Friday, November 25, 2011

Peak performance

I have been reading Arie Kiev’s book, The Psychology of Risk: Mastering Market Uncertainty.  He was a psychiatrist who died in 2009 at the age of 75. He was a prominent researcher in the fields of suicide prevention and depression. Later in his life he studied athletic peak performance, and in the last part of his life, the peak performance of traders and investors on Wall Street. He was an advisor to the famed hedge fund trader, Steve Cohen, of SAC capital. The book has many vignettes of how traders experience fear and anxiety and how that shapes their trading positions; for example, not building up positions in potentially profitable trades, selling winners too early or holding on to losers too long. His edited transcripts of his interviews with traders have the ring of authenticity.

His overall advice to traders might at first seem conventional. They should not fret over their previous failures, they should overcome perfectionism, they should observe their feelings without succumbing to them, and they should keep a diary of their trades and the feelings that accompanied them. Most importantly, he suggests that traders should subordinate themselves to a goal, for example a certain level of profit per-week or month, rather than to some imagined conception of either their prowess, if they are grandiose, or their shameful inadequacy, if they are fearful. The goal is everything. In psychodynamic terms, you could say that the goal should displace the ego. Just as theorists of “flow” might suggest, the trader should concentrate entire entirely on his performance in the here and now. There is the situation, the goal, and his skill. Nothing else.

A person attuned to psychodynamics might argue that this formula presumes the solution --the egoless trader -- rather than addressing the problem of how to achieve such a state of being. Would that we all could act as if we had no past, that we never succumbed to fixed ideas, “old tapes,” and grandiose fantasies? But Kiev has an answer to this objection. It is based on the idea of action. In the presence of risk, the trader has to “burn his bridges behind him,” for example, by making a commitment to a sizeable position in a particular stock, and in the face of the risk taken and the stakes accepted, draw on his best performance to make good on his decision. You can’t think your way to action. You have to act your way into new thinking. The prerequisite for change is danger not safety.

To the psychodynamically attuned this is a discomfiting idea. People develop in therapy or analysis, it is imagined, because the therapist or analyst provides safety and reliability. Indeed, in the days when ego psychology reigned in the United States, say in the 1950s, a patient was instructed to make no important life-decisions during her psychoanalysis. The patient was seen as fragile and vulnerable.

But perhaps there are two kinds of vulnerabilities. There is the sense of vulnerability prior to action, where our greatest fear is that we will disappoint ourselves or disapprove of our own conduct. But there is vulnerability within action, where we give it “our all,” knowing, that while we must be as prepared as possible, there are no guarantees.

Kiev’s book makes me think that I have something to learn about performance from performance coaches.

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