Winning and Trading

winning

Winning by Sir Clive Woodward

As traders and investors, most of us like the idea of winning. We want to make lots of money. We want to win.

We want to be work hard, do the right thing and prove that we are the best.

And no one ever wants to be a loser.

We’ve all dreamed of being the best at something—to soar like Michael Jordan, to play the cello like Yo Yo Ma, to practice medicine like Ben Carson. That is the very definition of winning. Being the best is an immensely satisfying experience.

Similarly, we enjoy the process of becoming and transforming into a winner. We actually relish the hard work and challenge if it is paving the way for success. Winning is the sweetest of rewards for all of the effort.

We are fortunate when someone lets us explore the transformation of a group into winners and champions. Recently, I finished the book Winning, the autobiography of Sir Clive Woodward. I read it on the recommendation of a friend who is a very successful fund manager and has put some of Sir Clive’s teachings into practice at his firm. The book covers the rise of the English Rugby Team under Woodward’s coaching, as they rose from also-rans in the late 1990s to winning the World Cup in 2003.

More relevant for us, the book provides amazing insight into how to build a professional, elite organization and how to win. I’ll talk about the lessons that Woodward imparts and how we can implement them in our own trading and investing to become winners.

In general, sport coaches have provided a host of lessons and teaching about cultivating skill and peak performance. SMB had a great write-up on lessons we can learn from Coach K, the guru behind Duke basketball. I love the work and example of John Wooden and Phil Jackson, two famous basketball coaches in college and the NBA, respectively. Vince Lombardi, the American football coach, is a veritable fount of wisdom about life and success.

With so many coaches out there, why did I decide to talk about Woodward? The answer: because he has been a success as a player and a coach, so he understands winning. More importantly, he can explain where success comes from and how to make it happen. Those are the lessons that we are looking for in our own lives.

For evidence of his success, let’s peer into his background. Sir Clive Woodward played rugby successfully for several clubs in England and also for the English national team. At the same time, he also built a thriving business career in parallel, during a time when British rugby was still an amateur sport. After retirement from playing, he remained in business and got into coaching. After a couple of years of coaching an amateur squad, he was asked to lead the England national team in 1997. He took the team to number one in the world, and then won the World Cup in 2003—defeating the perennial powerhouses from the Southern Hemisphere like Australia, New Zealand and South Africa. Since then, he has been the head of Great Britain’s Olympic Team for the Vancouver, Beijing and London Olympics.

Obviously, Sir Clive has a proven ability to win and to create success in various environments, not just in sports.  What I love about the book is his openness and thoroughness in explaining how he gets these results. There are many lessons that I wanted to draw out of the book and that are applicable, even if you don’t know the rules of rugby. (I didn’t when I first started reading it). But Woodward has already done that for us. Moreover, he now does coaching for businesses and in his book he talks about how the links that he sees between his career tracks in business and rugby.

He has taken his teaching about Winning! and distilled it down to seven mindset components which are equally in the sports and business world. I’ll go through this list, why they work, and identify the links to the markets.

 

Woodward’s 7 Keys to the Winning! Mindset:

  1. Enjoyment
  2. ChangeThinking
  3. Critical Non-Essentials
  4. Build on Success
  5. Second-Half Thinking
  6. One Team
  7. Beyond Number 1

 

  1. Enjoyment:

You have to enjoy what you do if you want to succeed at the highest levels. Obviously, Woodward always enjoyed playing rugby, because he played when it was an amateur sport. He certainly wasn’t in it for the money. When he first started coaching, he made sure to emphasize having more fun. This stuck throughout his coaching career. Sir Clive would also re-design the experience to make it more enjoyable—adding music to workouts, changing the practice grounds to encourage team bonding and raising the standards of the hotels that the team stayed at. All of this boosted the team’s enjoyment of the experience. It also demonstrated that the coach cared about them, because he was trying to make it more comfortable and enjoyable for them. By being able to relax and enjoy themselves, the team was more motivated to train and practice, leading them to winning more. That’s perhaps the most enjoyable thing of all.

