The Mindset of Wealth: What Top Traders Can Teach Us About Achieving Success and Happiness
F, F, F. The three F's will be the reason you do anything in life. And those three F's are fun, funds or money, and fulfillment. That's the reason why. So what do traders have to teach us about happiness and success? Aren't they those people we see on TV, like in the movie Wall Street, like Gordon Gecko, evil, greedy individuals? Aren't they people who've nothing to teach us about success and happiness?
Well, 26 years ago, half a lifetime for me, I interviewed some of the world's leading traders because I wanted to be a trader myself, and I thought I'd better get in front of the world's leading traders. And having interviewed traders from New York, Chicago, and London, I realized there was a lot more than they had to teach me about success, happiness, and wealth in the broader sense, not just the accumulation of stuff.
As you get older, you don't really care about stuff. You care more about the impact and the legacy you're going to leave, a more fulfilling the third F of your life. And I love acronyms. I'm going to write that down, okay, and we will do a few more. I'm going to suggest to you that what they have to teach us is different from what you've heard elsewhere. However, the destination is the same, success, happiness, and wealth in broader terms.
But what they have to teach us is not only different from what you've heard but where it overlaps, such as the issue of discipline. It's different from the way you were taught before. Again, it's very different from what you've ever been told. So it's a different way up the mountain of success they can teach us, and it's worth looking at.
Well, if you don't write it down, I'll write it for you. These are going to be the letters, okay? This is what we are going to talk about. Now, I will explain what each one of those is. So when I met these individuals, I'll give you an example of who these people were. One, Bill Lipschutz, was the Global Head of Foreign Exchange at Salomon Brothers when I met him. That made him one of the largest Forex traders, if not the biggest Forex traders in the world.
There was David Kyte. It happened on a school trip to the Financial Futures Exchange, which changed his mind. He left school at 16, and he's on the rich list, but more important than that, the bigger purpose he serves in life is through the people he helps. That captivates me and makes me interested in what he does now.
Or Martin Burton. He used to, in the days when you used to have somebody fill your petrol in, you're all too young to remember those days, but people used to fill your petrol up for you. You didn't even need to get out of your car. He used to be one of those petrol pump attendants, and one day filling up petrol for a person who drove up in a Rolls-Royce, he calculated in his head what the fuel cost was for the person in the car.
The person in the car was so impressed and gave him a job, and Martin never looked back since he was phenomenally successful. So it wasn't that they all had PhDs. There was a mixture of educational and demographic background, which is good to know if we're interested in a meritocracy. But so what was it? What were the traits that they had to teach us?
Well, the first thing that shot me when I was meeting these leading traders, and I look back on the last 26 years having lived that book, a book published by the Financial Times. And the lessons I would repeat in my weekly columns in the newspaper, and you can imagine you've got some of the biggest, best brains in finance reading the FT.
So you have to get it right. It's been peer-reviewed. The first thing that shocked me about what virtually every one of those traders told me was how risk-averse they were. That's the first R. Surely, if you're standing in front of some of the wealthiest people, the most successful, and they knew why I was there, I was a student when I met them, they knew why I was there. Any student would want to be talking to somebody who's ridiculously successful and wealthy or the global head of a major bank, or the head of a hedge fund.
They knew I wanted to know how to make it big and get rich. Of course, they did. Now I'm more interested in a bigger purpose and helping society, but that's what happens with old age. You get a bit wiser. So the first thing was risk aversion. Why were they so averse to risk? I expected them to say, "Oh, you know how we made it big?
Do you know how we got successful? We had a few shortcuts. We had a bit of inside information. We just put it all on black or all on red. We're just gamblers in a casino. We get a bit of an edge, and we just put all the money in, or we're just such a big bank, we can move the market." Wasn't that at all? And it wasn't just that one of them didn't say that. None of them did, and they didn't know each other.
It wasn't some global conspiracy, which people love on social media amongst hedge fund managers. It wasn't that at all. Risk aversion, how can risk aversion possibly lead you to success? Well, what they did, every single one of them, it's a lesson for success in life, is they were very good at risk management. Working out what they should do and what they shouldn't do. They would wait patiently for the right trade, or you might call it the right opportunity.
