How I trade for a Living

by Gary Smith
- first book ever read on the kindle
- great book starting off...then irrelevant later as he drifts off about how he trades which is very diff from me
- most important is that it taught me to care about market sentiment indicators and to use this as the subjective
** stopped chart analysis of Gary's trades at "A 9 to 1 up-volume day" on page 122 of pdf

Rick Pitino's Success Is a Choice is an excellent book on setting goals. Pitino maintains that dreams are where we want to end up and goals are how we get there. Goals give us the routine we need to accomplish our dreams. He also says that our long-term success is the result of the small victories we accumulate along the way—that by looking for incremental progress, the small successes will lead to larger successes and achievement of our goals. I could be the poster boy for Pitino's book. It wasn't until I set my goal of no losing months that I became a winner. Over the years, the accumulation of winning months led to the larger success of realizing my dream of trading for a living.

I get a laugh whenever I recall the advice given in one of the bestselling trading books. The
psychological guru pontificated on the beliefs that all traders must possess to succeed in the game, which were derived from his analysis of the beliefs of successful traders. These required beliefs include the following:
• Money is not important.
• It's okay to lose in the markets.
• Win the game before you start with confidence.
My track record certainly qualifies me as a top trader. However, my pattern is more like this:
• I trade for the money.
• I die after every loss, which sometimes eats away at me for days and weeks afterward.
• I begin each trade with a complete lack of confidence, convinced it will be a loser.

I also find it's beneficial to dwell on my losses—another no-no in psychological trading guru-
land. This way, I am less prone to repeat my mistakes. As for trading with a complete lack of
confidence, I find it pays to prepare for the worst in every trade and assume it will not pan out. This way, I am never caught off guard psychologically when the market moves against me.

I am a firm believer that success leaves clues and that it's important to study these clues. There's a strong correlation between studying success and achieving success. Successful people are students of success.

Many left-brainers also believe there is some sort of order and rationality to the markets. They use mechanical trading tools and mathematical formulae to measure this rationality. I much prefer to accept the chaotic and irrational behavior of the markets and devise trading strategies based on that irrationality.

I've often thought that the truly great traders are those who have been able to merge their left-brain analytical functions with their right-brain creative functions. After all, it takes creativity and imagination to develop a mechanical trading system that is different from the pack's.

Too often, though, traders become prisoners of their favorite indicators and lose the ability to think for themselves. What counts in trading is what the market is saying, not the indicators.

The point is that the action of the market always takes precedence over your indicators. Indicators are only used to warn us of a possible change in trend. The emphasis here is on possible.

From my experience, the crux of winning at the trading game boils down to the trader's understanding of market sentiment, so it's not surprising that my favorite indicators are sentiment based.

One reason for this is that, of the group of traders who speculate in stocks, futures, mutual funds, or options, it's the option traders who tend to be the least capitalized. As Richard Band describes them in Contrary Investing, "By nature, people who play the options market tend to be gamblers, dreamers, who hope to parlay a couple thousand dollars into a fortune. As a group, they represent the dumb money at its dumbest."

My favorite statistical models for measuring put/call ratios are the following:
• When daily total CBOE put volume doubles its 10-day average
• Single-day OEX readings of 1.60 puts over calls
• Consecutive daily CBOE put/call ratios of 1.00 or greater
• Equity-only put/call ratios above .75

As for put/call ratios, besides the readings at the extremes, I'm most interested when periods of strongly rising prices are met with heavy put buying and, conversely, when periods of strongly declining prices are met with heavy call buying—in other words, when there are divergences.

Other than the rare instances when the equity-only put/call ratio reaches above .75, I pay little
attention to equity-only ratios. Nor do I pay much heed to total CBOE put/call ratios. I'm primarily interested in the index ratios, which include the OEX and the S&P 500.

The High/Low Logic Index is most predictive if used with a 10-week moving average. Readings
above 4.5 percent constitute a sell signal, and below I percent, a buy signal. On a weekly basis,
readings above 7 percent and under 1 percent are considered extreme and, respectively, are sell and buy signals. Weekly readings over 10 percent are rare, but particularly ominous.

• When the Dow declines while the advance/decline line is rising, the market will rise.
• When the Dow advances—especially to new highs—while the advance/decline line is falling, the
market will decline.
• When the Dow approaches a previous low and the advance/ decline line is well above where it was at the time of that previous low, it's time to become bullish.
• When the Dow approaches a previous high and the advance/ decline line is well below its previous reading, which corresponded with that top, it's time to be cautious.
• The direction of breakouts from trading ranges in the Dow and S&P can often be determined if the advance/decline line has already broken out of its trading range.

With but a few exceptions, a pronounced uptrend or downtrend in the Utilities eventually will be followed by the broader market.

Through the years, I've come to see there is a flow and rhythm to the market, and that rhythm is its momentum. Being a successful trader hinges on being in synch with this momentum.

V-bottom reversals occur intraday where the Dow has been in decidedly negative territory the entire trading session, down at least .75 percent, and then makes a furious comeback, closing either near the unchanged level or, preferably, up for the day. The later in the day the reversal occurs, the more significance I attach to it. I will instinctively trade V-bottom reversals if the previous day closed down or if the Dow has been in a recent downtrend. On the other hand, I don't attach much importance to V-bottom reversals occurring after a strong up day or during a period of rising prices. In most of these occurrences, I will already be in the market before the day of the V-bottom reversal.

Closely related to V-bottom reversals are the late-day upside surge patterns. These normally occur during the last 2 to 2 1/2 hours in a trading day that has seen trendless and choppy price action. These late-day price surges should take the Dow to a close of at least .50 percent above the prior day's close. As with the V-bottom reversals, this pattern is significant only when it comes after a down day or a period of declining prices.