 

Markets Lesson:

You should enjoy the markets, or investing/trading and all of the main elements. Your enjoyment will fuel your success. You should think of enjoyment as a prerequisite for success. If you don’t enjoy it, then it will be impossible to succeed at the highest level. The easiest way to increase your enjoyment is to focus on the part of markets that you enjoy the most, the part that really hooks you. Ideally, it will be similar to something that you’re already interested in. If you find yourself drawn to international affairs, then try to trade foreign exchange. If you are a great poker player, then being a short-term trader will probably draw on the same skills. If you like the nitty gritty of how companies work, then you’ll probably enjoy being a long-term investor. By doing what you enjoy, you are more likely to do it, to do it well, to be fully absorbed and to feel the Flow of the experience.

As strange as it sounds, enjoyment should be front and center, over the potential financial rewards. Yes, they’re important, but they’re not everything. Too often, people fall prey to the idea of A Number at which they will gain financial freedom. That will motivate you toward success, but you will be much more successful if you can find the kind of deeper enjoyment in the process of making money.

 

  1. ChangeThinking:

 

Woodward defines this as a combination of thinking in new, innovative ways and also of going into an unprecedented level of detail to that thinking. He applied this in many ways, such as devising new heterodox tactics and strategies for the team to pursue; rethinking the organizational structure of England Rugby and trying to make it full-time and professional. By being willing to think completely differently, he was able to carry out large-scale tasks like formulate a new offense, based on a spread-out way of playing the field.

But ChangeThinking encompasses more than high-level changes. Woodward was looking for every edge possible, leading him to come up with many small-scale innovations that improved the team’s performance in meaningful ways. One example was tracking and practicing eye movement with players. The exercises literally involved practice and looking up and around the whole field. The thinking was that by practicing the right eye movements, they could build better awareness of their teammates around them, the ball’s location and where it was headed. That little change would have a huge knock-on effect in many areas, such as passing, defense and kicking, as their heightened awareness helped them to execute better. As Woodward’s experience shows, a seemingly minor change can and does make a meaningful difference.

 

Markets Lesson:

If we want to improve our performance, we need to be willing to implement all kinds of changes, big and small. It means being willing to consider changes in everything we are doing and not having any sacred cows. There are many areas that can facilitate success. Some of the basic items to rethink could be methodological issues with our style or process; whether or not we are taking the right level of risk; what tools do we need to use or consider to make our decisions better. As I have written about before, star fund managers will make wholesale changes to keep winning.

But similar to Woodward training player’s eye movements, we should consider little changes that could have a widespread impact. Maybe we get a new chair. Perhaps we start off each day with five minutes of mindfulness practice. Or we tell ourselves to write up an email to ourselves or a friend before we put on a trade. All of these are seemingly minor, but you can see how they would have far-reaching benefits, leading to higher profits and a better state of mind.

 

  1. Critical Non-Essentials:

This means taking care of the areas that support your core activity. Rugby players themselves should focus on playing rugby well, but they would certainly benefit from having all of their logistics sorted out, having a nice training facility and equipment and extensive support in relevant areas like fitness and nutrition. The idea is to make the players’ experience as hassle-free as possible and to set them up to win.

By planning ahead so judiciously, Woodward is against these potentially remote outcomes which could have a potentially disastrous outcome. As a rugby player, you may not pay much attention to your footwear—but if the bottom of your shoe fell off with two minutes left in a critical game, it would obviously be a disaster for your ability to play.

Part of this is mental. Imagine if you spent the whole game worrying about your shoe—you wouldn’t be able to give it your all because you’d be distracted. By sorting out all of the critical non-essentials, you are removing any sources of worry or fear that could detract from your overall performance. When getting all of the critical non-essentials into order, a good rule of thumb is that we should sort out or have a plan for anything that could potentially be a source of worry.

 

Markets Lesson:

If you want to win and to be the best, then you need to have an environment that supports and encourages your success. This means having the most supportive physical setup possible—having the right office space, desk, chair, etc. so that you can work at peak productivity. It can also mean having the best setup possible, with the right broker, communication links, IT systems and hardware. Financially, you need to feel somewhat secure– you don’t want to be risking money in the market that you can’t afford to lose. Overall, you want your whole setup to promote your overall success instead of creating obstacles to it.

