Andy Swan » Danger: High Water

Danger: High Water

April 23, 2009 – 10:45 am

Why do guys with millions of dollars kill themselves over financial problems?

Because they HAD a billion.

I’m sure Tiger Woods, one day with a friend, shot a 57 or something insane…on his best day….his high-water mark.

But I’m positive he isn’t thinking “break 57″ as he stands on the first tee at Augusta. In fact, I’m quite sure he’s not thinking about winning, or any score at all.

He’s thinking about the drive he’s about to hit. Analyzing his options, deciding what he wants to happen, visualizing a result and then executing the shot without fear.

Learn from this.

There is extreme danger in high-water marks. You should absolutely ignore them.

Comparing your current situation to the best situation you’ve ever been in is an invitation for self-doubt, sadness, hindsight and a general loss of the ass-kicking swagger that allowed you to reach that high-water mark in the first place.

In addition, obsession with high-water marks often leads to very risky behavior. Large, leveraged trades. Lies. Steroids. Hell….I’m willing to bet that 90% of ponzi schemes start off legit and slippery slope their way into ponzis as the manager begins to fudge the numbers to avoid showing a big move off that high-water mark.

Do yourself a favor, right now. FORGET the high number that your investing account, trading account, net worth, vertical jump, whatever was at at its peak. Free yourself of the impossible standard that you wouldn’t hold anyone else in the world to. Silence your critics by refusing to listen to them (they’ll never shut up on their own.)

Analyze your situation honestly.

Determine a course of action.

Visualize the intended result.

Execute fearlessly.

Himanshu

Excellent! Excellent! Excellent!

Pat Cruse

This type of thinking REALLY messes with people's heads in poker. You had all the money in the world when you had $10k to your name and you had been winning for the last month. However, you feel almost broke when you have had $100k at your high water mark, but now have $50k and have been losing for the last month. It really is a sick way to think and is a huge struggle for almost every poker player (who isn't currently at the high water mark).

andyswan

So true. Poker is almost always the perfect analogy.

ManyPeaks

extremely solid advice Andy

JakeGint

Wisdom!

frockenstein

I wrote a similar post recently after the same plan of attack worked awesome for golf. Having a memory is a great thing, and an awful thing sometimes.

Malcolm Lloyd

Damn good post Andy.

mark

great post

applicable across so many things in life.

Guest

Great post Andy. So true.

Interview_Guru

Andy - Excellent- see the same thing as a head hunter when sales people want a certain salary because they made it before, oh yea it was monopoly money during the dot com days - they forget that little fact, instead of head down and making it happen, they're looking for the next "gimmee".

andyswan

True. And home sales I'm SURE.

bankdraft/Leigh Scott

Stay in the moment....hindsight can kill you...very good food for thought...you are thinker Mr.Swan

Scalper68

Nice post. Total agreement. I would also add visualize HOW u react AFTER/DURING the trade. I.e. u bought at 10, what would u do at 9.70, 10.20, 10.30, etc. Excellent advice.

Nico

Nice post. Good to remember. Thanks

nickfenton

Excellent post! There is so much truth to your words. I hope a lot of people get a chance to read this.

ManyPeaks

whatup Nick. been a while since I've seen you (& Smalls) doing Backroad raps. hope you're doing great.

greenskeptic

Insightful as always, Andy. Reminds me of those signs at desert arroyos about the dangers of sudden high waters...they can sweep you away!