pretty much decided that live-trading experience is not, in general, a necessary criterion for a competent investment adviser (IA).
Coming to mind in support of this realization was my work as a pharmacist. I did not make the medications. Machines in remote locations make the tablets, the suspensions, the creams and ointments, etc. All I know is what medications are best for different conditions. If you bring me a diagnosis (from the MD) then I can recommend the proper medication. This seems quite analogous to an IA [representative–that’s a legal term] completing a personal interview/assessment in order to recommend funds or financial products suitable for client investment. Those products are traded in remote locations (e.g. New York, Chicago) often by machines (computers): just like the manufacturing of medications.
This rationale, in addition to the “agnostic” reason given in Part 1, supports my belief that in general an IA need not have live-trading experience to be competent.
What I think matters more is an investment style that can best suit client needs. A short option premium strategy can generate a higher average return, a lower variability in returns, a lower maximum drawdown, etc., but few IAs have this sort of offering. If you believe this approach is best then the confusion becomes clearer. The confusion arises because live-trading experience is necessary to execute this sort of strategy and this causes two separate arguments–what investment strategy is best and whether life-trading experience is advantageous–to run together into one discussion.
Categories: Uncategorized | Comments (0) | PermalinkDoes My RIA Need Live-Trading Experience? (Part 3)
Posted by Mark on July 14, 2014 at 05:55 | Last modified: January 28, 2015 07:04Today will serve as the “stream of consciousness” part of the program.
Part 11 inspired me to compose the following e-mail as an attempt to solicit feedback on the title subject:
> I’d like to know your opinion about whether live-trading
> experience is something a good financial adviser should have.
>
> Personally, I think the financial industry as a whole is very
> deceptive. Most financial advisers are salespeople. They have
> the marketing pitch, they have the “supporting data,” and they
> have the skill to sell clients on different funds or corporate
> products. Many television commercials stress the importance of
> “personal relationships” between advisers and their clients.
>
> I think the disconnect arises because clients believe their
> advisers are the ones who make them money. In fact, without live-
> trading experience the advisers are limited in knowledge about the
> mechanics by which money is made. I think much of this knowledge
> is based in details about execution, how products are traded,
> working the bid/ask, slippage, different types of orders, etc.
>
> The big question I wonder about is: DOES THIS MATTER?
>
> I want to say there must be some edge to having an adviser
> who actually does the trading or has live-trading experience.
> Is that the case or is it just as well that all the traders for
> one firm be located in a central office in New York or Chicago
> where they focus on nothing but getting the best execution and
> trades for all the adviser firm’s [anonymous, to the traders]
> clients nationwide?
>
> I’ve read a handful of articles over the years that talk about
> important criteria to identify when searching for a competent
> financial adviser. I have never seen “live-trading
> experience” listed as one of these criteria.
>
> And yet… I’m hard-pressed to believe the average investor
> wouldn’t benefit more from hiring an adviser who does the
> trading him/herself rather than hiring the typical adviser
> who does nothing more than sales.
I’ll conclude this sidebar in the next post.
Categories: Uncategorized | Comments (1) | PermalinkDoes My RIA Need Live-Trading Experience? (Part 2)
Posted by Mark on July 11, 2014 at 02:51 | Last modified: January 28, 2015 06:07Today I will continue by tying together a couple other loose ends brought up in this blog mini-series.
In Part 8, I wrote:
> And yet–-the prospect of offering complete transparency
> bothers me somewhat because others may copy it. I will
> be the first to say there is nothing new or unique to
> my trading strategy. The only thing “proprietary” may
> be that I understand it so well. That understanding
Now I realize that my live-trading experience in and of itself is proprietary. A pittance of people worldwide can claim to have the live-trading experience I do and even within the industry, few financial professionals can claim to have it.
As concluded by my last post, however, while live-trading experience gives me an edge with the strategy I employ, live-trading experience in general does not necessarily make for higher performance in an investment adviser (IA). Most IAs are salespeople rather than traders but I have yet to see “live-trading experience” listed as something to look for when shopping for an IA. The claim sounds good and may be a marketing point but ultimately, I believe a lack of supporting evidence renders it less meaningful.