Just like Woodward, we want to prepare for the worst case and to have some defenses in place already. For instance, you need to ask yourself if you have a backup in case your main electrical or communication system fails. You should have a file backup for all of your records and data. You should have a plan for when you get sick and need to rest. You should know in advance when you’ll do your research and review so that your other activities and your family life never get in the way.

 

  1. Build on Success:

Woodward does not believe in berating his players, as he finds this to be demeaning and ineffective. His approach is to emphasize and build on what works. If his team had a disastrous showing, then he would spend some time reviewing a couple of the main areas for improvement.

The focus of his conversations with the players was always on the positive aspects. One of the reasons is psychological—he doesn’t want to tear the players down constantly and create a rift with them. Instead, he wanted to stay focused on the big picture and on the progress that they were making. First of all, this meant identifying and emphasizing what they were doing right. If there was something successful, then Woodward wanted the team to understand what was successful, why it worked, and how to repeat it.  Then they would practice it until it became second nature. When interviewed, many famous athletes will say, “I just focus on getting a little bit better every day”. Woodward believes the path there is to keep doing what works and to build on that already solid base.

There are two reasons why this approach works. The first is that our brains don’t handle negatives well, so it is actually counterproductive to tell ourselves “not to do something”. Try picturing a command phrased in the negative like “don’t smoke”. What immediately pops into your head?

dont smoke

Exactly! We want to stop thinking about the cigarette, but instead there’s that picture of a cigarette popping into our head. If you concentrate on the negatives, then they stay lodged in your mind. It’s better to phrase things positively, speaking in terms of what we want to happen, such as “living a healthy, clean lifestyle”. This will help our brain to get the right image.

Secondly, it’s actually difficult to change engrained habits. If we try to tackle head-on something that we are doing wrong, then we will usually fail. My favorite statistic in this department comes from the book Change or Die, where they emphasized that only 10% of heart bypass patients will succeed in making the necessary changes to prevent another heart attack. Even when staring death in the face, only one in ten people can change. If we are making the same mistakes over and over, then trying to correct that specific set of mistakes will actually not end up working and leave us frustrated.

The solution is actually to build new, positive habits that will outweigh our weaknesses. Precisely because people do badly when focused on the negative, they should switch their focus to doing something differently. That means practicing new ways of doing things; building new habits; and ingraining new approaches until you mitigate or compensate for your weakness.

 

Markets Lesson:

Never beat yourself up. Whether you are having a bad run or just made one dumb mistake in the midst of a successful run, go easy on yourself. It’s tempting to focus on the negatives and to dwell on every little point that we could do better, but as Woodward likes to remind us, it’s counterproductive. That way of thinking won’t get you the results that you want.

Instead, we should be combing through our records and spending our time on identifying what works. Once we’ve we should do more of it. Do you make most of your money with one kind of setup? Then do more of that, or explore setups that are similar. Do you do your best research early in the morning? Then keep doing your research early in the morning, and maybe try to wake up a bit earlier to take advantage of your most productive research time. Did you do a better job of managing losing positions last year than the year before? Then congratulate yourself, keep up the good work and try to do even better.

Obviously, it’s ok if you want to do something better. But instead of beating yourself up about the negatives, refocus your efforts. Come up with a new approach or several and then explore them. If you have a weakness of jumping impulsively into positions because of FOMO (Fear of Missing Out), then don’t spend your daily review yelling at yourself for chasing a position, yet again. Instead, experiment with new, positive actions whose byproduct will be a lack of FOMO trades.

  • You could set up an accountability partner, where you announce to a friend or coworker what you’re doing to do before you do it. This would act like a speed bump before you put on a position, leading to more considered decisions with less impulsiveness—good for your results and especially good for avoiding FOMO trades.
  • You could also try changing your rules about legging into any position, so that you are only putting on 20 or 25% of a position to start. That way, if you find yourself in a FOMO-induced position, then it can’t cause as much damage and you can more readily get out of it.

The bottom line is to identify what works, own it and do more of it. You want to find new habits and to make them stick, so that you are doing the more of the rights things automatically. As I wrote in another article, creating new habits is the key to getting more consistent in your efforts. It is the pathway to success.

