Bill Gates, the world’s richest man, often talks about his mentor Warren Buffett, who happens to be the world’s most successful investor. It is well documented that Buffett was advised by famed investor Benjamin Graham, known as the father of value investing. Many companies have formal mentoring programs, as their benefits have been proven time and time again. Successful people often mention that one of the main reasons for their achievement was having a mentor. So if the Gates and Buffets of the world have mentors, shouldn’t you? I would like to suggest that trading without a mentor is like flying blind.
I imagine the reaction of many readers. They’re saying, “That sounds good, but where the hell am I, a sole trader, going to find a mentor – a smart…” I can understand that response. If you worked on Wall Street, I guess it wouldn’t be much of a problem. There you will find many like-minded merchants who could be called upon to serve as your mentor, but how about on Main Street? How many successful traders do you know? I know of a few that have tried, but I don’t know many that have been able to survive for more than a couple of years. The market is brutal and takes no prisoners. I also believe that successful mentoring requires a like-minded business philosophy. There are some aspects that transcend trading styles, but how much can a day trader learn from a value investor? Therefore, the chances of personally meeting a like-minded successful trader who could serve as your mentor are pretty slim.
So what are your alternatives? If you know Warren Buffet well enough to ask him to mentor you, you probably wouldn’t be reading this article. However, he has written numerous books. So by studying his works, you could develop a rather one-sided mentorship. I’m willing to bet that even if you bought all of his books; he still wouldn’t take phone calls from him.
I have heard of business coaches that you can hire. At least since you’re paying them, they’ll take your phone calls, but probably not before 4:30 pm. I can’t imagine a trader distracted during market hours with his problems. Your distraction could cost them much more than they could charge you. I have never researched such programs, but I think they could be of value.
The ideal trading mentor is probably not practical for most. I have settled for a pseudo-mentor approach. So what does that mean? I believe there are three criteria for a trading mentor. He or she must be successful, have a similar business philosophy, and be “somewhat available.” The “something available” is why I call it a pseudo-mentor relationship.
For the last 5 or 6 years, I have tried to force fit different business services into this pseudo-mentor concept. It’s pretty easy to find newsletter writers who claim to be successful. In fact, I’ve never heard anyone claim that it isn’t. The beauty of the market is that it is measurable. If the newsletter claims to be the greatest thing since sliced bread, it won’t take long to determine if they’re just fuming. It is also easy to find related services. There are newsletters for day traders, trend traders, momentum traders, fundamental investors, contrarian investors, all styles are covered. The difficulty is availability. Most are not available. Most will not return your emails. Most just want a one way street. That’s almost like reading Buffett’s books. However, newsletters are more frequent, weekly or monthly, so they have a bigger impact on your day trading.
To address availability, you can try an online trading room. No, I’m not talking about the Yahoo message boards. Online trading rooms are legitimate trading services where leaders exchange ideas and provide assistance to others. It’s not like having a personal mentor who is available only to you, but you can share ideas with someone before you take the plunge.
For the last two years I have been using Jack Chan’s trading service which fits between a newsletter and an online trading room. It provides almost daily updates as well as email support. For me this is perfect. I don’t need much hand holding, but every once in a while I have questions that he answers quickly. These questions are usually pretty focused, so it won’t help you develop a business philosophy. He’s not a financial advisor either, so he won’t help with portfolio assignments and such. However, if he is thinking of shorting and his cycle indicators have just appeared, he will advise against it.
So how does Jack compare to my three requirements? First, he succeeds. I have used his service for two years and can attest to his success. Second, his business philosophy is consistent with mine. He is a trend trader and only trades gold, oil and technology stocks. He traded those, as well as base metal and water stocks. Finally, he is “somewhat available.” His email service serves me well. This isn’t your classic mentoring relationship, but it’s a lot better than flying blind.
