I watched Moneyball the other day and the similarities to trading were striking.
It stars Brad Pitt as the Oakland A’s General Manager.
After a playoff season that they lose in, he realizes he needs to think outside the box because he does not have the budget to buy the stars like the Yankee’s do.
He happens to meet a young analyst/economist who shares that it’s all about the players statistics. Based on this factor only (not personality, age, etc.) he can tell if a player is worth the going price or not.
Many players are overpriced and a few are severely underpriced.
Brad Pitt (I forget his name in the movie… just like me to forget names) buys into it, hires the kid and hires all the severely undervalued players.
The coach does not play his new players and they start losing.
Just like if you buy a good trading system and then don’t follow all the trading rules.
I know 99% of those sold are not good systems, so if you are in that boat this does not apply to you, because it’s not your fault. In the movie the system ends up working, but it would have never worked if he did not stick to it.
After the coach “gets on board” the team goes on a 20 game winning streak. Which had not happened in baseball in over 100 years.
It proves that working the statistical system works and in the end he gets offered a job by John Henry (a large fund manager) who owns the Boston Red socks for 12.5 million.
John Henry says, “those who do buy and recruit players the old way are like dinosaurs”.
He should know; he is a statistical trader like me.
And in only two years with the new system the Boston Red Sox win the world series.
I won’t ruin the ending by telling you if Brad Pitt took that job or not… you will have to watch the movie to see.
The main point is once you have a winning system, you MUST follow the trading rules.
Helping you retire on time,
P.S – What I also like about the movie is that it’s based on a true story.
All of us have our own true story right? Well if you’re not retiring on time, it’s time to find a system and stick with it.
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