Once a king was very pleased with his subject. He rewarded him by offering the best reward that he could always choose the quantum of.
King and his sentinels took the man to an open expanse of land. King pointed towards an expanse and said “You can walk in that direction and come back. You can cover as much land as you want and the land will be given to you. But you need to reach the starting place before sunset. You can walk while going but on return, you can run as well.”
“However!”, the King said with a change in tone that conveyed seriousness, “– If you fail to return to the starting point before sunset”, the king paused, “you will be executed”.
The man was thrilled and terrified at the same time.
He asked meekly “Why execution my lord?”
“The price of the choice” the king smiled.
“Or you can have whatever we allot to you and you will not do this exercise”.
The man calculated and concluded that it was worth the risk. After all you cannot make big gains without the risk.
The man started. Few sentries accompanied him.
Within an hour he covered enough distance. The king and entourage were not visible in spite of the plain visual field. He thought he will cover more for an hour and then turn. It is enough for generations to come.
After another hour he looked back and saw no one. Then a thought whispered into his ear – Are you crazy? You should walk more. You have got here chance of a lifetime. Make the best use of it.
So he walked, possessed by his greed.
“It was noon now. Let us turn back. We have beyond dreams.”
“No! yelled another voice. NO!”
You can always cover back by walking at a faster speed.
He walked more till he could.
As the day started changing his colors and the sun became less hot, something jolted him from his bewitchment.
He turned and started running.
He was dead tired when he came back to a spot where he could see the entourage.
But he kept running as the sun started making preparations to set.
He was in a panic now. He forgot the land. The only thing he was clinging to was his hope to remain alive.
He could not run. Heaving, he just kept running till his body refused and he dropped dead.
He was executed by his own greed.
Greed is our greatest enemy in the markets. And it in turn leads to fear.
Overpositioning is a direct manifestation of greed. And overpositioning leads to panic selling when things turn adverse.
The greatest truth of the market is that we do not know how things will turn. You can bear these adverse times can only if the position does not make you nervous.
Barring a few, almost everyone is guilty of being greedy. The occasional big wins lead to complacence and bigger positioning and then bang.
Every time I over position, the market, it seems to take turns to teach me the lesson that has always been there – Do not be greedy.
Often the reason is complacence and shoddy entry buoyed by the previous big win.
I was reminiscing about my past behavior when I remembered this story. It is paraphrased.
Maybe you would take a cue or two. Or may be you would remember it when you burn your fingers.
Sooner or later this lesson has to be stored and internalized, whatever way you may choose.
Note: The story was originally written for Train for Success group.