Action Through Inaction

Michelangelo once said, “genius is infinite patience.” A master trader understands this truth on many levels.

Infinite patience is essential to staying with the grind and surviving the long and arduous crucible of learning how to win in markets.

Infinite patience is a cornerstone of developing one’s self. To beat back our weak human desire for instant gratification and instead journey on — knowing that those who play the long game win.

Infinite patience is necessary to fully exploit the natural 90/10 power-law distribution of market returns.

Infinite patience is a powerful skill possessed by only the most disciplined and effective masters of their crafts.

In chess we have the obligation to move; there is no option to skip a turn if you can’t identify a direction that suits you. One of the great challenges of the game is how to make progress when there are no obvious moves, when action is required, not reaction. The great Polish chess master and wit Tartakower half-joking called this the “nothing to do” phase of the game. In reality, it is here that we find what separates pretenders from contenders.

The obligation to move can be a burden to a player without strategic vision. Unable to form a plan when there isn’t an immediate crisis, he is likely to try to precipitate a crisis himself and usually ends up damaging his own position. We learned from Petrosian that vigilant inaction is a viable strategy in chess, but the art of useful waiting takes consummate skill. What exactly do you do when there is nothing to do?

We call these phases “positional play” because our goal is to impose our position. You must avoid creating weaknesses, find small ways to improve your pieces, and think small — but never stop thinking. One tends to get lazy in quiet positions, which is why positional masters such as Karpov and Petrosian were so deadly. They were always alert and were happy to go long stretches without any real action on the board if it meant gaining a tiny advantage, and then another. Eventually their opponents would find themselves without any good moves at all, as if they were standing on quicksand.

In life there is no such obligation to move. If you can’t find a useful plan, you can watch television, stick with business as usual, and believe that no news is good news. Human beings are brilliantly creative at finding ways to pass time in unconstructive ways. At these times, a true strategist shines by finding the means to make progress, to strengthen his position and prepare for the inevitable conflict. And conflict, we cannot forget, is inevitable.

Garry Kasparov, How Life Imitates Chess

Markets are dominated by periods of time where there is “nothing to do.” Infinite patience is critical to navigating these periods, utilizing “vigilant inaction” to position ourselves for the inevitable periods of volatility.

Overtrading, taking profits too early, and seeking action in the markets are typical traits of an amateur.

Ask yourself:

Do you practice infinite patience?

 

 

Michelangelo's infinite patience

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.

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Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

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Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

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