 

  1. Second-Half Thinking:

By this, Woodward means dividing up the game into two individual parts at half-time. The purpose is purely psychological: you can break with the first half and treat the second half differently. If the first half went badly, then this is the perfect chance to hit the reset button and to come out in the second half as if it were an entirely new game. Woodward’s players could come out prepared to play well and execute their game plan, without dwelling on the score. They would never feel “behind the 8 ball”, i.e. so pressured by the score and their circumstances that they would become stressed or paralyzed by fear.

Furthermore, the half time was a chance to review their performance and to make corrections or changes mid-course. They could identify what they were doing right and reinforce it. They could discuss any holes that they found in their opponents and how to take advantage of those weaknesses. The players could come out for the second half, with a new game plan and mindset, primed and ready for success.

 

Markets Lesson:

There is a lot to be said for the “pause that refreshes”. You want to find a time that lends itself to a certain amount of rest and review. It should feel like taking a break mid-stream. This will give you a chance to review how you’re doing and to make the necessary tweaks and improvements to your game plan. It doesn’t have to be every 40 minutes, but try to find some time each day, during the day. Bill Gross famously takes a break during the workday to do yoga. Try something similar. You will obviously get a break every night for sleep and when the market is closed, which you can also use to refresh and review. But try to go the extra mile in this regard and to create a half time for yourself.  You never want to push yourself too hard and get brain-fried.

After each break, you should feel that you are approaching the markets with a clean slate. You should feel that you are refreshed, raring to go. And you should feel prepared, as if you know exactly what you want to do in that next slice of time. There are huge psychological advantages to feeling like you’re starting from scratch. “Second-half thinking” means going in there, not thinking that it’s the second half but rather that it’s the start of an entirely new game—one that you will win.

 

  1. One Team

A team is greater than the sum of its parts. In order to craft the best team possible, Woodward sought to create the right team culture, with a twin focus on striving for elite standards and on teamship. One way was to come up with a code of conduct that was written by and agreed upon by all of the team members—so that everyone felt he had contributed to it in some way, and would feel like he was a part of it. Woodward called this a “’this is how we do it here’ philosophy”, which pervades the whole organization. His goal was to get all of the different team members and related people on the exact same page, working seamlessly together.

 

Market Lesson:

You must have your own attitude of “This is how I do it”, in which you articulate your philosophy and style for investing or trading. This is about setting the right tone for your own work. You are striving to be professional, disciplined and to set high standards for yourself. Just like Woodward’s players, you could come up with your principles and code of conduct for yourself. This would serve as a powerful reminder of how you want to do things.

If you work in a team of like-minded traders or investors, then Woodward’s lessons are even more powerful. You should get your entire team to come up with its own definition for teamship – and then stick to it. You could draft your own code of conduct and rules, and then work hard to make it a reality. Furthermore, you can create your own investment process document which serves as your team’s guiding light, and use it to support each other in being disciplined and successful.

 

  1. Beyond Number 1:

Woodward definitely saved the best for last. His philosophy is to strive to be better than number 1—meaning that you want not only to outdo your competitors or everyone else, but also to be the absolute best that you can be. Woodward sets out a discipline of constant improvement—reinforcing what works, always training hard to be the best prepared possible, always looking for ways to do things better. If I had to single out one essential element to being a champion and winning, it is this principle: striving to be the absolute best that you can be.

You can see this in Woodward’s experience as a rugby coach. There were many accomplishments that he could have followed by resting on his laurels. After England beat the three southern hemisphere powerhouses in a row, he could have taken it easy. But instead, he fought hard to become number one in the world. After being number one in the world, he could have coasted into the World Cup. He then made a big push to prepare for the World Cup, which paid off in victory. After that, he went on to even grander things for Team Britain.

Sir Clive has been successful because he is always pushing himself and those around him to new and greater things. He is always pushing – new methods, harder practices, better support—in an effort to create the best possible team around him. He knows that the constant pursuit of excellence is the only thing that will turn him into the best and keep him there.

