Visually Compelling TA

In Strategy and Tactics at Work (Chapter 3 of Garry Kasparov's How Life Imitates Chess) the author describes the "art of useful waiting." In chess there are occasions where there is nothing to do. These times are used to make small incremental positional improvements rather than explosive moves. Minor pieces are moved to the center of the board. Rooks are placed on key files. In investing there are times when we are fully invested and there is seemingly nothing to do. While there may be no trades to make, monitoring and research continues.

In chess one continuously calculates but the nature of those calculations change during the game. While it is your move you think through scenarios with if-this-then-that steps. For example if queen pawn advances, then knight takes bishop, then pawn retakes knight, etc. But in contrast while it is your opponent's move, let your mind run through abstract scenarios with visualizations of fantasy positions - without necessarily thinking through the sequence of moves to get there. Imagine your rook on the eight rank, imagine queening a pawn, etc. With such abstractions, your mind will be energized to search for a sequence of moves to make such positions possible.

In investing there are times for calculating trading sequences such as sell Citigroup then buy Cisco. But there are often times when an investor is in a "nothing to do phase." This is an excellent opportunity to visualize market and economic scenarios. Fantasize about a transportation industry with only three airlines; an internet where the PC and TV have truly converged; banks with all loans performing; consumers confident; further interest rate cuts; a strong US dollar. Such thinking will energize your mind to find investing themes and good company stocks to buy.

Comments: View Comments |  Wednesday February 27, 2008