The following is part of a series that I’ll be creating on trading strategies of well-known traders and investors. Today, we’ll look at the keys to the the investment and trading strategies of trend trader John W. Henry.
Unless your a Red Sox fan, you might not have heard of John W. Henry. When it comes to the lexicon of great traders, John W. Henry doesn’t hold a candlestick chart to guys like Warren Buffett and Richard Dennis. But he should be there.
One thing you notice about great traders is there’s no such thing as a “pedigree.” They don’t all come from Ivy League schools. They don’t all start investing early. A lot of traders don’t even have a financial background.
Henry was from a farm family. He went to Victor Valley College and spent a stint at the University of California. What was his major? Finance? Economics? Nope. Philosophy. He didn’t graduate, by the way.
Despite this unconventional background, in the late 1970s, Henry began to trade. First, he traded something he was familiar with–soybeans and corn futures. But, Henry eventually created and tested a systematic trend trading strategy for multiple assets, mostly commodities.
The tests proved successful. That’s an understatement.
Now I am reading Delivering Happiness by Tony Hsieh. Tony is a co-founder of Zappos, the online shoe company that was recently sold to Amazon for $1 billion. I highly recommend this book because it is entertaining and fun to read.
Yet it is also filled with some deep meaning. Tony shares his story about how he sold his first company, Link Exchange, to Microsoft for $265 million. His own share was $40 million. But here’s the interesting part. He would be paid $8 million for staying with the company for one year.
What if all this economic fear and loathing is a bunch of crap?
It’s really only one scenario that we covered here. What if the economy turns around and recovers like it has consistently done over the past 20,000 or so years of human history?
After all, in the vast context of economic history, this profoundly steep recession or depression, is nothing more than a blip on the chart. In the financial Olympics, it’s a 50-yard dash.
It’s at these moments of clarity (or delusion) that we should examine our long-term financial outlook. Investing is a marathon. Not a sprint. To remain competitive in this long run and to build endurance, you need a training regimen. Here are some tips on how you can be a marathon millionaire.
It’s hard to be a buy and hold investor in this economic condition. We’ve seen major companies get bailed out, or evaporate like a pool of water on a hot summer day.
But think what it was like to be a buy-and-holder in 1935, the depths of the Great Depression. That’s when Grace Groner spent $180 on three shares of her employer’s stock. Over the next seven decades, those shares in Abbot Laboratories split many times and she reinvested the dividends, too.
And guess how much she ended up with when she passed away in January?
Sometimes we catch a little guff for suggesting that we want everyone to become a millionaire and that technology is paving the way for this to happen.
Actually, what I say is I want everyone to follow their dreams and become financially free. This doesn’t mean you have to be a millionaire, per se, as long as you are calling your financial shots. There’s no price tag on independence.
As far as technology helping to create millionaires, it’s already happening! And it’s happening in profound ways. There’s never been a time in human history when financial advice and computing power is available to the mass of society.
In fact, here’s an example of that knowledge that’s (nearly) free. Here are ten blogs that will help you make a million, or become financially free. Whichever comes first.
A great book published this year was written by Russell Simmons, the hip-hop mogul. In his book Do You!, he details his story of success the music and fashion worlds. You might find this book interesting because he explains his strategies for success not in the boring, stuffy business sense, but in the cool and vibrant hip-hop world.
The reason for the recommendation of this book for you is not just because it can help you succeed in life, but because of Russell’s higher message. Russell is a vegan and practices yoga every day. So that means not only is he making money in a big way, but he is also improving the world at the same time.
But who cares? Think about it. He went from zero to $340 million, and then wrote a book about how he did it! Is he smarter than you or I? Did he have more resources when he started? Was he well-connected, before he became famous? The answer to all of these questions is no. The only difference is desire, commitment and strategy.
Another reason that this book is wonderful is that his style is just plain fun. Nobody likes to read a book, and then be bored and wish that they had not started reading it. Through funny stories and first-hand experience Russell both entertained and educated me.
Question for the day: if there was one piece of information, one strategy or one idea that you were looking for to improve life, what would it be?