If I can’t sell my trading experience as a proprietary benefit then I’m left to sell the trading strategy. I suspect this is where the slippery slope comes in with regard to marketing. If my sales pitch divulges too many details to one of the few people on Earth with live-trading experience then it could be duplicated. Those qualified to copy my approach would either be financial professionals with extensive trading experience or retail traders with extensive trading experience. Of the latter, though, few seem to offer what I do so the risk of competition is probably small.
What remains as my strongest, marketable edge therefore seems to be the common sense, well-publicized, nonproprietary trading strategy that I apply.
Does any of that make sense?
I’m not sure it does to me.
Categories: About Me | Comments (0) | PermalinkDoes My RIA Need Live-Trading Experience? (Part 1)
Posted by Mark on July 8, 2014 at 06:54 | Last modified: January 28, 2015 07:22The question left on the table from my last post is whether live trading experience provides Edge for clients in the market for an investment adviser (IA).
I definitely see a disconnect in the financial industry because so many IAs (or investment adviser representatives–a legal term) do not actually trade: they just sell products. Whether or not this live trading experience provides superior returns remains an open question, though.
I Googled this and e-mailed one person purporting to be an IA with 15 years of trading experience. He responded:
> I’ve been an active day timeframe trader for more than 16
> years, but that is by no means all I do. In a nutshell, I
> manage everything from a long term investment portfolio,
> to positions running anywhere (in trade duration) from a
> few minutes, to a few days, weeks or even months.
>
> As far as an investment adviser trading for him/herself,
> and, I assume, for clients…that is a very tricky
> proposition. I know there are many readers that follow
> my work that DO in fact manage and trade money for
> outside clients, but I have no clue how their results
> measure. There is simply no way for me to know whether
> an investment adviser with an active style has any sort
> of edge over a typical adviser. Some probably do well,
> while many break-even or simply lose.
I this is an outstanding response. So many things in the financial industry cannot or are not measured. Without measurement, they are simply advertising claims. For what I would do, yes: live trading experience is absolutely necessary. For this reason, I could advertise Edge based on my live trading experience. Does this mean live trading experience in general provides an edge over most IAs who focus on sales?
That’s an answer I do not know and, in agnostic fashion, is an answer I’m not sure I ever can know.
Categories: About Me | Comments (3) | PermalinkOption Fanatic, RIA (Part 11)
Posted by Mark on July 3, 2014 at 06:38 | Last modified: January 26, 2015 07:35Today I will tie together a couple loose ends from previous posts about the value-added benefit of my trading experience.
In Part 8 I wrote:
> …there is nothing new or unique to my trading strategy.
> The only thing “proprietary” may be that I understand
> it so well. That understanding comes from… my years of
> live trading experience… None of this should be a big
> deal to financial professionals who… do this full-time.
It’s not true that any full-time financial professional can get the live trading experience that I have. As I wrote in Part 5:
> Unlike most representatives of the financial industry
> who do little more than sell products, I actually
> trade. Trading experience gives me knowledge of how
> markets really work: details most “financial advisors”
> don’t [need to] know because they are generally
> specialized salespeople with a glorified title.
I am quite convinced that most financial professionals don’t know much about live trading. Here’s one article detailing potential jobs in the finance industry. If you look closely then you might see the word “trader.” Then again, you might not.
I view this as a significant disconnect in the financial industry. Most clients think they are dealing with the people who can make them money. In fact, they are dealing with salespeople who are limited in knowledge about the precise mechanics by which money is made. Put another way, the salesperson you’re working with may know many details about your personal history and financial needs. The trader who actually handles your money knows nothing about you. Who knew?
I still go back and forth about whether this matters.
I do know that what I would do as an RIA is all about the live trading. Details about working the bid/ask, watching volume and open interest, being cognizant of slippage, implementing limit vs. market orders, how to manage contingent orders, etc., are critical for success. If only for this reason alone, I will not be worried about transparency and the potential for clients to copy and adopt my trading strategy.
Categories: About Me | Comments (4) | Permalink