"The moment you become your own contra, and you can trade against yourself, then you have reached Shrubvana"
- Le Shrub, from “Reminiscences of a Shrub Operator”
This is my trading blog. As a result, you will read a lot of silly things once in a while. Ok. Quite often.
“SHRUBVANA” is one of those things that do sound silly but are in fact one of THE most important concepts that one should embrace in their journey as an investor.
When you enter the Arena that is called “The Stock Market”, you are playing against the toughest competition on the Planet because the stakes are so high. But ultimately, your toughest competition as well as your worst enemy is … Yourself.
This is where Shrubvana comes in…
It’s that moment when your emotions run high, when you are about to do something completely against your principles, when you are about to give up and join the troop of monkeys, when you are about to do a trade that will hurt your portfolio just so that you feel good about “joining the crowd”…
…but then you stop….
…and you realize that, in this point in time, YOU are the CONTRA…
…and you are realize that the best course of action is to do the OPPOSITE of what you were about to do…
…that’s when you have reached SHRUBVANA!
Stan Druckenmiller & Shrubvana
Stan Druckenmiller is the GOAT of Investing. Yet even he was not immune to the Siren call of FOMO during the Dotcom Bubble of 2000. Here’s the story in his own words (I must have read it 100 times over the years):
“In January of 2000, after riding that tech boom to a T and making billions of dollars in 1999, I sold everything. I had a couple of internal portfolio managers at Soros who didn’t sell out. They had smaller portfolios but made 30% after I sold.
And I just couldn’t stand it anymore. And I’m watching them make all this money every day. For two days, I’m ready to pick up the phone and buy this stuff back.
I pick up the phone and I buy them.
I might have missed the top of the Dotcom Bubble by an hour.
I ended up losing $3B on that trade alone. I had made more of the year before, but you know $3B is a lot of money.
It was all because I got emotional and dropped every tool of discipline I’ve ever had. And somebody says, what did you learn from [the trade]? And I just said, “I learned nothing. I learned that 25 years ago.”
Druck left Soros’ fund a month later, being down 22% for the year, and it was only April...I found the NY Times article from the time and this is what he said:
''We thought it was the eighth inning, and it was the ninth …I overplayed my hand.''
Stan was 46 years old at the time and at the top of his game. Yet, just ONE Momentary Lapse of Sanity was enough to blow him up. At that brief moment, he was actually his OWN Contra. Yet, at the time, the greatest trader of our generation wasn’t aware of it. He had not attained Shrubvana by that point. Since then, Druck has reached way higher levels of Enlightenment that us mere mortals could even dare to dream of - I am certain that Druck uses himself as his own Contra!