One of my more reliable momentum patterns over the years has been the Friday-to-Monday pattern. Stronger-than-average strength on a Friday is expected to be followed by more strength on Monday (or Tuesday if Monday is a trading holiday). Conversely, extremely weak price action on a Friday is expected to lead to more weakness on Monday. A Friday-to-Monday momentum break pattern occurs when the expected strength or weakness on Friday doesn't carry over to Monday. These weekend momentum break patterns are highly significant and indicative of a short-term trend change.

A 1 percent true selling day occurs after a period of rising prices of at least two weeks in which the Dow, S&P, Nasdaq 100, and Russell 2000 indexes all close down 1 percent or more on the same trading day. These types of days often are trend busters and can be harbingers of serious price declines ahead. I use a little leeway, however, in defining such selling days. For instance, if three of the four indexes are sharply lower—say, down 1.5 percent to 2 percent or more—but one is down only .75 percent to 1 percent, then I interpret that as a true selling day.

However, my limit is .75 percent. This means that if any index is down less than .75 percent on a day when the rest of the indexes are sharply lower, there is buying interest in at least one segment of the market, which rules out a true selling day.

One trading rule I live by is to expect weakness on Monday if the preceding Friday is extremely weak. Conversely, extreme strength on Fridays should also lead to more strength on the following Monday. Any aberration in these patterns gets my immediate attention.

Prematurely taking profits is an exercise best left for fools and losers. To accumulate wealth, you need to maximize your winning trades as much as possible by riding them for as much as you can and for as long as you can.

If you recall, that was one of my deficiencies during the 19 years I struggled as a break-even trader. I always seemed to be on board markets that were about to blast off. But for whatever reasons, I always found a way to exit before the actual fireworks began. Then when the market did take off, I just sat there, unable to reestablish my position. Let me tell you, if you ever hope to succeed in the trading game, you better learn how to overcome this type of psychological trading defect.

Of all the patterns I trade, the least reliable is the 1 percent true selling day pattern. And it certainly gave a false signal on March 5. However, when it's wrong, I usually know within a day or two and get back in the market. As you will shortly see, when it's right, it more than makes up for its occasional false signals.

One comment about late-day reversals bears reiteration. They normally occur in the Dow and the S&P. Then on the follow-through day or days, technology usually leads the way. With that in mind, I usually look to buy into the technology sector on late-day reversals.

August 21, the Dow made a huge turnaround and closed down only 77 points. However, this did not come close to qualifying as a V-bottom or late-day reversal pattern. To have qualified, the Dow would have had to close up or just slightly in negative territory. I've seen too many of these quasi-reversal days when the Dow makes the big intraday comebacks but still closes firmly down.

Every Bull Market in history, and many good intermediate advances, have been launched with a buying stampede that included one or more 9-to-1 up days." More significant than a solitary 9-to-1 up-volume day are two such 9-to-1 days that occur within three months of each other.

As a trader, I enter markets based on expectations of momentum follow-through. When my expectations aren't met, I immediately exit—no waiting, hoping, or praying.

Always remember that the most bullish thing a market can do is rise on extreme momentum. Yet many people are fearful that this type of extreme strength is an invitation for a market correction. Historically, extreme strength only leads to additional strength. This is even more so if the momentum surge occurs after a period of declining prices such as the situation prior to October 8, 1998.

The most bullish thing the market can do is not collapse when everyone is expecting it to.

I know that regardless of how bearish I may be, the market is always right and tells it own story best. Always remember that traders react to the evolving market, they don't predict and they don't anticipate. What separates the good traders from the not-so-good is the quickness of their reaction time.

Regardless of the study, it simply doesn't pay to be shaken out by extremely weak days in the market. Extremely weak trading days invariably lead to strength, not weakness.

I exit my positions on the weakness that precedes the real debacle days. In other words, debacle days rarely come from out of the blue. There is usually a period of a few days or weeks that leads up to the climactic selling days. It's at that initial weakness where I exit my positions and go to cash.

As you have seen, I trade various momentum patterns. In trading these patterns, there are no ifs, ands, or buts. Either the market immediately responds in my favor or I exit my position. How much simpler can a money management strategy get? If I buy because of extreme strength on a Friday that doesn't follow through on Monday, I'm gone. If I buy because of a late-day V-bottom upside reversal or price surge and there is no carryover buying the following day, I'm gone. If I buy the Nasdaq 100 because of a day or two of extreme positive divergence and the divergence dissipates the next day, I'm gone. I always enter or exit a market based on particular expectations. When the market proves me wrong by not immediately confirming those expectations, I act accordingly.

My most basic money management precept is that wealth accumulation comes from maximizing your winning trades—meaning that the name of the game is to make the big money when you are right. I'm a very conservative trader who becomes very aggressive when I get on board a winner. My method of exploiting winning trades is to continually add to my position on a scale-up, as taught by Darvas and Livermore. I try to milk winning trades for as long as I can and for as much as I can. Some would call this a pyramiding strategy. Try this type of strategy with futures, options, or any leveraged trading vehicle and you can get your head handed to you on just the slightest price reaction.

READING LIST

Books 1 through 7 in the following list are my favorite books of all time and appear in their order of importance to me. I have not included the previously recommended books on mutual funds.

1. How I Made $2,000,000 in the Stock Market, by Nicholas Darvas (New York: Lyle Stuart,
1986). No surprise here, as I've mentioned this book throughout How I Trade for a Living. This is my favorite trading book for primarily sentimental reasons. I wouldn't expect others to feel as much of an impact as I did when I read an earlier edition in 1961. Traders are always asking me specific mechanical questions about the Darvas methodology. I tell them that the Darvas book, as with any of the books I recommend, should be read for its concepts and not for black-and-white trading rules.

2. Reminiscences of a Stock Operator, by Edwin Lefevre (New York: John Wiley & Sons, 1994).
This is my kind of book—all text and not a chart in sight. This is the kind of book that should be read annually. Livermore's insights on trading are just as valuable today as they were nearly 100 years ago. This goes to show you that successful trading is simply a matter of following the principles of cutting losses and adding to your winners as you let your profits run.

