Michael Covel: News & Info.

From the Freaknomics blog:

A study by University of Toronto assistant professor of organizational behavior Jennifer Berdahl found that, contrary to the conventional belief that a woman’s acting “feminine” in the workplace leads to sexual harassment, just the opposite may be true. Berdahl’s paper concluded that women who “act like men” are more likely to experience harassment, possibly because of the conduct’s use as a tool to reinforce traditional gender roles.

An interesting (and sad) read regarding scam artists in the investment field. An excerpt:

Q: Most people probably think that only some- one who is uneducated or naive or stupid would fall for these pitches. True?
A: Totally not true. The majority of clients that I dealt with over the years were white- collar types of people. They were people who were already successful. They were people who had cash - had made money - and had worked very hard for it. They were doctors, they were dentists. [That] was a big group we went after - dentists. Dentists love to be loved by people.

Q: Dentists?
A: They sure do, because nobody likes going to the dentist. They’re the easiest group to sell. There are companies that just sell [investments] to dentists.

An article from Selena Maranjian titled You Don’t Have to Be Einstein to Get Rich builds off the Turtle experiment even if the author was unaware of the Turtles:

Pop quiz! What factors help determine how wealthy you’ll become in life? I initially guessed that education, intelligence, skills, and socioeconomic origin played a role.

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Question: What do you think of Moving [Average] 2 and Moving [Average] 5? From my research, these indicators look reliable.

Ed Seykota Answer: I think the two-day moving average and the 5-day moving average are fairly reliable as ways to churn accounts and generate commissions.

Jason Brumbalow at The Trading Authority passed along (2) videos:

Neuro Associative Conditioning

Trading As Mental Warfare

From Trader Daily:

The most common reason traders are reluctant to take a loss is their fear that once they do, the trade will rebound. Sound familiar? If this is how you think about taking losses, try to recognize that this kind of thinking might well prevent you from reaching your potential. It might even destroy your career. So stop trying to be right all the time - trading is a game of probabilities, which means winning and losing are necessary components. No one gives a bonus check to the trader who was ‘right’ the most over the course of the year. To coin a phrase, wrong happens. Great traders know how to implement damage control and are willing to take a loss. Are they scared and hesitant? Of course, but that doesn’t prevent them from doing what they need to do to stay in the game. If George Washington hadn’t decided to abort the Battle of Brooklyn and cede Manhattan to the British at the start of the Revolutionary War, for example, we’d all be eating ‘crisps’ and watching the ‘telly’ right now. He took a loss - but lived to fight on. That’s what true champions must sometimes do. A client of mine - I’ll call him Aaron - is a bond trader at a major bank. He was earning seven figures annually but envisioned taking his game to another level. During our first meeting, Aaron showed me his numbers, proudly pointing out that he was winning a healthy 81 percent of his trades. He rambled on, saying that his number was the highest in his group and telling me his managers had asked him to train other traders to be as ‘consistent as I am.’ I looked Aaron straight in the eye. ‘Was your performance bonus based on your winning percentage?’ I asked him. He paused. ‘No,’ he replied. ‘Exactly my point,’ I told him. Put simply, Aaron needed to stop obsessing about being right and start focusing on making money. Several follow-up meetings made it clear that he was taking his winners quickly and holding his losers way too long, even adding to them in some cases. I challenged him to think about what might be triggering this tendency. ‘The trade can always come back,’ he told me. ‘Maybe I’m just not giving it enough time.’ That’s not an answer; it’s a rationalization. ‘Come on,’ I told him. ‘You’re either a control freak or a perfectionist, but you always seem to have to be right. And this is limiting your ability to reach your potential.’ Aaron, I was discovering, was afraid to admit when he was wrong. So I presented him with a simple formula to help him get out of his own way: H + W + P = E. Hoping + Wishing + Praying = Exit the trade now!

Doug Hirschhorn, a former Division I baseball player and commodities trader, has a Ph.D. in sport psychology. He is the coauthor of The Trading Athlete and has served as trading coach for Deutsche Bank, Schonfeld Securities and Balyasny Asset Management. He is currently a consultant for financial institutions, trading firms and hedge funds. E-mail him at headcoach@tradermonthly.com.

From the ‘Card Shark’ in Trader Magazine:

I see a lot of players quit a game way too soon. I’m not just talking about leaving the table. More often than not, ‘quitting’ refers to the way someone plays after getting ahead a certain amount. Up enough to be satisfied, he quits the game by default because he stops taking chances and looks only for the locks.

On the flip side many people seek to “time” when they start trading or any entrepreneurial activity for that matter. What was the old Patton saying about a violently executed plan today being better than a perfect plan next week…

The article below from the AP has some choice quotes. This ain’t gonna end good!

1st-Time Investors Buy Up Chinese Stocks
Sunday May 13, 3:14 pm ET
By Joe Mcdonald, AP Business Writer
First-Time Investors Pour Money Into China’s Stock Market, Which Has Soared to Dizzy Heights

“We still can make money,” Ding said as she stood at the counter at Tiantong Securities with the paperwork for her new account. Asked what stocks she would buy, Ding said, “I don’t know. I’m still learning.”

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From the AP comes “Congress on the loose”:

Hedge Fund Managers Step Up Activism
Saturday May 12, 1:41 pm ET
By Marcy Gordon, AP Business Writer
Wealthy Hedge Fund Managers Step Up Activism in Washington As Tax Rumblings Grow Louder

WASHINGTON (AP) — With Congress always looking for new ways to boost tax receipts and protect individual investors, it’s natural for hedge fund managers to worry that they have a bull’s-eye on their chests — especially now that word is out that some of them made more than $1 billion apiece last year.

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Emma Humbert wrote a review of A Demon of Our Own Design recently on Victor Niederhoffer’s site:

I have a problem with this book, A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation. It irritates me to no end that Richard Bookstaber made his money first at Salomon Brothers and then at a major hedge fund that goes out of its way to block hedge fund regulation of any form. His career and fortune was made working at firms that use a lot of leverage and highly complex investment strategies to make money. And he was in charge of risk. But now that he has become a long/short equity manager, a relatively simple strategy that does not require much leverage, he is saying leverage and complexity are bad things. I find the whole thing a little disingenuous. Which is not to say the author does not make some valid observations.