First Step to Profitability | stockbee

6/06/2007

First Step to Profitability

I am often asked by new traders or struggling traders as to what should they do to be profitable. Often many are under the impression that there is some secret sauce. The only people I know of who claim they have secret sauce are the ones selling some software or indicator or news letter service. Also creating an illusion of secret sauce is always a good marketing strategy.

But in reality the first step to profitability in my opinion is process orientation. 90% of the struggle in life or failure to succeed can be traced to lack of process orientation.Between potential or intention and actual results there is always an executional gap created by lack of process. That is why you will see highly structured and regimented organizations like Army, Navy, Airforce are very good at personal transformation.

Most things can be broken down in to process and then tackled easily. Lets take beauty, it is highly subjective thing. But if you have been following the Beauty Pageant, India and Venezuela always make it to top 10. What is the secret. In Venezuela beauty pageants take place weekly. There are professional beauty schools set up by the government to promote modeling, fashion and contestants that will be ready for the future Miss World or Miss Universe. Now India replicated this process couple of years ago when Madhu Sapre ,a Indian girl first reached Miss Universe in 1992.

A private company in India, Times Of India, has perfected the process of identifying beauty contestant, there is an entire rigorous process which polishes the raw talent and makes some ordinary girls in to stunning beauties. They have set up a factory to produce beautiful girls. Since 1992, a Indian girl from that factory has been in top 10 in all worldwide beauty contests.

Yesterdays DIY example is a small illustration of the process orientation and why it is simple for some and difficult for some. Unless you become process oriented, success is elusive. A process orientation can quickly put you on path to improvement. But self directed process improvements as against mandated and regimented process improvements , inherently are more difficult to achieve unless you have a personality disposition to being process oriented or you are extremely self motivated.

I get emails everyday people saying they tried IBD, it does not work. They tried IBD 200, it does not work. They tried Double Trouble, it does not work.They tried 100 concepts and they do not work. At the same time there are another set of people who write back with several new improvements to the same method and how they are trading it profitably.Some write software hacks to speed up the process. Some point out better ways of doing same processes.

No matter the method or idea you trade, if there is no process orientation, you are unlikely to find success. The first step to profitability is process orientation.Once process orientation is imbibed, process improvement becomes easier. Profit is an outcome of following a process.

17 comments:

Jack said...

When you talk about "process" I'm assuming you mean a "system" or discipline or maybe even a template approach?

If i'm off track please explain further.

But I agree with your post.

I does seem that people who do succeed as traders have developed their niche, have a system or discipline in place. IE. Technical edges, small losses, and good money management skills. and live or die by their approach.

James said...

I have a question.

Do you do any king of fundamental analysis (reading financial statments, past news, etc..) before buying a stock?
If yes, how much time do you dedicate to this task?

Amit said...

Hey Pradeep,

I think you got a bit carried away with your comments on your beauty comments and the beauty school... but hey, this is your blog and if not here, then where :)

Amit

Pradeep Bonde said...

Times Of India actually has a beauty and grooming school. Besides the beauty thing the girls also have to mug up on General Knowledge and practice answering questions. 30 Girls are picked up from over 5000 who apply and then polished for the Miss India. One of mu students left MBA to get in to that school.
You can ask the other Pradeep at Times Of India. (Pradeep Guha).

Amit said...

There are schools, no doubts...and they are in other countries too.

There just happens to be a tremendous market for all the major sponsors in Venenzuela, India which makes a lot of marketing sense to have the competitors in top 10. Also, not many people would doubt that women from these countries are beautiful !

A school could polish them but thats pretty much it. Attending a beauty and grooming school could only make anyone so beautiful.

Marlyn Trades said...

I happen to agree with Amit on this one - Women are beautiful - and if that isn't what he said that's what he meant to say.

Once again my friend you speak the truth and there are those who just will not listen.

No not a system - a process - a method of making money.

Mine -
10 A.M. put up my watch list charts
10:15 buy any stocks that are in xyz configuration.
10:16 set stop loss and exit parameters (mental)
10:17 watch until exit (up or down)
Lather, rinse, repeat

It just isn't that difficult folks - Listen to Pradeep - he knows what he is talking about (even if he gets a little too serious about beauty).

Pradeep Bonde said...

So why there were no beauty winner from India before 1992 and after 1992 , several have won. The women were beautiful even before 1992.

The school was set up in 1993. The school basically does all India search picks 30 and polishes them to a template. The syllabus is skin, fitness, make-up and hair styling, mock shoot, diction and stage presence, hair care, ramp walk and choreography, grooming and etiquette, stress management and dental care.It is a month process for 30.3 Out of that undergo 9 month intense retooling to make them fit the template of Miss World or Miss Universe.

If you see the before and after transformation, it is amazing.
http://indiatogether.org/manushi/issue143/beauties.htm

Pradeep Bonde said...