3. Dow 1000, by Benton Davis (Larchmont, NY: American Research Council, 1964). This is another one of those books that I like more for sentimental reasons than for actual content. Davis, like Nicholas Darvas and Jesse Livermore, stresses letting the market tell you what to do and not your opinions. Dow 1000 contains my favorite piece of trading advice: "THE STOCK MARKET IS ALWAYS RIGHT AND ALWAYS TELLS ITS OWN STORY BEST." The capital letters are just as they appeared in Davis's book.

4. The Education of a Speculator, by Victor Niederhoffer (New York: John Wiley & Sons, 1997).
While the books by Darvas, Lefevre, and Davis may be my three favorite books of all time,
Niederhoffer's book is the best I've read about trading. Admittedly, Niederhoffer's book reads like a doctoral thesis, but it is well worth the effort. This is the only trading book I reread immediately after my initial reading—it was that good.

5. Why the Best-Laid Investment Plans Usually Go Wrong, by Harry Browne (New York: William Morrow and Company, 1987). Part One, which encompasses the first 235 pages of the book, is a must-read. Ignore Part Two completely, since it's about an outdated investment strategy. I underlined more passages in Harry Browne's book than in any other. His first paragraph tells it all: "The best-kept secret in the investment world is this: Almost nothing turns out as expected. Forecasts rarely come true, trading systems never produce the results advertised for them, investment advisors with records of phenomenal success fail to deliver when your money is on the line, the best investment analysis is contradicted by reality."

6. Mind over Markets, by James F. Dalton, Eric T. Jones, and Robert B. Dalton (Chicago: Probus,
1993). This book is about a trading methodology called Market Profile. Although this methodology is much like mine, I've never completely grasped Market Profile. I recommend Mind over Markets not for the method it preaches, but for its presentation of what it takes to become a successful trader.

7. The Tao Jones Averages, by Bennett Goodspeed (New York: E.P. Dutton, 1983). If you are a
struggling analytical-type trader, then it is probably because you tend to resist change by making fixity out of flux. Or as Goodspeed likes to say, "trying to understand running water by catching it in a bucket."

8. Rogues to Riches, by Murray Teigh Bloom (New York: G. P. Putnam's Sons, 1971). This author went in search of investors and traders who had conquered the market because of some special insight or trading method.

9. If They're So Smart, How Come You're Not Rich?, by John L. Springer (Chicago: Henry Regney Company, 1971). Read this book and you will understand how at such a young age I came to mistrust anyone labeled as a market expert.

10. Why Most Investors Are Mostly Wrong Most of the Time, by William X. Scheinman (New
York: Weybright and Talley, 1970). Yet another book that takes an unconventional approach to
trading. Scheinman presents a methodology for measuring investor sentiment.

11. Wiped Out, by Anonymous Investor (New York: Simon & Schuster, 1966). How a typical
investor lost all his money because he thought there were experts who knew better.

12. A Fool and His Money, by John Rothchild (New York: Penguin Books, 1988). The odyssey of
an average investor as he searches far and wide for that one expert or guru who has all the answers.

The next five books are recommended for their research, indicators, and investing techniques.

13. Stocks for the Long Run, by Jeremy J. Siegel (New York: McGraw-Hill, 1998). I often use
Siegel's book as a reference when debating the perennial prophets of pessimism in the various
newsgroups.

14. Stock Market Logic, by Norman Fosback (Chicago: Dearborn Financial Publishing, 1995). If
ever updated, this investment classic would become an investment bible.

15. Winning on Wall Street, by Martin Zweig (New York: Warner Books, 1997). Zweig has
ingrained traders with the credo that you never fight the tape and never fight the Fed. After reading his book, you will understand why.

16. Stock Trader's Almanac, by Yale Hirsch (Old Tappan, NJ: The Hirsch Organization). This
reference book is updated annually and is the best source on historical seasonal trading patterns.

17. 101 Years on Wall Street, by John Dennis Brown (Englewood Cliffs, NJ: Prentice Hall, 1991).
This is my favorite reference book on the market. It covers 101 years (1890 to 1990) of market
history. It's complete with charts and statistical information, and compares all the bull and bear
markets.

18. Market Wizards (New York: Harper & Row, 1990) and The New Market Wizards (New
York: Harper Business, 1992), by Jack Schwager. There have been many books about trading
masters and mavens and what makes them tick, but Jack's interviews with the market wizards are by far the best. Beware, though: Some of these market wizards have lost their touch and have become promotional wizards, peddling systems, seminars, and fax services.

19. The Trader's Edge, by Grant Noble (Chicago: Probus, 1995). How can I not like a book in
which the author gives me three paragraphs of exposure? Yet another book that takes an
unconventional view of the trading game.

20. Winner Take All, by William R. Gallacher (Chicago: Probus, 1994). Ditto #19 about being an
unconventional trading book.

21. Trading for a Living, by Alexander Elder (New York: John Wiley & Sons, 1993). As a rule, I
dislike trading books that present a hodgepodge of trading methods. I much prefer books about one trading method and how the author made it work for him or her. But Elder's book is the exception to my rule. The first 68 pages, about the psychology of trading, are what set this book apart. This book is especially recommended for futures traders.

22. Pit Bull, by Martin Schwartz (New York: HarperBusiness, 1998). I have a thing about trading
books by real traders—and Marty Schwartz is definitely a real trader. You'll see that he is also a big believer in synthesizing indicators.

One Minute Teacher

by Spencer Johnson
- one of the worst one minute books i've read
- boring because very similar to one minute manager
- stopped reading at top of page p65 (hardcover) - someone was anxious to speak
- had to return because due
- think i can learn more from reading jae's TEFL stuff

NO NOTES SCANNED AS ALREADY DOWNLOADED A FEW PDF SUMMARIES OFF THE WEB + TOO MANY NOTES TO SCAN...NOT A PRIORITY RIGHT NOW.

The Price of Everything

by Eduardo Porter
- ok book but didn't finish it...no time to read it and didn't feel it told much more than freakonomics
- again, its a book that tries to teach a lot but freakonomics is still better...