They didn't just dive into anything. We'll talk more about once they did get in; how did they then succeed? Risk aversion is the exact opposite of what you are told certainly on social media or as a business person. "Take the risk, and the rewards will be worth it." No, for the trader, it took the least possible risk for the outsized returns, which meant waiting and waiting and waiting.
What was the second thing alongside that? Again, it came as a bit of a shock. They seem to love failing. Wait a minute; these are incredibly successful people. Surely the secret to accumulating wealth and happiness is just winning all the time?
If only the world was that simple and take it for somebody with far less hair than all of you. If only the world gave me wins and nothing else, it wouldn't come like that. It was failing. Well, what do you mean they're losers?
But you just explained that they were at the top of their professional step burnout opportunities, managing billions in his fund. Or, as I said, David Kyte is running, running not only one firm but then expanding into building up hedge funds and funding others and so on. So what was it about failure that they liked?
They knew it would come and were following their process and cutting their losses short. There's an old saying in my industry, "Losers add to losers." In other words, they didn't throw good money after bad. It's a lesson for anything.
I used to be a barrister, and I can tell you the number of clients in the legal profession who, just through bloody-mindedness or just standing on principle, will throw good money after bad; losers add to losers. They're able to lose and get out quickly. Because in trading, you have to do it a hundred times a day.
They didn't double down on their losing trades, but there was a flip side to the losing. Of course, they won. In the case of Bill Lipschutz, he said to me, "You know what, Alpesh, I'm going to tell you something. I'm the global head of foreign exchange for this major bank."
He was head manager of the year a few years ago. "I've never made money trading The most popular currency pair there is in my profession." I couldn't believe it because I had never made money on the Sterling US dollar. He said, "I'm probably right about 40% of the time." So hang on. You've got a person who keeps getting it wrong, can't even make money on the most popular, supposedly the currency pair that would be the one you'd talk to your friends down the pub at and say, "Look, I'm so good at this." And yet he was willing to admit it.
There was a lack of ego, "Yeah, this is not true, Alpesh; I've seen TV. I've seen social media and TikTok; traders just swung around in Rolls Royce's and gold-plated teeth. Surely they brag about it all and they talk about their bling."
Not true, not the ones that I met, not the ones who were really successful. Not at all. So what I found with that failure aspect and with people like Bill was the same thing they said of Edison when they mocked him and said, "You haven't invented the light bulb. You've got 99 ways in which you failed."
And he said, "No. I found 99 ways in which the light bulb doesn't work. You only need to be right." Once these traders could cut those losses short, get out of there, free up their mental space, move on to a trade where they might make money, and let the profits run on those. And a lesson for life in that and a lesson for happiness. How many miserable people have I seen through just one or two mistakes in life and then doubled down on them because they want to be proven right?
I have no problems being shown that I'm wrong, and they're moving on rather than doubling down, doubling down, wasting energy, wasting time. What did we find from that? They were still courageous in two important ways, and courage came up among all of them. Every single one of them kept mentioning courage in two different ways. One was the courage to take the loss and walk on without ego.
They didn't care if people laughed; in their profession, people wouldn't laugh because the people who knew would know what comes in the profession. The other part of courage was to be a contrarian, to say when they were right and they believed it on the data they found in the research they did.
I'm going to stand by this conviction and view, and I don't care if I'm the only one who believes in it because I've got a view. That courage was consistent amongst all of them and a key component to their success in life, and I suggest success and happiness for anyone in life.
When I do the newspaper review on the BBC, there are about 300 million people, and you can imagine and get a few trolls now and again. Or, God forbid, TikTok, a hundred thousand followers, by the way. Three hundred million on BBC, nobody cares. Thank you.
The point is that you get a few trolls. A hundred thousand on TikTok, you get "Woo." If I'm right in the convictions that I believe in, then you have to stand up. You have to have a voice. Rather than saying, "No, the bad people are going to say stuff, and I'm going not to take it."
They had the courage to say, "This is my view." I'm talking about finance, but it extrapolates into the big picture, the FT because I have a big mouth, said, "Why don't you go up against some of the analysts, the bankers, the fund manager? We'll run a competition over 12 months and see how good you are."
Luckily, and I'll talk about luck in a second, I won that competition. Have that bravado. If you believe in your actions, stand up and be counted. Don't just sit there and say, "Well, this is what I think. I won't defend that person or that view because I'll get into a bit of trouble. It is worth it. It's not worth it."
