Since starting in 2003, Simon has produced an annual profit averaging 40% and confidently expects to improve upon this in future.  Despite his success Simon firmly believes in the continued use of expert coaching and this article illustrates his reasons why…

2008 what an astonishing year! 

Once again the market served investors with a timely reminder that the value of investments really do go down as well as up.  Perhaps it’s time that a dose of reality was injected into our increasingly blinkered world.  No longer will 1987 hold its position as the iconic year that investors break into a sweat when recalling.  Those of us living through 1987 and 2008 will remember both vividly of course.  But a younger generation of investors previously untouched by such dramatic events have now had their eyes opened to the fact that where markets are concerned the unexpected really does happen.  Unfortunately the unexpected happens sufficiently rarely that investors are lured into the belief that “it will never happen again”, so much so that the necessary safeguards are no longer being used by the time the next debacle unfolds. 

Whatever this new generation of recently hurt investors may think, there is nothing new under the sun.  Markets repeat themselves today as they always have and always will in future.  On this note of markets repeating themselves year after year, generation after generation, I am delighted to report another profitable year for our fund, with a profit being banked in 11 out of the 12 months. 

With a mentor as effective as Jeff Quinto of course, consistent results are to be expected whether it’s 1987, 2008 or any other year.  After all “it’s just another year” and to traders working with Jeff’s philosophy of banking consistent profits day after day, year after year, it makes no difference at all what year it actually is.  We just keep grinding out a profit whatever the prevailing environment.

One of the few positives to 2008 has been the background it has provided to highlight our own performance.  Profitable funds such as ours are very much in the minority this year.  On more than one occasion this year people have told me categorically that “it’s not possible for you to be making a profit this year!”  They seem stunned when I reply “listen it’s just another year!”  They don’t question our performance in years when the stock market has marched upwards, so why all of a sudden would they now?  Well pretty obviously if the year makes a difference to them, then they clearly don’t have the right strategy, the right discipline or the right coach.  Maybe they don’t have any of those three essential ingredients.  Yet it only takes one to be missing and that makes all the difference in the world.

“I don’t get it.  If you’re as good at taking money out of the market as you clearly are, why on earth would you need a mentor?”  I have been asked that one more than once too!  Initially I thought it was just a dumb question, but then I realised that to the layman a mentor is easily confused with a teacher.  Sure you are unlikely to be at the peak of your profession whilst still being at school.  But a mentor is not a teacher.  Tiger Woods is probably the best golfer ever.  He is no longer at golfing academy learning from teachers how to play.  But he does have a coach.  He has several in fact.  A mentor is not there to teach you how to play golf or how to trade.  He is not there to teach you the basic skill set necessary to excel at your chosen profession.  No quite the opposite.  A mentor’s task is to help an experienced golfer, trader or whatever, maximise his or her performance by squeezing out every last drop of potential he or she possesses and ensuring that potential is turned into reality.  Thus the value of a mentor is also quantifiable.

Another analogy I use is that of skiing.  As a half decent skier, I have been asked at times why I continue to hire the services of a private ski instructor.  I am fortunate that the instructor in question (a long time friend and now a member of my fund) is probably the best instructor available in the Alps.  As with Jeff in his field, I always seek to work with the absolute best of the best.  Anyway, whilst this ski instructor will teach novices to ski on occasions, his real strength is in coaching proficient skiers.  Whilst many people take the view that you take lessons as a novice and then your tuition ends, I take the opposite view that the greatest value can be obtained from receiving coaching as an already capable skier. 

The reason is very simple:  The closer to the top of any game that you progress, the harder it is to make the next incremental improvement.  Each 1% improvement becomes ever more difficult to attain.  Hence the greater the need for expert coaching.  Let’s face it any old ski school can eventually teach you get down a mountain from top to bottom without falling over.  But to progress beyond this to the point that you can come down any mountain, in any weather conditions, safely, effortlessly, confidently and with increasing rapidity, takes a whole different skill set.  It should come as no surprise then that my ski instructor friend used to win the annual ski instructors race.  Year after year he thrashed the young smart fit instructors, some of them decades his junior, causing as much anguish as disbelief.  That is a coach with real value, one who has really walked the talk and has had great personal success before seeking to help others reach their true potential.  This again brings Jeff Quinto to mind in our world of trading.  Of course we are talking here about a very different calibre of coach than those coaches whose personal success comes from selling coaching!  Caveat emptor!

Less than 20% of traders are profitable.  Probably only 5% are really profitable and probably only 2% are consistently really profitable.  To join the 2% club is not easy, but it is possible.  However it takes all three of those elements mentioned earlier - the right strategy, the right discipline and the right top class mentor.  Certainly you can reach the 20% mark without the latter provided you work hard enough.  But however good your strategy and your discipline, the 2% club will almost certainly elude you if you are working alone.  That is why Tiger Woods does not work alone and why the top traders all have mentors and buddies working alongside them too.  Fortunately for me I searched and found a mentor that is perfect for me.  Fortunately for you, you know his name and he could well be that perfect buddy to propel you too into that exclusive 2% club.

I wish you a happy and very successful New Year and remember whatever wild and crazy markets 2009 brings - it’s just another year!