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Part I > Great Trend Followers - Pg. 17

17 Chapter 2. Great Trend Followers "Most of us don't have the discipline to stay focused on a single goal for five, ten, or twenty years, giving up everything to bring it off, but that's what's necessary to become an Olympic champion, a world class surgeon, or a Kirov ballerina. Even then, of course, it may be all in vain. You may make a single mistake that wipes out all the work. It may ruin the sweet, lovable self you were at seventeen. That old adage is true: You can do anything in life, you just can't do everything. That's what Bacon meant when said a wife and children were hostages to fortune. If you put them first, you probably won't run the three-and-a-half-minute-mile, make your first $10 million, write the great American novel, or go around the world on a motorcycle. Such goals take complete dedication." --Jim Rogers [1] The best way to understand Trend Following is not by only reading formulas that make up the strategy, but by meeting the men and women who use it. Investors today are reluctant to concede that they might do better when it comes to their finances with some mentoring or guidance. While they will sign up for a cooking course, they won't take advantage of the wisdom of either their predecessors or their peers about money. They prefer "reinventing the wheel" to modeling their behavior after proven excellence. However, since we consider role modeling to be critical to learning, this chapter profiles excellent trend followers. As observers of Trend Following, we've come to realize that if you take historical and current trend following performance data seriously, you must make a choice. You can accept the data as fact, make an honest assessment of yourself and your approach to investing, and make a commitment to change. Or you can pretend the performance data doesn't exist. If you think you're likely to make the latter choice, you'll want to reconsider whether Trend Following is for you. Trend followers are generalists when it comes to their strategy. Tom Friedman, a noted author in the field of international relations, explains: "The great strategists of the past kept forests as well as trees in views. They were generalists, and they operated from an ecological perspective. They understood the world is a web, in which ad- justments made here are bound to have effects over there--that everything is interconnected. Where might one find generalists today? The dominant trend within universities and the think tanks is toward ever-narrower specialization: a higher premium is placed on functioning deeply within a single field than broadly across several. And yet without some awareness of the whole--without some sense of how means converge to accomplish or to frustrate ends--there can be no strategy. And without strategy, there is only drift." [2] The men we profile see the whole. They see the connections. They also know themselves and how to separate their emotions from their financial decision-making. One of our favorite "Market Wiz- ards," Charles Faulkner, explained to us how crucial it is to know who you are. "Being able to trade your system instead of your psychology means separating your self from your trading. This can begin with your language. "I'm in the trading business" and "I work as a trader" are very different from "I'm a trader" or "I own a few stocks and bonds" (from a major east coast spec- ulator). The market wizards I've met seem to live by William Blake's phrase, "I must make my own system or be enslaved by another's." They have made their own systems--in their trading and in their lives and in their language. They don't allow others to define them or their terms. And they are sometimes considered abrupt, difficult, iconoclastic, or full of themselves as a result. And they know the greater truth--they are themselves and they know what works for them."