Manufacturing beauties
The Miss India pageant has emerged as a site for the creation of a new kind of woman in post-liberalization India. Under the guidance of leaders of the Indian fashion, film and beauty industries, Miss India contestants learn how to construct gendered identities. Susan Runkle notes India's integration into the global beauty industry.
http://tinyurl.com/2lry9m
Read this article to understand what happens.

Art said...

So very interesting Paradeep. I enjoy how you use such a variety of subjects to teach us.

Thank You
Art

Gnib said...

Hi Pradeep, I started reading your blog just recently, I think I've learned a lot, including from this one. I agree with your analogy with beauty schools.

However, what do you mean by "process orientation"? I can understand "lack of process" or lack of routine or system. But what's orientation here? Would you please elaborate a little bit?

Thanks a lot!

Pradeep Bonde said...

James
I look at earnings, earnings growth, acceleration, sales , sales growth, margins. Most of the time it takes few minutes to figure this out. Besides that for most stocks I know what business they are and what is they key story driving industry and stock higher.

gnib
Process orientation is just fancy management speak for systematic, step by step approach.

Marlyn Trades said...

Don't forget a process isn't developed overnight - it takes work and perseverance and you are always striving for the most streamlined, simplest form you can find.

And if you change your process daily you will never have one. Start something and stick with it and make incremental improvements over time.

Slow, steady and repeatable wins this game.

Amit said...

Pradeep,

Simple.. India started liberalization in 1991.. prior to 91-92, Women (Indian Women) were beautiful too.. :)

Prior to 1991, these Miss India winners have made a mark in Miss Universe (or in some respect on the world stage) :

Persis Khambatta (60s): (pulled out of miss universe) but actually made it a couple of movies in Hollywood.

1972: Roopa Satyan - Was a semi-finalist in Miss Universe

1974: Shailini Dholakia - Again a semi finalist in Miss Universe

By the way, Madhu Sapre never attended this school.

Amit

Pradeep Bonde said...

The only Indian person to win Miss World before 1994 was Reita Faria.
You list is meaningless. They never won the contest.
The reason the school was set up was because Madhu Sapre made a dumb error and lost. She answered some questions wrong.

From the official history page:
---------------------------------
Reita Faria, a young medical student from Mumbai, created history in 1966 by becoming the first Indian to be crowned Miss World.

However, it took almost twenty-six years for another Indian to win at an international beauty pageant. The turning point for the Femina Miss India pageant was when Madhu Sapre was selected the second runner-up at the Miss Universe contest in 1992. After she almost missed the Miss Universe crown that year, a lot more planning was put into the competition. The training imparted to the winners was made more intensive and rigorous to ensure they fared exceptionally well internationally.

And the result was clearly visible in 1994, with the twin triumphs of Sushmita Sen and Aishwarya Rai, who were crowned Miss Universe and Miss World, respectively. Their feats are responsible for taking the whole business of Indian beauty pageants to where it is today.

Ever since, there have been an array of winsome beauties from India winning international titles: Diana Hayden, Miss World 1997, Yukta Mookhey, Miss World 1999, Lara Dutta, Miss Universe 2000, Priyanka Chopra, Miss World 2000, and Diya Mirza, who scored a hat-trick for India, by winning the Miss Asia-Pacific 2000 title. In 2006, Amruta Patki and Tanya Vakil have brought laurels to India by winning the Miss Earth - Air 2006 and the Miss Tourism International first runner up title.
-------------------------------
Post 1993 beauties are manufactured to fit the Miis World and Miss Universe format. It has nothing to do with liberalization.
Times Of India can take the same process to Pakistan, Iran or Kazakhstan and it will work. The process improves the odds of getting the girl in to top 10 in Miss World or Miss Universe.

The distribution of beautiful women in any country is statistically same. Indians have no monopoly on beauty.

Pradeep Bonde said...

Marlyn trades:

Don't forget a process isn't developed overnight - it takes work and perseverance and you are always striving for the most streamlined, simplest form you can find.

And if you change your process daily you will never have one. Start something and stick with it and make incremental improvements over time.

Slow, steady and repeatable wins this game.
--------------------------------
That is the key. Some are fast learner some are slow learner.
But in my observation, some never get it. They can never become process oriented on their own. Typically such people have psychological problems.
Many such people get more pleasure from not following the process. So they are not interested in the reward following the process will bring.

Amit said...

Pradeep,

List is meaningless ? The original post had a comment saying beauties reaching top 10.. and thats where the list becomes meaningful :) anyways, its a subjective point of view... you think something and I am sure you got some reasoning to think that ways.

Agree to disagree with you here :)

Amit

StockRake said...

I don't know anyone who has a process that didn't have to walk through fire to get it. Sometimes it just takes time and maybe trial and error.

Some people never get it and then some do incredible things.