“Friendship is unnecessary – like philosophy, like art…. It has no survival value; rather, it is one of those things which give value to survival.”― C.S. Lewis, The Four Loves
Van Tharp’s life work has made a significant impact on my life and in the lives of thousands of people. And Van’s ideas and gentle way of doing things continues to impact thousands more.
The Fondest of Memories
Since this is one of the last articles that I am blessed to write for the Tharp’s Thoughts newsletter, I’d like to reminisce a bit about some of my most fond memories of Van.
A little more than 25 years ago, I wandered into the International Institute of Trading Mastery as a student. Since then, Van graciously and generously became my mentor, my business partner, and my friend. And then, my confidant. I helped in creating and writing two of his books and then the second edition of a third one.
Earlier this year, I wrote a few sentences about the Super Bowl that Van and I attended back in 2011, when his beloved Green Bay Packers made it back to the Big Game. Ever since the Packers lost to the Denver Broncos in Super Bowl XXXI (14 years earlier), Van had always promised himself that he’d go to the big game the next time they made it. So, I surprised him with tickets and we flew to Dallas from different parts of the country.
Here we are in our Packers jerseys after the big win over the Pittsburgh Steelers:
Fast forward 11 years. The Packers were making another run toward the Super Bowl. I texted Van to see if he had plans to attend any of the playoff games (the same conversation we had just about every year at that time), and he told me about his terminal diagnosis for the first time. I was on a plane to Cary the next day.
Over the next six weeks, Van wrote tens of thousands of words about what he wanted to pass on to his students. To be honest, he had a spurt of superhuman strength for that time. We exchanged 107 text messages and numerous phone calls. Sure, we talked about health and procedures (I had had a major surgery nine months earlier) and what was working or not for his health. And yes, we talked a bunch about his beloved Packers. We talked about things spiritual, including my deepest desire for him to put his trust in God during our last text exchange and our last midnight phone call. But we talked much more during that time about legacy, about giving back, and about what he still had to pass on to students.
To say that Van was an inspiration for me is a huge understatement. That is why staying connected to the Van Tharp Institute community is important to me, and I hope it’s important to you.
Moving Van’s Legacy Forward
Exactly six months after my last communication with Van, I got an unsolicited personal email from an old friend and colleague, Dr. Richard Smith. Richard studied mathematics at U.C. Berkeley and earned his PhD in Systems Science from the Watson School of Engineering at SUNY Binghamton. After 20 years of bringing automated stop-loss tools to regular investors and traders, Richard told me that he was now working on tools to provide broader access to institutional-quality risk management. In particular, he had cloud-based apps for quantifying risk, volatility, and uncertainty for not just individual trades or investments but for whole portfolios at a time.
Not only that, but the tools we’re now working on together don’t just quantify risk. They use strategic diversification to reduce risk across a portfolio of investments or trades so that you can access higher rewards (gains) for the same amount of risk. This suite of tools helps quantify and reduce risk for traders and long-term investors—not just on a position-by-position basis but across a whole portfolio of trading positions or investment assets.
Richard explains that investing and trading really both boil down to the fact that we all deploy or “spend” risk to gain rewards. By deploying your risk across low-correlation assets, you can gain higher rewards for the same amount of risk, or put on more positions, or buy more investment assets with reduced incremental risk.
Better yet, these tools can be applied to portfolios built to last 20 years or 20 minutes.
I believe that being able to quantify and adjust portfolio risk in a matter of minutes is an amazing accomplishment. Using the same philosophy to increase reward exposure (number of positions, number of shares or contracts) with diminishing risk per unit (there is still no free lunch!) to quantify that, and to adjust it on a trade-by-trade basis – that’s a game changer.
In fact, these tools are basically position sizing 2.0. Or, maybe we could call them “portfolio sizing” since they allow us to quantify and adjust (adding and/or subtracting positions) on a portfolio-wide basis.
Richard’s comprehensive thought process around risk, uncertainty, and volatility intrigued me initially but what won me over was the practicality and usefulness of the tools. I believe that thinking in terms of the reward per unit of risk (R multiples, in Tharp Think) on a whole portfolio or “all cash utilized” basis is groundbreaking, next-level thinking.
Richard and I have also incorporated the core concepts of Tharp Think into the tools and strategies at DrRichardSmith.com. We hope to build a community of investors and traders that can be another great place to add to your “tool box” while enhancing your Tharp Think foundation.
Dr. Smith’s newsletter, Risk Rituals, and his twice-monthly video series Market Moves, are truly useful and inspiring for investors who feel, like we do, that the discipline of investing leads to a better, more fulfilled life.
Please hit this link and join our community for no cost and with no strings attached. We’re designing an online web-based seminar that shows off the true power and possibilities of these new tools targeted for late November.
We’ll also be bringing you lots of unique content through live teaching sessions, forums, Q&A sessions, emails and videos. With no costs or obligations, this really is a zero-friction way to join a trading and investing community that builds on Van’s legacy while exposing you to cutting-edge tools and strategies.
Also, if you want to contact me directly, send an email to dr “at” drbartonjr.com or reach out to me on Twitter (X) @DRBartonJr.
I look forward to staying connected with many of you and building a great interactive community of traders and investors. We can continue to support each other and keep the Tharp Think tradition alive and growing.
God bless you and great trading,
D. R. Barton, Jr.
Twitter (X): @DRBartonJr
dr “at” drbartonjr.com