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What do the best stock traders have in common?

Eric Barker
March 27, 2012

 

They communicate the most.

Via Imagine: How Creativity Works:

…the best traders were the most connected, and people who carried on more IM conversations and sent more messages also made more money. (While typical traders generated profits on only 55 percent of their trades, those who were extremely plugged in profited on more than 70 percent of their stock trades.) âThese are the guys who get embedded in multiple chats,â Uzzi says. âTheyâre just sucking up information from everybody else, like a vacuum. And when they start to trade, they donât go silent. They donât stop talking. They IM even more.â In contrast, the least successful traders tended to engage in the fewest electronic chats. They also stopped exchanging messages right before making an investment decision. Says Uzzi, âTheyâd get cut off from the conversation. And this meant that they werenât able to make sense of what was happening.â

Uzzi compares these financial conversations to the creative process. âThe act of investing is like solving a difficult puzzle,â he says. âThese traders are trying to connect the dots. And if you look at these IM exchanges [in the hedge fund], what you frequently find is that they lead to a good idea, a successful trade. Because the traders are listening to their network, they manage to accomplish what they could never have done by themselves.â While all the instant messages might seem like a distractionâ a classic example of multitasking run amokâ Uzzi argues that theyâre an essential element of success. âIf I had to choose between a trader who was a little smarter or one who was a little better connected, Iâd definitely go for the connections,â Uzzi says. âThose conversations count for a lot.â

Same is true in your average corporate office as well:

After analyzing the workplace data, he realized that the highest-performing employeesâ those with the most useful new ideasâ were the ones who consistently engaged in the most interactions. âHigh performers consulted with anywhere from four to nine organizational colleagues [on a given project], whereas low performers contacted one or two colleagues at most,â Allen wrote in his 1984 treatise Managing the Flow of Technology. âThis suggests that increasing the number of colleagues with whom an employee consults contributes independently to performance.â

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TheRedArchive is an archive of Red Pill content, including various subreddits and blogs. This post has been archived from the blog bakadesuyo.

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Post Information
Title What do the best stock traders have in common?
Author Eric Barker
Date March 27, 2012 12:45 PM UTC (12 years ago)
Blog bakadesuyo
Archive Link https://theredarchive.com/blog/bakadesuyo/what-do-the-best-stock-traders-have-in-common.14471
https://theredarchive.com/blog/14471
Original Link https://www.bakadesuyo.com/2012/03/what-do-the-best-stock-traders-have-in-common/
You can kill a man, but you can't kill an idea.

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