Right-wingers are happier than left-wingers.
A survey by the Pew Research Center found that even as the Republican candidate John McCain headed for disaster in the presidential election of November 2008,37 percent of Republicans rate(themselves as "very happy," compared with 25 percent of Democrats. A similar trend has held since 1972, when the General Social Survey started asking the question. This is true around the world. Apparently, it has to do with the left's guilt. A study by psychologists at New York University found that the right-left happiness gap increases with deepening income inequality. This suggests people on the right are better at rationalizing inequality as a normal feature of life and feel less guilty about it.

The rich may be happier than the poor. But getting richer wouldn't make them happier, at least not for long, because they would soon adapt to their new life one rung up the income ladder and start comparing themselves with richer people.
Adaptation could be a useful trait. Economists Gary Becker and Luis Rayo argue that the ephemeral, context-dependent nature of happiness makes sense in evolutionary terms. If progress boosts our happiness only briefly, we will be motivated to constantly improve. The desire to keep up with the neighbors would work in much
the same way.The relentless drive to improve would increase our chances of survival. As Adam Smith put it 250 years ago, the idea that we can achieve happiness amounts to a "deception, which rouses and keeps in continual motion the industry of mankind."

Money makes us feel better about our lives, but so does having free time. Americans have sacrificed enormous amounts of time to achieve their unparalleled economic prosperity. Easterlin's paradoxical finding that Americans' growing wealth hasn't made us any happier is, in reality, proof that the time we spend earning money is erasing the happiness we get out of counting and spending it.

The French chose time and the Americans money because they preferred it. Their choices
should make them both happy. But there is another possible reading: Americans chose an unhappier path.
Some of the same studies that showAmericans stuck in a happiness rut since the end ofWorldWar II suggest that the French have become happier with their lot. The French work 440 hours a year fewer than Americans partly because they take sevenweeks' vacation, compared with fewer than four in the United States.They sleep the longest of all citizens of the industrial world. They spend two and a quarter hours a day on meals, an hour more than in the United States.And they devote almost an hour a daymore to leisure than Americans do.
French women spend more than twiceasmuch time as Americans on meals and almost 50 percent more on active leisure-like doing sports or going to shows.American women spend about 10 percent more time working and a third more on passiveleisure activities like watching TV.As it turns out, Americans like the French life better than their own. Researchers found that ifAmerican women were to reorganize their days to spend time as the French do, theywouldn't
be quite as happy as the French, but they would be happier than they are with the lives they lead.
The conclusion to be drawn from the American happiness paradox is not that money cannot increase happiness. It can. It simply underscores that money is not the only relevant variable. Happiness can be purchased in other currencies too. It can be bought with love. It can be bought with time. And pursuing growth at all costs can lead us to sacrifice other components of our happiness.

MANY DYNAMICS CONTRIBUTED to the decline of labor coercion. Employers who could increase production by adding more inexpensive slaves had little incentive to invest in laborsaving technologies. Coerced workers had no incentive to become more productive-because they would just be handing a higher surplus to the boss. Both these effects hindered economic progress.
In the Americas, slavery led to slower subsequent economic growth. NewWorld colonies in which slave labor was common in the 1830s,such as Jamaica and Guyana, are today much poorer than colonies in which slaverywas rare, such as Barbados or Trinidad. In the United States, states where slave labor was 'widespread in the mid-nineteenth century, such as Mississippi, South Carolina, and Louisiana, are much poorer today than free states such as Connecticut, Massachusetts, and NewJersey.

Prices provide the most important signals in an economy, guiding people's decisions on where to invest their resources to get the best return they can. People who shop around to get the best possible price for their plasma TV are doing us all a favor. They get a better machine, have more money left over to buy other things, and improve the odds of success of the company that makes good products for less, boosting the economy's efficiency. Successful technology companies that profit from the work of highly qualified workers will offer higher wages-a higher price-to attract better-qualified applicants. Workers will keep raising their qualifications as long as the return-measured in better wages-is worth the investment in time, money, and effort.

A study of the impact of economic shocks on politics between 1970and 2002 concluded that a one-percentage-point decline in economic growth leads to a one-percentage-point increase in the share of the vote going to right-wing and nationalist parties.
Still, it's hard to know what to do about bubbles, even when we know they are going to pop up time and again. The cycle of investment surge and bust can bankrupt many investors but can also do good along the way. Investment booms built upon technological breakthroughs like electricity, railways, or the Internet ultimately revolutionized the world economy-fueling surges of productivity that could-at least temporarily-justify the exuberance.
The long-standing American approach, shared by the chairman of the Federal Reserve, Ben Bernanke, as well as his predecessor, Alan Greenspan, has been that bubbles should be dealt with only after the fact. The Fed should be ready to pick up the pieces after they burst-flooding the economy with cheap money to encourage lending and help debtors avoid bankruptcy as the value of their assets deflates. But the government should do nothing to the bubbles themselves. Their point is that we can't tell when a bubble is a bubble.

Opinion surveys in the United States over the past few decades suggest that Americans
who experienced a deep recession between the ages of eighteen and twenty-five were more likely to grow up to believe that success is achieved through luck rather than effort and were more likely to support redistributing income from the lucky rich to the unlucky poor. Paradoxically, the shock also diminished their trust in public institutions, like the presidency and Congress, so even as they demanded more of government, they doubted government's ability to deliver necessary services

What Now?

"What Now?" by Ann Patchett

• never read a book so fast in my life....all in 1 hr before i went to sleep
• very fun read and filled with a fun interpretation of all the wisdom u might want to hear as a graduate or someone embarking on a new adventure.
  

- Sometimes the circumstances at hand force us to be braver than we actually are, and so we
knock on doors and ask for assistance. Sometimes not having any idea where we're
going works out better than we could possibly have imagined.

