It can be a rough and cruel world out there in the markets. The competition is high, people are cutthroat, and the markets are never easy. Sometimes it can feel like a feral jungle, with danger lurking everywhere.
You want to give yourself every edge and extra chances to succeed, but what really makes the difference?
Simple: A mentor.
In his classic Liar’s Poker, Michael Lewis referred to a mentor as a “jungle guide”, implying that he helped you navigate the savage environment of Wall Street. While the word “mentor” may not be as colorful as “jungle guide”, it doesn’t diminish the need for a mentor. As traders, if we want to succeed or just get to the next level, then we absolutely need a mentor and the guidance and support that they can offer.
What Is A Mentor?
The term “mentor” can be a bit hard to define. We all have some idea of the benefits of a mentor/mentee relationship, but we rarely have a good idea of what a mentor is or does. For our purposes, we will define a mentor as someone more experienced than you who offers guidance, wisdom and support in your trading career, drawing on what they have learned in their own careers. Almost by necessity, they have to be more experienced, otherwise they would just be colleagues.
There are many examples of well-known investors and traders with mentors. Warren Buffett counts the famous Ben Graham as his mentor. Paul Tudor Jones was mentored by Eli Tully, a well-known cotton trader. Stanley Druckenmiller was mentored by the legendary George Soros. To some extent, these famous investors partly owe their success to the guidance and education that they received. If you want the same success as these greats, shouldn’t you seek out a mentor also?
The first question out of your mouth is probably: How do you find a mentor? Typically, such a relationship develops naturally out of another interaction, and then turn into a mentor/mentee relationship over time. The important thing to realize is that it involves a lot of mutual respect, trust, and communication. A relationship like this is like any cherished friendship—it needs to evolve out of some kind of interaction where the stakes are lower and you can get to know each other. That is a necessary prerequisite for better lines of communication to open up. Imagine: Would you go up to someone you’ve never met and ask them to be your friend and confidant? I doubt it. Would you ask someone you don’t know to be your career guide? Somehow, I think not. Because the stakes are high and the mentor/mentee relationship involves so much trust, that’s the exact way NOT to go about it.
Ok, so what is the right way to cultivate a mentor? You have to make sure that there is an existing interaction and let things develop naturally, without seeming to push it. If you think about it, there are many different kinds of contact you could have with potential mentors, all of which could lead to a deeper relationship. For instance, there could an older guy in your office who you speak to at the water cooler. He takes you under his wing and starts to share some advice. Maybe you meet someone who’s else well-respected in your field and that turns into a more substantial dialogue. The opposite—just going up to someone you don’t know and asking them to be your mentor—is extremely rare and almost feels unnatural.
What exactly happens in a mentor /mentee relationship? Typically, you are receiving guidance and advice from the mentor, while discussing either your life or just business and life in general. It’s rare that the mentor is coming to you and seeking advice, so get used to it. In fact, some mentors enjoy that distance and the power dynamic and love dispensing advice.
For you, the mentee, the benefits are obvious and quite substantial. You receive the solid advice that comes from experience and wisdom. In trading, this is especially important, as older and more experienced traders have gone through many more market cycles than you have. Typically, such advice will sustain you through rough times and take you to new heights during good times. You feel like you have a wise teacher who is giving you extra lessons, transferring to you the lessons from experiences that you hadn’t yet had. You build a personal relationship with a person you respect, almost like a grandparent or uncle/aunt. You have someone who genuinely listens to your concerns and gives you wise counsel.
Less obvious is what the mentor gets out of the relationship. Nevertheless, your first goal should be to figure out what you can give to the mentor and to do just that—show that you have an open heart, genuinely want to help in some way, and demonstrate that you are appreciative. In some cases, a mentor can be the boss, who just wants to know that his people are developing well in their careers. For instance, if you ran a trading floor, you would want to know that your traders were growing and learning new things over time—otherwise, they would be stagnating and they wouldn’t be able to adapt as the markets changed! It could be that the mentor enjoys the feeling of giving back, and wants to know that you will be motivated to take his advice and then to pass it on to other people. In any event, the mentor feels good knowing that someone is listening to his ideas and doing what he suggests—everyone likes to feel like their opinion matters to someone. Or the mentor could want to know that by having helped you, he has a built a personal relationship and has left the door open for working together in the future—on small matters like getting his email working, all the way to working as partners in a new venture.
In trading, one of the most important things that a mentor can do is to relate age-old trading wisdom to you in a way that you understand. Remember the old man, Partridge, in the bucket shop in Reminiscences of A Stock Operator? He didn’t say much, but one of his famous lines came when he was advised to sell a winning position and to wait for a reaction—he rejected the idea indignantly saying, “my dear boy, if I sold that stock now I’d lose my position; and then where would I be? ”. This led the main character to conclude that “The big money is made by sitting, not thinking. Men who can be both right and sit tight are uncommon”.
To that extent, a mentor can also be anyone or anything which imparts wisdom to you, even if you don’t have, or don’t yet have, a close personal relationship with them. For instance, several books, like Reminiscences of A Stock Operator, have reached mentor status in my mind because of the treasure trove of knowledge, advice and wisdom in them. Bella and the rest of the SMB team are like mentors to me, because of the trove of knowledge that they freely share on their blog. The lesson: look for a personal relationship with a mentor but be open to receiving wisdom and advice from every channel.
So far, I have talked about the more practical side of the mentor/mentee relationship. There is also a more moral or spiritual side, especially in the markets. Oftentimes, there are a lot of very competitive, driven people and they can be quite challenging to work with—often, they’re ready to play politics or screw over fellow employees, or worse. Hence, why he’s a called a jungle guide—it can be rough out there! Continuing the animal theme, a shark pool would also be a good description. For both a mentor and mentee, by building a bond that goes beyond pure superficiality, they have found someone that each other can trust, a member of their own tribe, someone who is likely to be decent and straightforward for them. In other words, a genuine friend.
Thus, don’t overlook the benefits that each side can get out of the relationship, and go to the interactions to give, give, and give some more. Don’t take your mentor for granted, ever—treat them like you would your most beloved and wise grandparent.
In the past, I’ve written a lot about the practical steps that you should take to get your trading to the next level—like refining your methodology, focusing on risk/reward instead of money, and using advanced performance psychology techniques like visualization—I want to spend more time on the “whole person”. By this, I mean the stuff away from your trading screen that can help you to move forward in your career and in your life.
Now, go find that jungle guide.
By Bruce Bower | E-mail: Bruce [at] howoftrading.com
Blog: www.howoftrading.com | Twitter: @HowOfTrading