End justifies the Means

I had once written a note about Growth being Overrated. I had also passingly mentioned about the rogue trader issue saying that a MD is a rogue trader who made money. Obviously this is a generalisation and an exaggeration but it does highlight one issue that I wanted to talk about. Our society celebrates success, as it should. However, the problem is that success is celebrated without any questions being asked and the fact that something ended up being successful is reason enough to justify the means or the process used to generate the success. If one makes abnormal profits as a trader, one almost inevitably can demand and get abnormal bonuses. Nobody bothers to ask how those profits were made. Whether limits were broken in the process or rules bent in order to generate those returns.

On hindsight, we can say that the same is true about countries. When certain countries could maintain an almost socialist society with the population working around 40hrs a week, with per capita income which was in multiples of other countries, taking a month off every year for vacations and with a nice house in the suburbs everybody celebrated this success. This success was simply attributed to  better allocation of resources, efficiency and productivity. Nobody bothered to check whether there was even a hint of living beyond their means or a hint of spending what one had not earned in those countries. Nobody checked whether the social security schemes had a hint of the Ponzi in them.

This celebration of growth and success at the cost of the process is now coming home to roost. This celebration is embedded so deep in the psyche of our society that it will take a lot of pain and effort for the society to start focusing on processes.

After saying all this about the importance of the process, I cannot but emphasis that system trading is all about the process. Success is important but really only a byproduct of staying with the system or sticking to the process. I shorted Nifty yesterday when it broke below 5016. The level at which I will cut my short positions and go long is now far off. If you insist on knowing then it is at 5175. Looks like I will remain short for some time.