For those who are successful, it was worth it. Every single one of traders, you might think trading and great lives don't go together. Same traits, just a different perspective than you've ever had before.
What was D? D was detachment. Again, I couldn't believe it. How can they be detached? They've got these stupidly rich people. How could they be detached? They were detached from the fruits of their labor. The words they used were different for every single one of them.
They didn't care about the money. You might say, "Well, that's easy enough for them. They had tons of it." I already told you David Kyte left school at 16, Hilton Nathanson, who wasn't in the book, but somebody I met later as a hedge fund manager, incredibly successful. When he first started, he didn't come from a wealthy family.
He probably admits it himself. No silver spoon at all. Carvey Alamotye, somebody whom I met for the book, and his employer wouldn't release him because he was the UK's highest-paid employee. When he first walked into the room, I thought it was the cleaner. They were detached from the fruits of their labor. They weren't showing off in their Ferraris and Lamborghinis. I doubt they even had them. What was clear was that they loved the process. They absolutely were obsessed with the process. The fruits took care of themselves.
As a Hindu, that resonated with me because what's it about when you think about religion generally? It's about building resilience; whether it's Christianity, Hinduism, or any great religion, it is about building hope and resilience. While they had that resilience through detachment, good things will come if I finish the process. And that was the case entirely in what they said. You'd think they'd say skill. L, luck.
They'd say a common bias in psychology is known as self-attribution bias. You'd think they'd say, "Hey, I'm God of the markets. I know exactly how good I am. I've got swagger." Time and again, they said luck. So often, luck had so much to do with their success. When we encapsulated all of this into a piece of software to make sure people did what these guys said because, think about it, if everybody did this naturally, everybody would be rich and successful.
When we put it into software, people couldn't believe it. They said, "Wait a minute, you're saying that you're not supposed to be right a hundred percent of the time or 90 or 80 or 70 or even 60%. There are people out there who are right 40, 50% of the time, but making huge successes." Well, that's the way winning goes.
The difference between a winner and a loser is that the winner does one more trial and succeeds. It's that one extra thing, and if you want to know about losing, you want to be an expert on losing, ask a winner because they've done more of it than the loser has. By definition, the loser gives up and stops. Luck, they kept pushing their luck. We have a saying in the industry, "Winners add to winners." When they knew they were onto a good thing, that's when they doubled down.
Do you know what regular people do? And a whole era of behavioral economics has opened up in this area. I used to write about it in my columns before, and this has happened in the last 20 years; three people went on to win the Nobel Prize in economics, who were all specialists in psychology, Daniel Kahneman, Richard Thieman, and Eugene Fama.
Their work was more about psychology, and these traders understood behavior. If you want to succeed, understand your own behavior and how other humans behave. Remove things like confirmation bias; only look for something which agrees with your preconceived views. What was clear about the most successful people I've met since that book and those traders was that they wanted opposing views. They wanted people who disagreed with them. And you've heard it before from ancient philosophies and wisdom.
Roman emperors used to have people would walk behind them into an auditorium. Once those emperors are being saluted, the person in their ear would whisper to them, "You are only mortal," to remind them there's another view to what they hear in the room.
These people had the opposing view. It led to immense success, and they didn't have the God complex or that self-attribution bias. As I said, they didn't even have an ego. They couldn't afford to have an ego. They had to take so many losses and so much failure.
Speaking of which, hate humility; I couldn't believe it. They said, "Carvey walks into the room. I swear to God; I thought it was the cleaner." Where was all the Gordon Gecko corner office? Where was the entourage? Where was all of that? None of it. We subsequently learned when we were raising money for my fund.
If you want to know where the money is in a room, the person at the back with the roughed-up shoes, probably no watch, looks the scruffiest. That's usually the money in the room. It's really different from the person in the front row with the Rolex, Louis Vuitton, and all the rest. Time and again, it's also been a good way to raise capital for us.
Finally, the final F, focus. You will only give up if you pass the four and four rules. You'll lose that resilience. It'll be interesting; you like the outcomes, you like the flash cars and the nice clothes that won't get you to where you need to go to, and these people were testimony to that. In finality, in closing, the one thing which stayed with me and the most important thing, they felt they had a bigger purpose.
They had fun and funds, which is the main thing most people think of, but most importantly, they had fulfillment. And that is what will bring true success and happiness. Thank you.
Alpesh Patel OBE