Why It Pays to Pay Attention To Me

I've been a trader, analyst, portfolio manager, and market strategist in a professional capacity for 30 years. I know a few things about investing and I'm willing to share what I've learned with you.

I'm about to praise my own stock picking prowess, but before I do, a little background is in order. 

My first teacher - my dad

I began picking stocks when I was 10 years old. My dad used to sit at the kitchen table and pore over the stock tables in the Wall Street Journal. I would sit quietly at his side and marvel at the way he could make sense of all those columns of numbers. Being a curious boy, I started asking questions like...

• "Why are you so interested in this part of the paper?"
• "What do those ticker symbols mean?"
• "What makes the prices go up and down every day?"

Eventually he began to teach me about what the stock market was, how prices changed, and most important of all - why he liked certain stocks. Little did I know that he was laying the foundation for what was to become a 30 year career path for me.

Fast Forward 30 Years

My first job after college (Marquette University, Finance Degree) was with a small retail brokerage firm in Milwaukee called Loewi & Co. (Later purchased by the insurance behemoth Kemper and became Kemper Securities.)

I started out as a rookie trader on the equity desk and soon made a name for myself as the guy who asked a million questions. I couldn't help myself. I was naturally curious. The bosses took notice and offered me a spot on the research team. I accepted.

Research isn't really research

I loved the fast pace of the trading desk, but the research desk was boring as hell. I did the same thing there, asking a million questions. What I found out was that research wasn't really research. Research was finding ways to spin stories so that the brokers could sell stocks to their clients. It was my first major disillusionment in the business, and I vowed to never participate in this kind of obfuscation again. So, I asked to be transferred to another department.

Proprietary Trading

By a stroke of pure luck, the firm was putting together their first prop trading desk. Interviews were already underway, and I snuck in at the last minute. The guy who would run this new venture was a certified genius. He hired me on the spot, and thus began my real career - figuring out how to pick winning stocks.

My job title was Head of Trading and co-manager of the portfolio. It suited me well.

A prop desk is funded with firm capital, and the bosses don't take kindly to traders who underperform. In the 5 years I spent on that desk we went through a dozen traders who graduated from the top schools, often with honors, but who couldn't pick a winning stock if their life depended on it.

The lesson I learned - brains alone don't make a good stock picker. Brains + Temperament does.

My Next Adventure

After the success we had on Kemper's prop desk, I was recruited to join the Oakmark Family of Funds in Chicago. There I was a senior equity trader and Registered Options Principal. My job was to execute trades as given by the portfolio managers, and to offer them hedging strategies during rocky markets.

Three years later I  was recruited to run the entire equity trading desk at Northern Trust.

I finally saw the whole picture

As the head of trading for a major bank I was privy to all of it - hidden agendas, research bias, favoritism, tribalism, in-house politics, and best of all the truly skilled portfolio managers who ignored all the noise and bulldozed ahead.

I chose to befriend these gifted stock pickers, hang out with them, and trade ideas. I did the same with brokers who covered me, sifting through the posers to get to the truly skilled practitioners. 

I built an informal network of these skilled practitioners, and I maintain it to this day. 

My practice today

By an overwhelming majority, my clients and subscribers have met or exceeded their objectives by listening to what I have to say and implementing my ideas. When I created this website I chose the name carefully. I've been practicing Zen Meditation and Zen Philosophy since 1977. The way it works in the investment realm is by bringing balance, clarity, and simplicity to the process. 

A typical encounter with a new client/subscriber goes something like this. They tell me that they're unsatisfied with the advice they've been getting and they want to try something new. Sometimes they tell me that they just want to find someone who will reveal the true secret to beating the market. And others tell me that they're at a loss when it comes to designing a portfolio and picking the right funds on offer in their company retirement plan.

The one thing these investors share is a desire for the truth. And that's what I bring to the table because I'm beholden to no one. I'm free to speak my mind, without fear of criticism from the bosses. I speak from the heart and tell it like it is, even if it means trashing the dreams and expectations of these sweet doomed angels.

Tough Love

One of the first things I do with a new client is to disabuse them of old ideas. This can be a little jarring at first, but soon they realize that I'm giving them the hard truths that they are seeking. An example:

A client came to me recently, claiming that he had designed a stock-picking algorithm that would beat the market. He wanted me to review his algo and tell him whether or not it was viable.

I reviewed the algo and found some flaws. When I brought up these flaws he rationalized them away, saying that I didn't understand what he was trying to accomplish. When I asked him what he was trying to accomplish he said "that's what I want you to tell me."

Put another way, he had a stock-picking algo that he had little confidence in, and he just wanted my stamp of approval so he could move forward. When I refused, he went elsewhere to seek validation.

Final Thoughts

Every one of my 11 model portfolios has beaten the market for the last 10 years. The difficult choice you face now is deciding which model to follow. Some are factor-based, some are asset allocation, and some are pure stock picking. 

But they are all winners, and I urge you to sign up before January 1st when prices are set to increase.