Patience

One of the hardest skills to master when you invest is patience.  When I traded, it was a totally needed skill.  Even though many trades were in and out in seconds, others were not like that.  As a spreader, sometimes you had to wait for the market to come to you.  It could be an interminable wait.  It didn’t matter whether you were trying to put something on, or take it off.

Most of the time, you had to “leg” into the trade and “leg” out.  That meant closing one side of the spread and trying to get out of the other side.  In the pit, you could get a true edge, and sometimes you could get the edge on both sides of the spread.  That felt good. Other times, the market would go against you and you’d have to figure it out.

You’d have to fight a psychological battle with yourself every day.  It spanned the emotional gamut from elation to despair.  You’d fight nerves.  When you were in a flow it was a lot easier to deal with than when you weren’t.  Hence, you always looked at ways to get into flow.

I remember once in the hogs, I got out of one side on the open at 9am.  I put my cards in my pocket and waited.  I left the floor with one eye on the quote board. I nervously chatted with people.  I anxiously read newspapers all day.  At 1pm, I walked back into the pit and got out of the other side on the close.  Saved myself thousands and thousands of dollars.  Risky and nerve wracking.  But, the trend was pointing my way and patience let me ride the trend.

Investing in startups is like that too except the time horizon is 10-15 years.  It might take a few years for the trend to develop so the startup has tailwind.  Some startups can create their own tailwind, but again, it can take years.

I think one of the hardest things to shoulder when I traded was that all the risk was mine and it was impossible to hedge it.  I had a lot of capital tied up in my business.  My membership cost a lot of money, and the value of it fluctuated up and down.  There was nothing I could do about it.  I had to keep a lot of capital liquid as dry powder so I could be opportunistic and trade.

Entrepreneurship is a lot like that.  Everyone shoulders a lot of risk.  Entrepreneurs are 100% invested in their company.  Employees of that company receive stock and are 100% all in.  Investors invest money, and are 100% all in.  No way to hedge.

Then you wait.

When it works out, the participants receive the spoils from shouldering that risk.  They deserve it.