Investing & Online Stock Trading : The Importance of Having a
Mentor and a Stock Trading Plan
On Friday evenings I look forward to closing the week by going
twilight racing on a friend Alan's 30 ft yacht on beautiful
Sydney Harbour. It's a wonderful experience, with some
spectacular sites of the city skyline and the many sails as we
return to base in the setting sun. We have a handicap of about
half an hour, which means we start about half an hour after the
first boats.
Yet week after week we manage to overtake the other boats and
arrive back at or near the front.....
At the start of the season the club organisers decided to
challenge us further by moving us into the next category of
yachts - to race against the 40ft yachts which are designed to
be faster due to their increased sail area and length...... yet
a few weeks ago we took out line honours there too!
What's the secret? Is it a special purpose built lightweight
boat with secret features built for speed? Do we have a special
winged keel like Australia 2 had in 1983 to win the America's
Cup?
No. None of these. It is a standard yacht built over a decade
ago.
Our hidden gem as to why we do so well is the experience and
leadership of our tactician Jim Vaughan.
His many years of sailing on board many owners' boats in all
conditions means that he is totally in tune with all the
parameters needed to win. He plans each race before we hoist a
sail.
He checks weather forecasts, current weather conditions, tides,
winds, competition, skill levels and weight of those on
board.... the list goes on. Then, once we cross the starting
line Jim watches for every slight change that may come our way.
For nearly two hours Jim checks every detail around him on the
boat, what the crew are doing, the surface of the water for tide
and wind changes - to make sure he sticks to his plan or makes
fine changes to suit if any unexpected changes occur.
Yesterday I had the pleasure of helping him and a few friends
sail the yacht about 20 nautical miles in the open sea from an
inlet called Pittwater (North of Sydney), past Sydney's northern
beautiful beaches, before re-entering Sydney Harbour.
While this was not a race, Jim and Alan still planned the trip
down to the smallest detail.
For this one we had charts; Global Positioning equipment to
check not only position but also our actual speed relative to
the ocean floor bed and extra safety equipment in the form of
personal EPIRB - so that satellites could track us if we fell
overboard ............
This time we were due to sail south into a south west wind. For
the benefit of non sailors, let me first explain that you can't
sail into a wind head-on. This means that you have to 'tack'
back and forth in a series of steps in a zig-zag pattern to
progress forwards.
For our journey yesterday Jim eluded to us that in addition to
the wind coming almost face on, we also had an opposing tide to
slow us down too.
Jim's solution? He also explained that a few miles off the coast
there were ocean currents which contained warmer water -
travelling southwards in our favour. The weather forecast was
for slight seas and no storms forecast so his risk assessment
was that he felt safe heading straight out to sea.
So rather than do a series of multiple tacks backwards and
forwards close to shore, Jim's plan was to sail a few miles out
to sea until we found these warmer waters and then to alter
course to take only one more tack straight in through Sydney
Heads.
Sure enough, when we found the ocean current, the colour of the
sea turned a magnificent shade of blue; we watched the sea
temperature climb from 23.8o C to 26.3 o C within an hour and
the GPS measured our real speed over ground increase by a few
knots.
The result of Jim's contrarian approach? We clipped almost an
hour off the overall sailing time taken by other yachts as they
went to and fro close to shore, trying to make headway against
an opposing wind and tide.
In comparison, our experience miles off the coast was to me one
of those magic moments to be treasured forever.
As we achieved our goal and safely rounded North Head at the
entrance to Sydney Harbour, I reflected on what had made the
difference to our success - to making it appear simple:
Having a mentor - being able to follow Jim who has
several years of experience, knows what he's doing and can
handle the simplest and most difficult conditions
Calculating our risk exposure in advance and having
safety equipment and safety procedures in place
Taking the time to make a detailed Plan before we cast
off from the safety of the yacht club mooring.
Including within that plan, the 'what ifs' - to know
what we would do if conditions didn't go our way.
Having the right charts, with indicators, tools and
skills to monitor and review our progress
Having made the Plan, the decision then to stick to it
with discipline.
My mind then turned to successful stock trading - and the
parallels sprung out as being so very similar. The activity of
sailing vs trading may appear vastly different at first sight.
Look a little deeper and we see the principles of success remain
the same.