 

Markets Lesson:

What Woodward means by “Beyond Number 1” is that we can always do better and we must always strive for excellence. This is even more important with the markets, because they are always changing and dynamic. If we didn’t strive to be the best, then we could easily start to struggle.

If we internalize this attitude, then we will do two things. The first is to stay prepared and focus intently on what we’re doing at every minute, because we want to give it our all. There is nothing quite like giving it our absolute best effort and “leaving it all out on the field”. This is a prerequisite for being the best.

The second thing is challenge ourselves constantly, looking for ways that we can improve and setting the bar even higher for ourselves. Even if we are doing well and happy with our performance, look for that little extra push that we can give ourselves. Set yet another stretch goal, and figure out how to get there. Look for some minor things that you can tweak and let their impact ripple throughout your trading. Never settle. Keep pushing. Remember, excellence is a habit, not a place that we get to and then coast.

 

Examples of Winning! In Action

The amazing thing about Woodward is his dedication to thinking of the sweeping changes that he can make—but also all of the little incremental changes that will help them towards their goal.

Here are some examples of the micro-level steps that Woodward took and how they worked. I include these vignettes because I found them to illustrate well the mindset and actions of a champ, and the kind of action that he takes to achieve his goals.

 

  1. Getting new jerseys:

As you probably know, a traditional rubgy shirt is quite loose-fitting and has a lot of extra fabric. It’s comfortable, but that comfort has a downside—it makes the person wearing it easier to tackle. Woodward noticed that England’s players were tackled on a couple of key plays because of their loose-fitting jersey. He immediately called up Nike and asked them to design tight-fitting jerseys. While it would probably only make a small difference, this is the mindset of doing every little thing necessary that can help you to win. And in the end, this turned out to be a key difference on some subsequent key plays.

 

  1. Improving the quality of practice and preparation:

Obviously, practice and preparation are essential for developing skill and achieving peak performance. When he first joined Henley, the regional rugby squad, Woodward found the players less than enthused about practice and their own fitness. He decided to get them pumped up by introducing workout music into practice sessions. It was a simple change, but their engagement and effort in the pre-workout and calisthenics increased dramatically. As the effort and engagement improved, then they naturally got much more out of the practice. Similarly, when he was at the National Team, Woodward rebuilt their practice facilities to his exact specifications in order to create the kind of practice environment that he wanted. Woodward knows that the overall quality of practice determines everything, so he tried to get players as motivated as possible.

 

  1. Professional environment:

Woodward redid all of the facilities to make them feel like a corporate office. He redid the players’ changing areas so that they were no longer “as inspiring as a prison cell”. He created a War Room, which was actually all-business—this was where the team gathered to discuss strategy and review film. It was given the feel of a genuine corporate boardroom.  And they created another room for all of the teams socializing, called the Team Room. This gives the entire facility the feeling of a serious office, with a professional and sober demeanor.

 

  1. Professionalism:

He created handbooks for the players with all that they would need to know, including a Mission Statement and a Code of Conduct. Importantly, the players wrote the code of conduct for themselves, so that they could all feel comfortable with it and thus stick to it. This binder eventually ballooned into a 96-page Black Book, just like one you would expect to receive upon joining a prestigious law or consulting firm. The team also came up with their own ground rules for preparation and study. That included a “no mobiles” policy, so that Woodward had their undivided attention; and a punctuality rule, insisting that players be 10 minutes early. These may seem like minor things, but Woodward established high standards and guaranteed that the players would be engaged and concentrating on practice, like true professionals.

 

  1. Commitment:

When Woodward became the coach of the National Team, he joined an organization where most of the coaches were part-time. In order to win, Woodward insisted on being full-time, and on having junior coaches who were fully committed, i.e. full-time also. He wanted to create a professional environment full of people who were similarly completely committed to winning.

 

As you can see from the example of Sir Clive, winning is not just a singular act. It is a mindset that permeates everything we do, down to the most minute detail. Hopefully this post has given you insight into the mindset of a champion.

What’s one thing that you will do today to be a winner in the markets?

 

 

 No relevant positions

By Bruce Bower | E-mail: Bruce [at] howoftrading.com

Blog: www.howoftrading.com | Twitter: @HowOfTrading

 

 

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