- It was for me the start of a lesson that I never stop having to learn: to pay attention to
the things I'll probably never need to know, to listen carefully to the people who look as if
they have nothing to teach me, to see school as something that goes on everywhere, all the
time, not just in libraries but in parking lots, in airports, in trees.

- he did teach me something I should have known all along: people need to
talk, and often a willingness to sit and listen is the greatest kindness one person can offer
to another. One of the first lessons of childhood is to be wary of strangers, and while this
is good counsel to guard against the world's very small nefarious element, it also teaches
us to block out the large majority of those who just have something on their mind
they'd like to say.We are taught to be suspicious, especially of anyone who might not
look like us or share our beliefs. Bythe time we reach adulthood, many have perfected the
art of isolation, of being careful, of not listening in the name of safety. But the truth
is that we need to hear other people, all people, especially in those moments when
we don't know exactly where we're going ourselves. When it comes to finding our way we're better off taking in as much information from as many sources as possible.

- wouldn't it be even crazier not to listen to people or to make up your mind against them based on the most superficial bit of information, say a saffron robe, perhaps? For the most part wisdom comes in chips rather than blocks. You have to be willing to gather them constantly, and from
sources you never imagined to be probable. No one chip gives you the answer for everything. No one chip stays in the same place throughout your entire life. The secret is to keep adding voices, adding ideas, and moving things around as you put together your life.

- How much sadness could be averted by taking the time to notice all the people we have come to ignore? Would we in fact be safer and not more at risk if we asked someone to voice his
feelings rather than wait until he looked for other means of making himself heard? The
world may be telling you to go forward, to climb and to strive and to move briskly
ahead, but while you're doing all that, be sure to keep your ears open. Divest yourself of
prejudice whenever possible.

- As quicldy as you think that everything is set, it all becomes unglued again. A huge part of this is simply luck, the element of life both good and bad that is beyond our control. Sickness comes into the picture of perfect health, true loves catches your eye just as you were setting your foot on the train that would have taken you away forever. Babies are born, jobs are lost, fortunes
are made. Wars and suffering pull us backwards while science gives us a second chance
we never thought possible. Even if you have it all together you can't know where you're
going to end up. There are too many forces, as deep and invisible as tides, that keep us bouncing into places where we never thought we'd wind up. Sometimes the best we can
hope for is to be graceful and brave in the face of all of the changes that will surely come. It
also helps to have a sense of humor about your own fate, to not think that you alone are
blessed when good fortune comes your way, or cursed when it passes you by. It helps if
you can realize that this part of life when you don't know what's coming next is often the
part that people look back on with the greatest affection. In truth, the moment at which
life really does become locked down, most of us are overcome by the desire to break it all
apart again so that we can reexperience the variables of youth.

- It turns out that most positions in life, even the big ones, aren't really so much about
leadership. Being successful, and certainly being happy, comes from honing your skills
in working with other people. For the most, part we travel in groups-you're ahead of
somebody for a while, then somebody's ahead of you, a lot of people are beside you all
the way.

- The secret is finding the balance between going out to get what you want and being open to the
thing that actually winds up coming your way.What now is not just a panic-stricken
question tossed out into a dark unknown. What now can also be our joy. It is a declara-
tion of possibility, of promise, of chance. It acknowledges that our future is open, that we
may well do more than anyone expected of us, that at every point in our development we
are still striving to grow.There's a time in our lives when we all crave the answers. It seems
terrifying not to know what's coming next. But there is another time, a better time, when
we see our lives as a series of choices, and What now represents our excitement and our
future, the very vitality oflife. It's up to you to choose a life that will keep expanding. It
takes discipline to remain curious; it takes work to be open to the world-but oh my friends, what noble and glorious work it is. Maybe this is the moment you shift from seeingWhat now as one more thing to check off the list and start to see it as two words worth living by. This is the day you leave this campus, but if you keep your heart and mind open and are willing to see all of the possibilities that are available to you, it will only be the start ofyour education.

- If you're trying to find out what's coming next, turn off everything you own that has
an OFF switch and listen. Makeup some plans and change them. Identify your heart's truest
desire and don't change that for anything. Be proud of yourself for the work you've done. Be grateful to all the people who helped you do it. Write to them and let them know how
you are. You are, every one of you, someone's favorite unfolding story. We will all be anx-
ious to see what happens next.

A Funny Thing Happened...

A Funny Thing Happened on the Way to the Future...
by Michael J. Fox

• ok book but too much about him and too little about the wisdom he learned
• i wanted to learn more but it did make me respect michael j fox a lot
• Think "what now?" was a better version of this book..and i should read his other book "always looking up"
  

-"Wherever you go, there it is." The succinct summation of both of these thoughts is that wherever you travel, you have to adapt to your surroundings. They won't adapt to you.

- Just as you can't change the essential nature of a place, don't count on the place to change the essential nature of you. It may be tempting, at some time in life, to seek a fresh start or even establish a new identity uprooting from one location and transplanting physically to another.

- I always take the time to appreciate where I am for what it is. I seek out the excitement of the strange and not the comfort of the familiar. I'm not trying to lose myself, or even find myself, for that matter. My goal is just to enjoy myself, learn something, and gain an appreciation for the amazing complexity of this planet and the people who live on it. Wherever I go, I bring myself. And so far, it's always been a roundtrip.

- None of us is entitled to anything. We get what we get, not because we want it or we deserve it or because it's unfair if we don't get it, but because we earn it, we respect it, and only if we share it do we keep it.

- If you're lucky, at some point in the future when you're in need of guidance, or maybe just moral support, you will cross paths with a suitable mentor. Even luckier, you'll realize you've had one in your life all along, and you'll gain a new appreciation for how you benefited from Lhat relationship. The luckiest circumstance of aU, of course, is a combination of the two. You've had help all along, and as the path widens or narrows, whatever the case may be, new and powerful influences will enter your life and aid your progress .

- In my experience, a mentor doesn't necessarily tell you what to do, but more importantly, tens you what they did or might do, then trusts you to draw your own conclusions and act accordingly. If you succeed, they'll take one step back, and if you screw up, they'll take one step
closer. Whatever it is they teach you ... pass it on.

