The Closing Bell

Hoenig: In my final column, a look back at how the investing landscape has changed -- and hasn't changed -- over the past 11 years.

After more than 11 years, this is my last column for Smartmoney.com.

The goal was to examine the craft of trading. As was pointed out from the onset, market discussion invariably dealt with what to buy, but was rarely focused on how to buy, what we dubbed Tradecraft, the discipline and technique of investing itself.

Observe most market banter today and you'll see not much has changed. Stock tips still dominate the conversation, just as they did in 2001 when we began or when Jesse Livermore traded a century ago. Back then he lamented how the average investor desired only "to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn't even wish to have to think."

In the modern era, that comes down to "The Top 7 Mutual Funds to Buy Now" and other perennial herd favorites, which, rest assured, will never go away.

Every individual approaches the markets as they approach life: with a distinct philosophy and set of ideas. Those looking for a quick buck, again quoting Livermore, "invariably pay for the privilege of proving conclusively that it cannot be found on this earth."

But from avoiding the emotional stress to reading the tape itself, we've demonstrated how a thoughtful, realistic and objectivity informed approach can improve any investor's odds.

In many ways the investment landscape is unrecognizable now compared to when we started in 2001. Back then, diversification consisted of adding Cisco Systems (CSCO) to your portfolio of Microsoft (MSFT), Oracle (ORCL) and America Online (AOL) . Asset classes like commodities, let alone leveraged loans or foreign exchange weren't just ignored by most investors, but unknown altogether.

Stop-loss orders weren't part of most investors vernacular either, let alone buy-stops, position size or integral follow ups such as when to add, hold or cut.

ETFs were in their infancy a decade ago, and now dominant options like bond and commodity products hadn't yet been invented.

Back then, as is too often still the case, investors fixated nearly exclusively on a company's fundamentals as against what we've always stressed as the most important factor: its price action. That's what we trade. That's all that ever matters, and if you care about making money, all that ever will.

I've often remarked in this column how you don't get any smarter as a trader, you just get more numb. After buying and selling through the 1997 Asian currency crisis, the technology boom, bust, and rebirth; the horror of 9/11, the flash crash, 2008-2009 economic crisis, Occupy protests and ongoing encroachment on liberty, markets rarely surprise me anymore. But they continue to excite me -- and always will.

Trading is a hyper-exaggerated reflection of the American Dream, a relentlessly fascinating and endlessly challenging real-money reality show to which no other activity can be compared. Trading is like everything in life but nothing else on Earth, and the only real way to learn the game is to play it yourself.

In his 1904 classic "The Pit", Frank Norris described it as "some resistless force within the Board of Trade Building that held the tide of the streets within its grip, alternately drawing it in and throwing it forth."

On the trading floor, he saw "a great whirlpool, a pit of roaring waters that spun and thundered, sucking in the life tides of the city, sucking them in as into the mouth of some tremendous cloaca, the maw of some colossal sewer; then vomiting them forth again, spewing them up and out, only to catch them in the return eddy and suck them in afresh."

I've navigated these often tumultuous waters since I've been a teenager and for the past 11 years, I've been honored to share the journey with you.

Thanks for coming along for the ride.

—Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC. He can be reached at Jonathan@capitalistpig.com

INVESTOR CENTER

MARKETS:
Chart
TODAY
Portfolio Chart

RESEARCH STOCKS & FUNDS

Subscriber Tool

Stock Screener

Screen over 7,000 stocks using more than 100 different variables.

Portfolio Tracker

Track your own buys and sells

See More Tools

Answer Engine
Find Answers to Life's Challenges  

Find solutions to this and many other problems using

Answer Engine from SmartMoney. 

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
www.djreprints.com.