We Are What We Do Every Day (November 6, 2009)
Thoughts on the passing of my stock market mentor, Stewart Pillette.
My stock market mentor and former boss, Stewart J. Pillette, passed away late last month at the age of 71. I worked for Stew for only a year and a half, Spring 1997 to Autumn 1998, but in that brief period I learned a lot from him about the market and quantitative analysis and about being a good boss.
I titled this entry We Are What We Do Every Day because it is a simple but profound statement. Stew was positive every day, even when things were going badly. Being positive was what he did every day. He was enthusiastic about the market, his weekly golf and his family, and lived his mission credo: "Get it early, get it right and make a difference."
We had a complex technology-dependent system to maintain, and snafus were constant. Market data came in via a satellite feed into a Linux box, and various processing steps required DOS and Linux line commands. When it all worked, Stew would exclaim, "I love technology!" And when it fizzled, he would exclaim with equal force, "I hate technology!"
His family recounted that Stew had been drawn to the priesthood as a young man, but ended up choosing to be a stockbroker. He worked at Drexel and other big houses until he struck out on his own in his 50s.
His system was based on plotting the second derivative of the rate of change in stocks' price movements rather than massaging the prices themselves. This created charts similar to MACD (moving average convergence/divergence) in appearance.
One of my jobs was to assemble the data to backtest the system, which had never been done. (It was basically a two-person office at this time.) The system identified the change in trend correctly about 80% of the time-- about the best that any system can manage over the long-term. The other 20% of the signals failed, often because of some unexpected news which sank the stock.
Stew was the sort of boss who would surprise you with a bonus check for a $170 on a Friday after a long hard week, shake your hand and thank you for your work. That is how I discovered the power of gratitude and unpredictable bonuses.
As his son Justin noted at Stew's memorial service, Stew would disagree and defend his view, but in ways which always respected others.
I think Stew could have become a millionaire many times over with his system but by his own account he was an impulsive trader who was drawn to the goal of "hitting one out of the ballpark." We learn not just from others' best traits but also from their weaknesses, and since I share these traits with Stew--perhaps that was part of our bond--then becoming a disciplined trader is what I am striving to "do every day."
Stew loved the market and golf, and though I don't play golf it is my observation that the market and golf share the characteristic of being fundamentally impossible in the sense that there is no perfect golf game and no perfect trade. A good game and a good trade are satisfying; aiming for perfection in either guarantees disappointment.
Justin told a story at Stew's memorial service which encapsulated his daily approach to life. When it was storming outside and heavy rain pelted down, Stew would bundle his young son and daughter into rain slickers and take them outside to splash around in the puddles and glory in the rain and wind.
The typical parental approach, of course, would be to prevent the kids from going outside in such foul weather. Stew was an exceptional parent and Justin observed that many of his friends were jealous of his relationship with his Dad.
That is high praise indeed, and not something accomplished by occasional effort. It was what Stew did every day.
We miss you, Stew. You were a good man.
In memoriam: Stewart J. Pillette, 1938-2009.
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