Sol Palha on the Nature of Paradoxes

PARADOXES
by Sol Palha of TacticalInvestor.com, John Tyler of
Trader007.com, and Janice Dorn, Ph.D. of TacticalInvestor.com
October 17, 2004

The way of paradoxes is the way of truth. To test Reality we must see it on the tightrope.
When the Verities become acrobats we can judge them.
Oscar Wilde 1856-1900, British Author, Wit

1) Thou shall get the exact opposite of what thou sorely seeks.

The principle here is very simple, the harder you try for something the more you are willing to risk, the more bull headed you become and slowly but surely logic and reason are replaced with faith, and stubbornness; two of the most deadly sentiments to have when it comes to investments. Whenever you go after something do so in a nonchalant manner, do not desperately seek to win, because desperation blinds and when one is blind they only see what they want to see.

2) The harder you try for something the more likely you are to fail. There is difference between being determined to achieve something and simply being like a bulldog who wont give up. Lots of effort does not necessarily equate to possible success. It’s learning from your mistakes, taking time out and then trying again but with a different approach that usually results in success.

This law is very similar to the above low. Over efforting does not bring about success. In fact if you try to squeeze water out of rock, the only thing you end up with is a massive headache and lots of dust. So do not try to create opportunities, instead look for them and then use the trend is your friend principle. The most important thing to do is to keep a journal of all your failures and mistakes, forget your successes. Most individuals have an incredible capacity for forgetting their mistakes and failures, however they never seem to forget their success (perhaps because they have had so few and want to hide behind something). If you forget your failures and mistakes, you will be doomed to repeat them and suffer twice as much in the future. Make sure you learn from them, if you learn from them then you lost nothing, if you don’t then you lost everything.

3) When you think you are desperate, take time out, for the little you have will be taken away from you to teach you the true meaning of the word desperate.

This is perhaps one of the most dangerous diseases to have. When you start feeling desperate, stop doing everything and take a vacation. If you think you can’t afford the vacation, wait to see how you feel a few months later when you have lost almost everything. Never ever do anything when you are feeling desperate. You need to take time out and let your body and mind recover so that you can assess the situation clearly.

Desperate minds lead to dangerous mistakes and dangerous mistakes lead to bankruptcy

Or worse.

4) Never get into something with the thought that I don’t have enough money or time to put into this project. For if you do your wishes will come true.

If you think you don’t have enough money or time, then stay the hell out till you have enough of both, for if you don’t you will definitely have a lot more time on your hand and a lot less money. Lots of time and no money are the ideal combination for depression.

5) Always look at failure as bringing you one step closer to success. The law of paradoxes states that without failure there can be no success. Failure is an absolute and necessary ingredient for those who chose to be successful. Therefore you should embrace your failures with equal gusto as you do with your wins. Make sure you learn from each failure otherwise you will be punished twice as severely in the future.

This is perhaps the most important if not thee most important rule. If you look at failures as a waste of time, you have learnt absolutely nothing and you deserve all the pain and more you will get in the future. Make sure that you listen closely to what each failure is telling you. Failure brings you one step closer to success because it lets you know exactly where you are lacking. Most people tend to look at failures in their lives with dread and the reason is simple, they actually want to lose. If they took the time to sit and analyze their failures they would find a solution to their problems but they don’t and so they deserve every single bit of punishment life hands out to them. In addition never ever try to help a failure unless he/she wants to help himself/herself first. Trying to help them if they do not have this desire, will result in tremendous pain, loss and most likely the individual you are trying to help will blame you for all the problems in their life.

Conclusion

Paradoxes, if understood, can be used to improve our lives in every single aspect. All one has to do is learn to take things as they come rather than forcing a situation. Examples of paradoxes in action:

Telling the market what to do and then losing your shirt and your pants as results of your stubbornness and stupidity.
Clinging to hope that a certain sector will go up because all the fundamentals are prefect and ignoring the trend principle; end result complete loss and when you close out your positions this sector takes off like a rocket.
Being a perpetual bull or bear is a guaranteed way to make sure that the only success you will encounter is in finding a nice prime resting spot (as in 6 feet under the ground)
Looking for or chasing happiness, net results misery and depression. Happiness is right there you don’t have to find it, you just have to learn how to appreciate the small things in life.

And the list goes.

So make sure you learn how to take it easy and live each day as if its your last because it might actually be your last. Most important of all do not chase investments, or try to force an investment to take off. Study the trend and then take your position and wait for the rewards to come in. while waiting don’t ever forget that the most important things in life are really free.

© 2004 Sol Palha
Tactical Investor
Email

The Mortality of Mortals
by John Tyler CEO www.Trader007.com

If you think that this “Law of Paradoxes” is for eggheads, think again. It could mean your life!

A friend has just been diagnosed with a highly malignant cancer. He knows that the treatment, even if successful, has many adverse side effects. His business has been successful and based on 110% effort, will power and pure doggedness. Hence he believes that he’ll beat this by application of the same principles.

This is the ultimate Paradox Law: our apparent success can kill us.

