THEME: Market vs. Me
From Donald Luskin...

Now, on to the bad stuff. If "American Sucker" by David Denby were a cookbook, it would consist exclusively of recipes for how to poison oneself.

Denby isn't an investment pro — he's the movie critic for The New Yorker. His book is a memoir of how he — like probably many other investors — lost a substantial portion of his net worth investing in technology stocks following the market top in March 2000.

Unlike many investors, Denby wasn't just excessively hopeful, or greedy, or naïve, or even just plain wrong. Instead, in the midst of a painful divorce, Denby was so obsessively focused on his own inner life that he barely seems to have engaged his mind in the investment process at all. If anything, it seems to have been a kind of play-therapy for him, and a perfect example of that old maxim: "Wall Street is a very expensive place to find out who you are."

As a critic for a respected magazine, Denby had social entrée into relationships that could have made him a better-than-usual investor. In the book we hear about how he met with Securities and Exchange Commission chairman Arthur Levitt, how he lunched with superstar Internet analyst Henry Blodgett and how he attended parties at the home of controversial ImClone (IMCL) Chief Executive Sam Waksal.

But those were all missed opportunities for Denby. It's as though those people weren't even there — Denby has absolutely nothing to say about them, other than how his encounters with these extraordinary men affected his own emotional state. Reading "American Sucker" is like talking to a boor at a party who says, "But enough about me. Let's talk about you. What do you think of me?"

The thing I have always loved most about investing is precisely how little it has to do with me. An effective investor has to study literally everything in the world — because everything in the world affects the market. Nothing is out of bounds, except one thing: oneself. One's emotions, biases, hopes, fears — these things are irrelevant, and to the extent that one regards them at all except to extinguish them, they are enemies.

When you are the focus of your trading, you can never win. When you can become part of market and attain mushin, then you will empathize with it. Trading based on your needs or biases is like singing out of tune in a choir, they'll sing louder to drown you out.