- It may seem hard to believe, but it's catastrophe that offers the most promise for an even richer life. This is the gateway to the good stuff. In other words, you never truly know which way the wind is blowing until the shit hits the fan. And further, if you don't mind getting a little dirty, that breeze will carry you a long way.

- Don't spend a lot of time imagining the worst-case scenario. It rarely goes down as you imagine it will, and if by some fluke it does, you will have lived it twice. When things do go bad, don't run, don't hide. Stick it out, and be scrupulous in facing every part of your fear. Try to be still. It wilI take time, but you'll find that even the gravest problems are finite-and that your choices are infinite.

- Being in control of your own destiny is a myth-and wouldn't be half as much fun anyway. Pay
attention to what's happening around you. Read the book before you see the movie. Remember, though you, alone, are responsible for your own happiness, it's still okay to feel responsible for someone else's.

Switch

by Chip Heath + Dan Heath - good book, but not great...easy to read and good writing + formatting style though

(unfinished notes...need to start with p10 of scanned image)

- What good is a 5 minute session of cleaning? Not much. It gets you moving, though, and thats the hardest part. Starting an unpleasant task is always worse than continuing it. So once you start cleaning house, chances are you won't stop at 5 minutes. You'll be surprised to take pride in your accomplishment

- One way to shrink change, then is to limit the investment you're asking for - only 5 minutes of housecleaning, only one small debt. Another way to shrink change is to think of small wins - milestones that are within reach. The overall goal - cleaning the whole house - is too distant to be motivating, but if you can engineer a small win in the first 5 minutes, it might buy enough enthusiasm to pursue the next milestone.

- The value of the miracle scale is that it focuses attention on small milestones that are attainable and visible rather than on the eventual destination, which may seem very remote.
It's like climbing a tall ladder and focusing on the next step rather than gawking up at the top. There may be many more steps to go, but you can take comfort that you're making real progress
in the right direction.
Notice, once again, how often Elephant appeals and Rider appeals can overlap. In this case, your son's Rider is getting very clear direction-Ask the clerk about the toothpaste-at the same time as his Elephant is getting little boosts of hope-Maybe I don't have to be so shyforever.
By using the miracle scale, you always have a clear idea of
where you're going next, and you have a clear sense of what the
next small victory will be. You're moving forward, and, even better,
you're getting more confident in your ability to keep moving
forward.

-When you set small, visible goals, and people achieve
them, they start to get it into their heads that they can succeed.
They break the habit oflosing and begin to get into
the habit of winning.

-Former UCLA coach John Wooden, one of the greatest college
basketball coaches of all time, once said, "When you improve
a little each day, eventually big things occur.... Don't look for
the quick, big improvement. Seek the small improvement one
day at a time. That's the only way it happens-and when it happens,
it lasts."

-No one can guarantee a small win. Lots of things are out of
our control. But the goal is to be wise about the things that are
under our control. And one thing we can control is how we
define the ultimate victory and the small victories that lead up
to 1t.
You want to select small wins that have two traits: (1) They're
meaningful. (2) They're "within immediate reach," as Bill Parcells
said. And if you can't achieve both traits, choose the latter! (The
5-Minute Room Rescue wasn't very meaningful by itself, but it
made great change possible.)

-Paul Butler didn't
shrink the change. Instead, he grew the people. He made the St.
Lucians swell with pride over their parrot-a species that exists
nowhere else. He inspired them to feel more determined, more
ready, more motivated. And when you build people up in this
way, they develop the strength to act.

-March says that when people
make choices, they tend to rely on one of two basic models of
decision making: the consequences model or the identity model.
The consequences model is familiar to students of economics.
It assumes that when we have a decision to make, we weigh the
costs and benefits of our options and make the choice that
maximizes our satisfaction. It's a rational, analytical approach.
In the identity model of decision making, we essentially ask
ourselves three questions when we have a decision to make: Who
am I? What kind of situation is this? What would someone like me
do in this situation? Notice what's missing: any calculation of costs
and benefits. The identity model explains the way most people
vote, which contradicts our notion of the "self-interested voter."
It helps to shed light on why an auto mechanic in Oklahoma
would vote against a Democrat who'd give him health insurance,
and why a Silicon Valley millionaire would vote against a Republican
who'd cut her taxes.

-Because identities are central to the way people make
decisions, any change effort that violates someone's identity
is likely doomed to failure. So the question is this: How can you
make your change a matter of identity rather than a matter of . '
consequences?

-When you think about the people whose behavior
needs to change, ask yourself whether they would agree with this
statement: "I aspire to be the kind of person who would make
this change." If their answer is yes, that's an enormous factor in
your favor. If their answer is no, then you'll have to work hard to
show them that they should aspire to a different self-image. And
that's exactly what Paul Butler did in St. Lucia. He convinced the
island's citizens to think, "This is our bird-if we want to be good
St. Lucians, we'd better protect it."

-One of IDEO's designers even
sketched out a "project mood chart" that predicts how people
will feel at different phases of a project. ~t'sa U-shaped curve with
a peak of positive emotion, labeled "hope," at the beginning, and
a second peak of positive emotion, labeled "confidence," at the
end. In between the two peaks is a negative emotional valley labeled
"insight."
Brown says that design is "rarely a graceful leap from height
to height." When a team embarks on a new project, team members
are filled with hope and optimism. As they start to collect
data and observe real people struggling with existing products,
they find that new ideas spring forth effortlessly.Then comes the
difficult task of integrating all those fresh ideas into a coherent
new design. At this "insight" stage, it's easy to get depressed, because
insight doesn't always strike immediately.
The project often feels like a failure in the middle. But if the
team persists through this valley of angst and doubt, it eventually
emerges with a growing sense of momentum. Team members
begin to test out their new designs, and they realize the improvements
they've made, and they keep tweaking the design to
make it better. And they come to realize, we've cracked this problem.
That's when the team reaches the peak of confidence.

