The Way of the Dollar

Zen. just flick a scrunched-up ball of paper into a bin, and it will probably go straight in: think about it, and you’ll probably miss. There is much more to Zen: for the “most explicit and orderly account… in English”, as one critic put it, look to the Way of Zen by Alan Watts. In the context of trading. 1) the discarding of the ‘I’ (as in ‘I am right’), and 2) the emphasis on ‘just doing’ without worrying, when you can see what to do, these are two gold nuggets of Zen thought.

Zen & the Art of Motorcycle Maintenance 72 . Master-piece by Robert Pirsig.

Zen in the Art of Archery 90 . Masterpiece by Eugene Herrigel.

Zero-sum (game) 47 . In most investment games, like real estate and stock markets, and like precious metals and art markets, investors can win or lose because of the expansion or contraction in the size of the cake. The only way all of them – or indeed most of them – can win is if the cake expands: and most players in these games believe the cake will expand over time

for ever.

In a zero-sum game, the only way players can win is by taking a larger slice of the same cake. To most people, the disadvantage of the zero-sum situation is that you can only win, over time, if you have expertise. The advantage is that you cannot lose over time if you have expertise. In variable-sum games, like stock markets, you can lose everything, with or without expertise, as many investors did in the 1930’s – and in recurrent property busts throughout history.

The currency markets are a pure zero-sum game, the only one in fact.

SHORTLIST OF MUST READING

Alchemy of Finance, The 68 . An original account of the ‘new investment way’. By George Soros. weidenfeld, London,

1988, ISBN 0 297 79331 4.

Big Hitters, The 68, 86-7 . By Kevin Koy, Intermarket Publishing, Chicago 1986. ISBN 0 9374 5300 5. Worth reading for its interview with Peter Steidlmayer alone.

Market Wizards: interviews with top traders 82 . Masterpiece. By Jack Schwager. new york institute of finance

1989. ISBN 0 13 556093 4.

Psychology of Consciousness, The

114 . By Robert Ornstein. Get the first edition 1973, if you can, for a helpful discussion of left and right brain consciousness and other topics, including Sufism. Penguin, 1986; ISBN 0 14 02 2621 4.

Reminiscences of a Stock Operator 76 . A classic. By Edwin Lefevre. The story of the trading experiences of the great Jesse Livermore – larry livingstone in the text. 1985 hardback published by Trader Press Inc. ISBN 0 934380 11 2.

The Futures Game, by teweles and jones. recommended overview of futures trading. McGraw-Hill, 1987; paperback ISBN 0 07 063734 2.

The Way of Zen . the best introduction to zen. by alan watts (Pelican ISBN 0 14 020547 0).

What do you say After you say Hello?

The best easy expose of Transactional Analysis, by Eric Berne. Corgi Books1972. ISBN 0 552 09806 X.