Kitchen versus Trading Philosophy

By Jeff Kum | 27 February 2018

This few weeks I obsessed watching old TV show Kitchen Nightmares, where famous Chef Gordon Ramsay hits the road to help struggling restaurants all over the United States turn their luck around. Ramsay examines the problems each establishment faces, from unsanitary refrigerators to lazy or inexperienced staff, and searches for resolutions. With help from his team, Ramsay redecorates each eatery to give it a fresh new look and updates the menu as needed. Ramsay’s ultimate goal is to make the restaurants he visits popular and profitable, but it’s up to the restaurateurs to take his advice and turn their business nightmare into the American dream.

I observed in each episode; each restaurant had a different type of problems but all down to 3 similarity which is:

  1. The owner/s is in denial
  2. Losing support
  3. Lack of Principle/had swayed from the original principal

Why and how all this related to investment/trading?

  1. The owner is in denial

In the TV show from the start of each episode, the owner will keep saying to the Chef Gordon,”The food is perfect, I don’t agree with you that the food is terrible. The kitchen is clean and the food is not frozen and fresh waiting to serve. I had dedicated the job to him/her, so it is not my responsibility”. And the owner will get angry whenever his customers or staff is complaining and telling him the truth.

When Chef Gordon show the owner all the frozen package, the expired food, the cooked food had been put together with the raw food (which is a big no in kitchen rules; the cooked food will get contaminated easily) all inside the freezer which is most of the time not work correctly. The owner will either cry and blame the others or realise it is his responsibility because he owned the business.

When a trader is in denial, It means that he keeps denying by telling everyone including himself that he saw nothing is wrong, did nothing wrong and assumed that he had done everything correctly. So how he knows he is wrong? Just look at the trading account statement, and it never lies! If you keep losing money in the long run just like a restaurant business owner, you should start finding out what is the problem and fix it. If you still in denial, you will never be able to see the problem clearly, therefore finding the solution will be a mounting task to do.

  1. Losing Support

In the interview before Chef Gordon comes to help them, all the owners had the same/similar speech which is ”I don’t know why I lose in this business and I don’t know what to do next”. By the time Chef Gordon pointed out their mistakes, the owner realises all the error were apparent that they already should know it long before from the customers and people around him. The problem is the owner stop listening.

When you stop to listen, you stop getting valuable feedback from your staff, from your client and even from your own family. When you are in ignorance, people around you will stop communicating with you and the worst thing will follow is they stop supporting you.

As a trader, you may think why I need others people support? Whether you are fund manager or just a garbage collector; you will still need human support because we are only human. A trader at some point will need either emotionally or financially support from family, friends and even traders community itself. You need a mentor like Chef Gordon to guide you if you are a restaurant owner, same as you will need successful traders or fund managers to guide you along the way in your trading journey as well. You also will need support from investors when you become a successful fund manager. You can’t trade like George Soros if you don’t have investors to back you up. Please bear in mind that even George Soros makes his fortune by managing investors money first.

  1. Lack of Principle/had swayed from the original principal

In some episode, the owner had a good business before it goes downhill. It happens when the owner changes their business model like serving more type of foods, reduce costs by cutting headcount and cook using frozen food which needs lesser people to handle. All this practice is to improve profitability for the business but also jeopardise the quality of the service and the food. Eventually, the customer stops patronising the restaurant and business start to lose money. The owner had no longer follow their principle which providing good food and excellent service to customers which had become their pride when business is thriving. In the end, they lose their business and worst, their principal and pride.

A lot of traders will try to increase their profit by double the lot size every time they make some money without a proper plan, so they can quickly double the gains. They will also try to find brokers that offer cheap brokerage without checking their credibility. Instead of focusing on how to improve their trading skills and knowledge, they try to take a shortcut by concentrating on short-term gain. When you lose a principal, you will start to lose focus. Eventually, you begin to lose money.

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