Entrepreneurial Genius

Every Wednesday at HX Research, we profile a great thinker and share some of their wisdom.

While we are focused on the stock market and trading securities, not all of the profiles we do are on traders or investors.

We find great wisdom that can be applied to the market from many different areas. Sometimes, it is philosophers; other times, it is writers or even (gasp) politicians.

Today's issue highlights one of the greatest entrepreneurs of recent history – Jeff Bezos.

Bezos comes from a complex background that many don’t know.

His original name was Jeffrey Preston Jorgensen, and he was born on January 12, 1964, in Albuquerque, New Mexico. His mother was 17, and his father was 19 when he was born.

His father was actually a unicyclist (!) and struggled with alcohol and his finances. His mother left him shortly after Jeff was born and married a Cuban immigrant named Miguel “Mike” Bezos. The family then moved to Houston, TX before eventually settling in Miami.

After graduating summa cum laude with a degree in Engineering from Princeton, Bezos began his career at a telecommunications start-up before going to work at Bankers Trust and then joining early hedge fund pioneer D.E. Shaw & Co.

After reading about the explosive growth in web usage, Bezos left D.E. Shaw at 30 and began Amazon (originally named "Cadabra") out of his garage shortly thereafter.

We won't go through all the details of Amazon's incredible success but will share some of his great quotes.

While these are not focused on the markets, his insights easily translate to trading and investing.

Enjoy!

“If you don't understand the details of your business, you are going to fail.”

As traders and entrepreneurs, we can't emphasize how important this concept is for success.

Perhaps the biggest failure by traders is not understanding exactly how and why they are both making and losing money.

At my hedge funds, we continually improved by constantly analyzing our returns. We then looked to identify common factors in our biggest winners and losers.

From there, we looked to do more of what was working and eliminate what was losing us money.

This process of constant analysis and assessment is a MUST for your process.

“The human brain is an incredible pattern-matching machine.”

If you use technical analysis like we do, this is something you monetize every single day.

Bezos has tremendous respect for the ability of the human brain to quickly take in information and figure out patterns and solutions. It is one of our most significant evolutionary advantages.

Understanding that repeatable patterns can generate high-probability situations is the basis for successful trading.

“Our motto at Blue Origin is 'Gradatim Ferociter': 'Step by Step, Ferociously.'”

I had never seen this quote, but I absolutely love it!

It emphasizes both process and conviction.

Regarding our strategies, we always say that we operate with great belief in our methods but quickly change our minds based on new information.

The concept of high conviction yet willingness to quickly change your course is difficult for most folks to understand.

It is also a trait shared by the greatest traders of all time.

“It is very difficult to get people to focus on the most important things when you're in boom times.”

We see this every day in the BULL market.

Smart traders become distracted by the next “shiny” fad that is working and drop their disciplines.

This might pay off for some time, but inevitably, they lean too far into it. Then, when these fads collapse, these investors are devastated.

We think it is MORE important to be disciplined in a BULL market than a BEAR market. It is also much more challenging to accomplish.

“What's dangerous is not to evolve.”

In the markets, it is an absolute must that you continue to evolve your process to survive and succeed.

Remember that markets themselves evolve. Don't try to trade the market you want; trade the market you have.

Embracing evolution in your process will allow you to create a sustainable one that can weather any market environment.