-Notice what team leaders at IDEO are doing with the peaksand-
valley visual: They are creating the expectation of failure.
They are telling team members not to trust that initial flush of
good feeling at the beginning of the project, because what comes
next is hardship and toil and frustration. Yet, strangely enough,
when they deliver this warning, it comes across as optimistic.

-Edmondson found that the
teams who failed made the mistake of trying to "get it right on the
first try" and were motivated by the chance to "perform, to shine,
or to execute perfectly." But of course no one "shines" on the first
few tries-this mindset set the teams up for failure. By contrast,
the successful teams focused on learning. They didn't assume that
mastery would come quickly, and they'anticipated that they'd
face challenges. In the end, they were the ones who were more
likely to get it right.
Failing is often the best way to learn, and because of that,
early failure is a kind of necessary investment.

-Under her new system the
only grades offered at Jefferson County High School were: A, B,
C, and NY.
Not Yet.
In Howard's view, the students at Jefferson had accepted a
"culture of failure." In a fixed-mindset way, they acted as though
they were failures to the bone. Students often didn't do their
homework, or they turned in shoddy work. Getting a D or an F
was an easy way out in a way. They might get a poor grade, but
at least they would be done.
In the new system, the students couldn't stop until they'd
cleared the bar. "We define up front to the kids what's an A, B,
and C," said Howard. "If they do substandard work, the teacher
will say, 'Not Yet.' ... That gives them the mindset: My teacher
thinks I can do better. It changes their expectations."
The school was reborn. Students and teachers became more
engaged, the school's graduation rate increased dramatically, and
student test scores went up so much that remedial courses were
eliminated.
Howard transformed her students. She cultivated a new identity
in them. "You're all college-bound students. Then she flipped
Jefferson from a fixed-mindset school to a growth-mindset
school. She believed that every student was capable of doing acceptable
work, that no student was doomed to failure. There's no
"never"at Jefferson anymore, only a "Not Yet ."

-In trying to minimize the risk of bad outcomes, injury prevention
experts often turn to the Haddon Matrix, a simple
framework that provides a way to think systematically about accidents
by highlighting three key periods of time: pre-event,
event, and post-event .•
Let's say our goal is to reduce serious injuries from car wrecks.
Pre-event interventions would include anything that would tend
to prevent wrecks from happening: installing bright lighting on
highways, painting clear lane markers on the roads, popularizing
antilock brakes, launching advertising campaigns against drunk
driving.
With event interventions, we accept that crashes will happen
and ask ourselves how we can reduce the chances of injury. Seat
belts and air bags are classic event interventions, but also think
about breakaway light poles and those big orange barrels that line
exit ramps (which are intended to soften collisions).
With post-event interventions, we acknowledge both that
crashes will occur and that people will be injured. The goal of
post-event interventions is to minimize the severity of the injuries

-our habits are
essentially stitched into our environment. Research bears this out.
According to one study of people making changes in their lives,
36 percent of the successful changes were associated with a move
to a new location, and only 13 percent of unsuccessful changes
involved a move.
Many smokers, for example, find it easier to quit when they're
on vacation, because at home, every part of their environment is
loaded with smoking associations. It's like trying to quit smoking
inside a Camel advertisement-everywhere you look are reminders
of the habit. There's that drawer in the kitchen where
the lighters are stashed, the clay pot on the porch that's become
an archive of ashes, the ever-present scent of smoke in the car and
the closet. When a smoker goes on vacation, the environment recedes
toward neutrality. That doesn't mean it's easy to quit, but it's
easier.

-When you're leading an Elephant on an unfamiliar path,
chances are it's going to follow the herd. So how do you create a
herd?

-Well aware of the power of contagious behavior, a group of social
psychologists persuaded a hotel manager to test out a new
sign in the hotel bathrooms. The sign didn't mention the environment
at all; it simply said that the "the majority of guests at
the hotel" reuse their towels at least once during their stay. It
worked-guests who got this sign were 26 percent more likely to
reuse their towels. They took cues from the herd.

-In situations where your herd has embraced the
right behavior, publicize it. For instance, if 80 percent of your
team submits time sheets on time, make sure the other 20 percent
knows the group norm. Those individuals almost certainly will
correct themselves. But if only 10 percent of your team submits
time sheets on time, publicizing those results will hurt, not help.

-Reinforcement is the secret to getting past the first step of
your long journey and on to the second, third, and hundredth
steps. And that's a problem, because most of us are terrible reinforcers.
We are quicker to grouse than to praise. At work, we love
to bond with our colleagues through communal complaining.
(Sutherland calls this behavior "verbal grooming.") But this is all
wrong: We need to be looking for bright spots-however tiny!~
and rewarding them.

- Learning to spot and celebrate approximations requires us to
scan the environment constantly, looking for little rays of sunshine,
and it isn't easy. Our Riders, by nature, focus on the negative.
Problems are easy to spot; progress, much harder. But the
progress is precious. Shamu didn't learn to jump through a hoop
because her trainer was bitching at her. She learned because she
had a trainer who was patient and focused and reinforced every
step of the journey

-"If you want your child to do two
hours of homework on her own every night, you don't withhold
praise and rewards until she does two hours of homework without
being asked to." Instead, you set small goals and gradually
build her up. And when a child doesn't get something right,
Kazdin advised: ''Ask yourself, 'Was there anything about it that's
a component of what I'd like her to do?' If the answer's yes, and
it almost always is, then jump on that component: It was great
that you did X."

-The most important lesson we can learn from Kazdin and the
animal trainers is this: Change isn't an event; it's a process. There
is no moment when a monkey learns to skateboard; there's a
process. There is no moment when a child learns to walk; there's
a process. And there won't be a moment when your community
starts to invest more in its school system, or starts recycling more,
or starts to beautifY its public spaces; there will be a process. To
lead a process requires persistence.