There is statistical proof of this Law in action in the area of health and disease. I first became aware of this in the 1980s when we were looking at the mortality rates from a specific type of malignant tumour. The surprising finding was that the survival time related to the time of diagnosis and not the size of the tumour! This was unable to be explained even by the adverse effect of treatment. Now we know however, that the mental effort of the unfortunate victims acted to ensure their own eventual death, no matter how advanced the tumour was at the time. These results are now masked by more radical life extending therapies, but it maybe that the window has just been opened wider.

The Law of Paradox here is that focusing on the disease, tumour or whatever, actually strengthens its hold over the victim!

There are right ways to think, as well as to act, for both health and trading are concerned. All our efforts can be tainted by an ignorant approach. Don’t become another statistic proving the effectiveness of the Laws of Paradox.

“ Cured yesterday of my disease,
I died last night of my physician”
M. Prior 1664-1721:The Remedy worse than Disease”

The Scorpion and the Frog
by Janice Dorn, M.D., Ph.D.
Contributor
Tactical Investor

A scorpion and a frog meet on the bank of a stream and the
scorpion asks the frog to carry him across on its back. The
frog asks, "How do I know you won't sting me?" The scorpion
says, "Because if I do, I will die too."

The frog is satisfied, and they set out, but in midstream,
the scorpion stings the frog. The frog feels the onset of
paralysis and starts to sink, knowing they both will drown,
but has just enough time to gasp "Why?"

Replies the scorpion: "Its my nature..."
Aesop's Fables

No matter who you are, how intelligent or how much education you have, if you keep doing the same thing over and over again, expecting different results, you are suffering from the most insidious form of insanity. This is self-delusion of the highest degree.

Years ago, when I first started to trade, I was so optimistic that I could make money consistently. I was smart, more educated than almost anyone I knew, a successful physician, and always had been able to study hard and master anything I put my mind to. I could do it and nothing was going to stop me. I would work longer and more intensely than anyone else, and show wonderful profits month after month.

Little did I know what I was facing, and that I was about to come head on with the most challenging task of my lifetime. Simple, maybe.... but not easy. Not easy at all. After a few months, I found myself dancing as fast as I could; yet running on a treadmill going nowhere and suffering from vertigo, headache and a severe case of tick-itis. I studied and read everything I could lay my hands on, subscribed to service after service looking for the Holy Grail and struggling to make consistently successful trades. Why couldn't I do it? What was wrong?

Is this so difficult? What about all the people who have returns of greater than 80% a years? They couldn't be exaggerating, could they? After all, it's in print and on a heavily subscribed website, so it must be true. Mustn't it? So I studied more, subscribed to more services, learned new indicators, bought books, joined some chat rooms and saturated myself with information. This produced more vertigo, headache and sleep deprivation. I was on total information overload. I started sleeping sitting up so that I would not sleep too deeply and could awaken more easily at 4:30AM (having gone to sleep at around 1:30 AM) in order to study and watch the markets before they opened at 6:30 AM.

I was in total immersion, so why couldn't I make consistently successful trades? I became paranoid, thinking it was a kind of conspiracy since every time I took a position it went against me. I knew the stop and was stopped out in my minds, but we didn't take the stops because I had faith that the position would come back. It was some kind of a misunderstanding or misinterpretation by the market that was responsible for the price spiraling downward.

Buy more. That's it. Average down and keep averaging down and eventually, I will get it right. Eventually, the price will come back up and I will be justified. Why isn't the price coming back? I know it has to. After all, I studied it, charted it, listened to the gurus, read everything on every bulletin board, and it absolutely HAS to come back. Oh, that news that just came out.... Ugh! Must be false or overstated because there is no reason that the stock should be selling off like that.

I know it is coming back, so I will buy more. Wow!! Look at the size of the position now. Hmmmm. I better kick it up a notch and start participating in every message board and study every report and watch every tick every day for signs that life is returning and I can get back from underwater. Most of you know how this feels. I do. I have been there, lived it, and suffered losses from it. Life was miserable this way. I became depressed and irritable. I walled myself off from the rest of the world just trying to figure out what to do. I had dug a really deep hole and the only way out was to sell and take the losses. OR- wait and be in agony day after day, watching my account and my self-esteem (what was left of it) erode like sifting sands.

I tried too hard, studied too much, and pushed myself to the point of both physical and mental exhaustion. Why? Why did I not honor the stop, continue to hold on and even average down? I had to figuratively kill the frog and kill myself in the process. In order to be reborn, I had to destroy the internal self-defeating programming and start all over again. I had to step back, look at what I had done with a sharp and penetrating glare in the bright light of day. I decided to take the loss, to stop trading for a while, to take a vacation and center myself. My health returned. The dizziness and headache went away. I didn't care so much about watching the flickering ticks (so, at least, I was in remission from a severe case of tick-itis).

It was not the market, the charts, the software, the gurus or anyone/anything else but I. I was my worst enemy. Nothing was going to change until I got right with myself.

...To be continued....

The most exquisite paradox is that as soon as you give it all up, you can have it all.
As long as you want power, you can't have it. The minute you don't want power,
you'll have more than you ever dreamed possible...
Ram Dass