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Celebrating Minyanville's 10th Anniversary: Wall Street Selector Interviews Todd Harrison


In this one-on-one, Todd Harrison discusses his book, his trading psychology, and the US economy.

John Nyaradi: I thought that one of most touching parts of your story is where you talk about Ruby Peck, your grandfather, and what he taught you…I tell my kids at the dinner table about your quote from your grandfather.

Todd Harrison: My grandfather was a special guy and he taught me that all you have is your name and your word, that honesty trust and respect are the foundational constructs for any successful endeavor. Over the course of 20 years, there have been opportunities for me to cut corners and I never have.

He also told me that what goes around comes around and so I have to believe that if you do the right thing, someone eventually will take notice. We've perpetuated his memory through The Ruby Peck Foundation for Children's Education and we've raised seven figures for kids over the course of the last decade and right now we're having a drive to help rebuild the library in Joplin, Missouri, after the tornado ripped through it, much like we did after the tsunami in Japan. Given the opportunity to affect positive change, I think we all need to do our part in moving that forward.

John Nyaradi: Definitely. Many traders and investors are in our audience, and in your trading days you were running a $400 million hedge fund and you could make or lose millions in literally moments. How do you handle that psychologically?

Todd Harrison: Well, there are different ways. You know there's a contingent out there that will subscribe to copious amounts of drugs and alcohol to help dull the edges of these types of swings. It's an "A Type" personality that typically succeeds in this business. I did not, for the record, opt for a self destructive solution. I figured at the end of the day when you're dealing with $25 to $30 million swings, you have to just step outside the realm of consciousness and stop looking at it as real money and just, you know, go through the process. You know whether it's a $25 or $50 swing, or a $25 million or $50 million dollar swing, it really is the same process and the mechanics of the swing always trump the results of the at bat.

John Nyaradi: Yeah.

Todd Harrison: I always tried, when I was trading, as unconventional as it may sound, to not look at my P&L, because you should never trade to bottom line, you should never try to trade not to lose. You should always trade to win and I think that perspective can stand traders in good stead.

John Nyaradi: What do you think is the most important part of being successful at trading, is it psychology, a system, what?

Todd Harrison: I think ultimately it's discipline. You hit for average, not for a power, easier said than done. You know this market, the DNA of this market, has changed dramatically over the last few years. Social mood is shifting not only with regards to world climate but with a perception towards Wall Street. And I think that's unfortunate because there are a lot of good people on Wall Street. But ultimately, discipline, by a long shot, and being able to define your risk. You have to understand why you put risk on the table. A definition of an investment should never be a trade that's gone awry and you need to understand why you had your risk on and let your winners run and cut your sinners.

John Nyaradi: That's great. 9/11 was a big part of your book and of course, it impacted us all as Americans, and you wrote at 8:47 in the morning at, "A bomb has exploded in WTC, may God have mercy on those innocent souls." Can you talk a little about that day and how it relates to the birth of Minyanville?
No positions in stocks mentioned.

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