-When change works,
it tends to follow a pattern. ~he people who change have clear direction,
ample motivation, and a supportive environment. In
other words, when change works, it's because the Rider, the Elephant,
and the Path are all aligned in support of the switch.

Peaks and Valleys

by Spencer Johnson

• How you feel depends largely on how you view your situation. The key is to separate what happens to you from how good and valuable you feel you are as a person. I found that you can feel good about yourself even when bad things are happening
• Peaks and Valleys are connected. The errors you make in today's good times create tomorrow's bad times. And the wise things you do in today's bad times create tomorrow's good times.
• For example, people who use a peaks and valleys approach during bad times make things better when they return to basics and concentrate on what matters most.
  
• No one can stay in one place forever. Even if you remain physically in one spot, you are always moving in and out of the places in your heart. The secret is to truly appreciate and enjoy each time for what it is while you are living it.
  
• Peaks are moments when you appreciate what you have. Valleys are moments when you long for what is missing.
  
• So if you want to avoid fewer valleys, avoid comparisons. If you enjoy what's good about the moment, you feel more like you are on the peak.
• You cannot always control external events. But you can control your personal peaks and valleys by what you believe and what you do.
• To change a valley into a peak, you need to change one of two things: what is happening, or how you feel about what is happening. If you can change the situation, that's great. If not, you can choose how you feel about it so that it can work in your advantage.
• The path out of the valley appears when you choose to see things differently
• You change your valley into a peak when you find and use the good that is hidden in the bad times.
• Between peaks there are always valleys. How you manage your valley determines how soon you reach your next peak
• While it is unhealthy to try to escape by blocking out reality, it can often be very healthy to just relax and rest and trust that things will get better. Because, after a good night's sleep or a few days' break, they often do.
• Your ego can make you arrogant on the peak and fearful in the valley. It keeps you from seeing what is real. Your ego distort the truth. When you are on a peak, your ego makes you see things as better than they really are. And when you are in a valley, your ego makes you see things as worse than they really are. It makes you think a peak will last forever, and it makes you fear a valley will never end.
  
• The most common reason you leave a peak too soon is arrogance, masquerading as confidence. The most common reason you stay in a valley too long is fear masquerading as comfort.
• I find the best way to get through a valley is by creating and following your own sensible vision. By sensible I mean a vision of a future peak you want to be on that makes good sense to you. Something as big as you can imagine that is also realistic and attainable if you want it enough. And sensible also means you can make what you imagine more real to you when you use all your five senses to create an image in such specific, believable detail that you begin to realize you can make it happen. Imagine how your future Peak will look, sound, smell, taste, and feel until it becomes so real to you that the image of getting there pulls you through your valley.
• A great way to get to your next peak is to follow your sensible vision. Imagine yourself enjoying your better future in such specific, believable detail that you soon enjoy doing what takes you there.
• The pain in the valley can wake you up to a truth you have been ignoring.
• Maybe you are always creating a vision of your future whether you are aware of it or not - either a fearful vision, or a sensible vision. And it's just a question of which vision you follow.
• My valley is fear
• Since your valleys are moments of longing for what is missing, did he fear that he would never gain or regain what was missing? He knew the bad times can continue, but if you move beyond your fear, you soon feel much better.
• Avoid believing things are better than they really are when you are on a peak, or worse than they really are when you are in a valley. Make reality your friend.
  
• A personal peak is a triumph over fear.
• He wondered about the difference between wishing for a better future and following a sensible vision. Then he realized that the difference is in the doing. Wishing leads to no action but when you truly follow a sensible vision, you want to do the things that make it happen. You don't force yourself, you just want to do so much that you find yourself doing things you never knew you were capable of.
  
• He was beginning to truly understand what the old man meant by truly following your vision. It meant staying true to what you want and doing what really takes you there - recognizing the truth! More and more, he was starting to realize that fear block you, but the truth helps you succeed
• You create a peak when you truly follow your sensible vision. Your fear fades and you become more peaceful and successful.
• I don't know if this is right but it seems to me that the purpose of the peak is to celebrate life, and the purpose of the valley is to learn about life.
  
• I remembered that a great way to get to my next peak is to create and follow my sensible vision - one that makes sense to me and is realistic and attainable if i want it enough. I used all five of my senses to imagine that I was already enjoying being on the higher peak. I imagine what I would see, touch, taste, smell, and hear. As I did, my fear faded and it gave me the energy and enthusiasm to go for it. Then I kept seeing and feeling my sensible vision until I came up with a way to get there.
• Now I'm hoping that I can experience my future peaks and valleys with more curiosity about the truth. I'll ask myself "what is the truth in this situation I am in?"
• To stay on a peak longer: Be humble and grateful. Do more of what got you there. Keep making things better. Do more for others. Save resources for your upcoming valleys.
• He decided he wanted to grow into a more loving and attractive person. He now believed that by becoming more loving himself - by replacing fear with love - he was more likely to be loved, and to attract a truly fulfilling relationship into his life.
  
• In the days that followed, the created another sensible vision. This time, he imagined himself becoming the person that a woman like her would want to be with. And perhaps more important, the kind of person he would like to be. He imagined his better self in every detail. He would become someone who didn't take himself too serously, someone who was fun to be with, yet someone who cared deeply about creating real excellence in his life and work. He would be a man who wanted to make a difference in the world - perhaps a small difference, but a significant one. And he would never take for granted the people closest to him. For a change, the young man did not talk about this to anyone. He just held this picture and feeling very clearly in his mind and hear. Then he did the things that made it happen - staring with small things. In time, he became more like the man he had imagine.
  
• You get out of a valley sooner when you manage to get outside of yourself: at work, by being of greater service, and in life, by being more loving.
• One of the most useful things he found was surprisingly simple: Whenever he got confused about how to get out of a valley, he remembered that peaks and valleys are opposites. So he looked at what he did that put him in the valley and then he did just the opposite - and he got the opposite results.
  
• The man realized that what counted was not where a person lived, but how a person lived.