Bruce Wasserstein, CEO and Chairman of Lazard, unveils himself in a book entitled Big Deal. An 820-page tome that discusses the basics and the complexities of the financial and corporate world, Wasserstein presents a basic instruction manual on how to take over a company, make it grow, and sell it off again at a higher price.

Bruce Wasserstein’s Big Deal is separated into different takes on history, particular industries, and takeover strategies. It comprehensively discusses the five waves of corporate mergers that have started since the mid-1800s: the first one is about the creation of the business empires, which was ushered by the railroad system; the second wave that occurred during the 1920s when companies were crazed about the merger mania because of the skyrocketing stock market; the third one which happened during the “Go-Go” years of the 1960s when the concept of conglomerate was introduced; the fourth wave is typically the aggressive takeovers of the 1980s; and the fifth wave which is occurring right now in this digital age.

Bruce Wasserstein’s Big Deal also talks about famous dealmakers in the corporate scene and their work ethic and strategies: Barry Diller, Sumner Redstone, Carl Icahn, T. Boone Pickens, and Bernard Ebbers.

Read a review of Bruce Wasserstein’s Big Deal.

Read the interview with Bruce Wasserstein and the HBR.

Let’s talk a minute about the idea of screwing up. How do you handle that? When you buy 500 shares of XYZ and three days later it’s down $4, do you kick the cat, yell at the wife and beat the kids?? Or do you suck it up, and move on? It’s all about the attitude that you bring to the table folks.

One of the things that people usually don’t see in themselves, but that we see all the time is a “poor loser” What do we see? We see a person, upset with himself, possibly embarrassed, and on a mission to “make it back” Therein lies the heart of the matter. That “make it back” mentality gets plastered on their foreheads like a badge. They are going to press, squeeze, over play, etc, to get that money back. Guess what? They’ll probably lose more.

Some of you have a little support system and we are in total agreement with that idea. If you have a buddy or two that you can call and discuss your trades with, great! Because maybe that friend will point out something you didn’t see. Maybe he can talk some sense into you when you are holding something that’s falling day by day. Maybe he can keep you from self destructing when you try and make it all up the next day.

Personal investing is a lonely, solitary game. It’s a hard game. The whole world seems to be against you. At times you’ll swear that the market makers know your account number and will adjust prices just enough to stop you out. It can “get” to you. But in all the years we’ve been playing this game the single biggest problem that we see people making is taking losses personally. Getting mad, hoping their stock will come back instead of moving on. Throwing things, getting nasty, and pressing the next trade to “make up” for it.

Folks, you are indeed going to get smacked at times. The best trade on the planet is going to reverse on you sometimes. Silly news blurbs are going to blindside you, trapping you in things you want no part of. It’s all part of this game. Kicking the cat, busting your monitor and throwing the chair won’t make you a dime. Buying the next stock that bounces up off it’s 50 day moving average will. It’s easier said than done, but keeping calm and moving on is the single best thing you can do for yourself. Sure you can talk to someone, we encourage it. But inside you have to know that losses will happen and getting upset won’t stop them.

The very first trade we ever made we lost 500 dollars. We were crushed and figured we were worthless at this. But after a while we realized that none of that mattered. We got trapped in something and let pride continue to tell us that it would come back. It didn’t. It taught us a lesson we’ll never forget, which is “We can take a lot of small losses” but we can’t stand too many big ones. Pain is a good teacher and we learned well. Now, we take my 50 cent, $1 or $2 hit and move on. If we keep playing correctly the $7 gain in ABC, the $14 in ACME, the $2.50 in XYZ, etc, etc, will far outstrip the losers. For the most part, we shrug our shoulders and say “dang it, what did we do wrong?” We find the answer and move on, hopefully wiser.

If you have to cut, then cut and run. But DO NOT let that affect the next play. If there is no play in front of you, pass. Don’t make one up. Don’t trade to “make up” the last one, you will lose more. If you get in a spot, figure your best way out and move on. Revenge simply does not work in market land.

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Is not a stretch to believe. Most traders like excitement, like
life edgier than most. Like their share of thrills, have their
appetites and needs to excel. This is one of the personality
that would be attracted to trading. But this and this but is
big, if you are using trading to satisfy these parts of your
personality you are fighting a losing battle.

Successful traders actually tend to be attracted to the duller
parts of trading. The mechanical system designers that easily do
‘this’ if ‘that’ happens. They are not thrilled with their
winnings nor do they despair over their losses. Every trade,
every situation calls for certain actions, either liquidation,
stop placements, or just waiting, but it is all pre-ordained.
Sure there are chart readers, like yours truly, but even then
the charts dictate the action needed. While we do not use
mathematical equations to impart are entries and exits, we do
use charts. We do sit on positions when we would rather not, we
do exit when we would rather not, but it is all pre-ordained as
well. In short, our observations, our trained eye is our system.

Contrast that with the emotional trader, who goes from ecstasy
to despair, in a single week, or day, or even hour. One minute
he thinks he has figured out the trading game, with the holy
grail of systems, and the next he realizes that all his friends
were right and trading is a waste of time, a game you cannot
win, not any different than casino gambling,. He was attracted
by the appeal of easy money, and was sure he would be the one
who would get it.

Well even the most successful traders will tell you, trading is
NOT easy money. 50% annual returns may sound too good to be
true, but it is not without its share of the full range of human
experience. For even the most seasoned, mechanical traders will
also tell you, that deep down, they experience the same emotions
as the novice. The trick is and always has been not to allow
your emotions to effect your trades.

So you can be wildly emotional on the inside. But you had better
stick to your guns on the outside. Most weeks, most days, most
hours, you are not going to be very happy about your open
positions. Most trades will go against you at least one time
during their open status. And probably more than once, the
unpredictable is always going to happen. The illogical will
always have its moment, and yes, you are going to be wrong.

The only smart thing to do about all of this is to learn from
it. In fact, if you are not still learning new things from your
trading, you have no reason to still be in it. The markets like
humans, like the universe evolve. Evolution is the only thing
you can bank on, and if you think you do not need to partake in
it. Then you will be consumed by it.

To be successful at trading you do not need to always be one
step ahead of the evolution of the markets. But you need to be
in time with it, to accept its existence.