For those of you unfamiliar with Showtime's hit series Billions, Wendy Rhoades is a fictional character played by Maggie Siff. She is an employee of the fictional hedge fund firm Axe Capital where she is a performance coach and head of Human Resources.
The investment world is very macho and that is probably putting it lightly. The weak are actively sought out and destroyed on a regular basis. It is no wonder that the topics of therapy, mental health, and others have been so taboo and for such a long time. What has changed is that science is finally proving just how important psychology is to winning and performing at the highest levels.
If you are truly a professional investor who continuously outperforms the markets, investing can be a very solitary and lonely place. Real results (alpha) are generated by investing in things people do not understand, undervalue, overvalue, and so forth. Often times you are going against the massive weight of the herd. The real money is not made investing along side the herd.
The smart money is made going against the herd. Now, do not just think that you can pick any popular position and simply take the other side of the trade. It does not quite work like that. Let us examine a simple example many people can identify with.
From 2002 right into the crash of 2008 home flipping shows were all the rage. It seemed like every network had a few dozen running back to back to back every night. Vanilla Ice even had his own show! Anyway, these shows made flipping houses seem so easy as credit was easy to obtain and home prices kept going higher (again, because credit was easy to obtain). Many people were lured into the trap of easy money and tried to flip houses. 2008 came and wiped nearly everyone out.
This is obviously a once in a life time example, but we can see smaller examples of this every day. Look for assets that people simply want to be in because they have a fear of missing out (FoMo). The emotion of buying simply because you do not want to miss out creates bubbles and those are very painful when they pop.
Once you identify a position the hard part begins. You are going to be constantly inundated by the media, family, friends, etc. about how the price is performing so well, how much money people are making, and so forth. This is only temporary if you have done your homework and found yourself a good position because at some point, it will turn your way. The problem is waiting out that time while everyone in the world is against you.
It helps tremendously to have someone like a fictional Wendy Rhoades or a real professional like Jonathan Levy LCSW at your disposal. Talking with this person and having another party listen and not critique your position is extremely helpful. A good therapist/coach should not state their opinion on the position, only listen to you and focus on the emotions you are experiencing and how you can effectively deal with those emotions.
Many find that a good therapy session leaves them feeling energized and provides renewed vigor. It is also very helpful to feel like you have that person there. It makes grinding through the difficult times much easier knowing you can tell this person anything. Find your Wendy Rhoades or your Jonathan Levy LCSW. These professionals can add serious performance and make you feel better along the way.
About the author: Anthony Davian is a former Cleveland Ohio hedge fund manager. He launched Davian Capital Advisors in 2007 and now focuses his time on consulting start ups, web design, marketing, sales, and more.