Archive for September, 2008
Posted in Holy Grails | 6 Comments | Tuesday, September 30th, 2008
Monday Dow down 780 and the world is on the brink of implosion. All the news shows, all the front pages of the biggest papers, they all painted an end of day scenario. Today, Dow is up 485, recovering a huge piece of the 780, and the story is a footnote on the nightly news. Does the average guy or girl ever stop to think about the level of manipulation being thrown at them? It is very similar to the film ‘V for Vendetta’. That is the messaging, the propaganda, and the fear are quite an impressive achievement for politicians and the media. It might be a sick and perverse achievment, but it is impressive.
Posted in Economics | 3 Comments | Sunday, September 28th, 2008
Why do we reward U.S. car makers for 30 years of futility? U.S. cars can’t compete with Toyota, BMW or Mercedes in the market, so we now we give them a big gift to make more crap? What next another “K car“?
Posted in Holy Grails | 1 Comment | Saturday, September 27th, 2008
Writer Tim Shipman outlines the end of the financial world. Now that is how to drive the fear into the average guy!
Posted in Trend Following | No Comments | Saturday, September 27th, 2008
Posted in Holy Grails | 2 Comments | Friday, September 26th, 2008
So why did people line up to put their money into IndyMac bank? It is a question I had not considered until I went to an IndyMac branch this summer in California. What did I learn? While waiting outside to talk to IndyMac clients, some of whom were going to lose money due to IndyMac’s failure, I was approached by a local broker who worked next door. He had spent much time talking with IndyMac clients about coming over to his nationally known (and very solvent) brokerage and parking their money there. Even in the midst of IndyMac’s share price cratering, even in the midst of constant negative news, people would not leave IndyMac for safer havens. Why? They all wanted those high return saving and money market accounts IndyMac was offering. The extra 1% (or whatever it was) was so enticing to these people that they were willing to risk their entire account values for a few extra bucks. Crazy? Of course. Normal behavior for some people? Unfortunately, yes.
Posted in Multimedia | 1 Comment | Thursday, September 25th, 2008
Posted in Economics | 1 Comment | Thursday, September 25th, 2008
Posted in Trading 101 | 6 Comments | Wednesday, September 24th, 2008
I am preparing an in-person trader training program. This would be on top and beyond the course materials, lessons, and books I have shared over the years. The program will incorporate unique trading research and ideas that I have assembled over the last 4 years, audio interviews I have conducted with top traders since 2005 and full length video interviews conducted for my documentary film over the course of 2007 and 2008. Those who have an interest can contact me now to be kept informed of dates, times, and pricing. These trading events will initially only be in San Diego, CA.
Posted in Feedback | No Comments | Wednesday, September 24th, 2008
Posted in Trading 101 | 3 Comments | Wednesday, September 24th, 2008
The author (old pro) of this, saw the comments for that post, and responded:
I really enjoyed some of the comments on my post. Some of the guys are right on. The manager I referred to is a very disciplined trend follower who has a rule based system he follows religiously. The losses took five weeks not two days. A large % of the losses were incurred via being short the financials which were in fact in clear and well defined downtrends prior to the so-called intervention. It is obvious from some of the comments that all contributors are not traders but rather observers and there is nothing wrong with that. But I will pass the comments along to my friend. He has averaged a net return of 24% per year the last five years following his rules.
Posted in Risk Management | 3 Comments | Tuesday, September 23rd, 2008
From Gibbons Burke comes an oldie, but goodie about money management.
Posted in Trend Following | 2 Comments | Tuesday, September 23rd, 2008
Kevin Bruce is one of the traders who appears in my documentary film. He is a great story.
Posted in Multimedia | 4 Comments | Tuesday, September 23rd, 2008
Posted in Economics | 26 Comments | Tuesday, September 23rd, 2008
Feedback from an old pro trader:
In 35 years I have never seen so much corruption in the former free markets. Never!!!!!! I had the ES nailed so at least I can eat a few more months. I have a friend running a $1 billion hedge fund that 5 weeks ago was plus 18% YTD. He is now running $600 Million and it’s not because of withdrawals. 41% drawdown! 5 weeks!
If people start to feel the game is rigged, why play? The consequences of these bailouts are not good and I am not just talking of the trader mentioned above. The issue is one of trust and trust is disappearing.
Posted in Trading 101 | 11 Comments | Monday, September 22nd, 2008
I included this 2004 “Economist” article excerpt in my November 2005 expanded edition of my first book “Trend Following”:
“The size of banks bets is rising rapidly the world over. This is because potential returns have fallen as fast as markets have risen, so banks have had to bet more in order to continue generating huge profits. The present situation is not dissimilar to the one that preceded the collapse of LTCM . . . banks are walking themselves to the edge of the cliff. This is because as all past financial crises have shown the risk-management models they use woefully underestimate the savage effects of big shocks, when everybody is trying to wriggle out of their positions at the same time . . . By regulatory fiat, when banks positions sour they must either stump up more capital or reduce their exposures. Invariably, when markets are panicking, they do the latter. Since everyone else is heading for the exits at the same time, these become more than a little crowded, moving prices against those trying to get out, and requiring still more unwinding of positions. It has happened many times before with more or less calamitous consequences . . . It could well happen again. There are any number of potential flash points: a rout in the dollar, say, or a huge spike in the oil price, or a big emerging market getting into trouble again. If it does happen, the chain reaction could be particularly devastating this time.”
Now that was a great prediction!
Posted in Economics | 2 Comments | Sunday, September 21st, 2008
The powers that be said the same thing during the LTCM crisis 10 years ago.
Posted in Critics | 15 Comments | Friday, September 19th, 2008
From Trader Daily comes some nice sarcasm:
Stocks have lost $3 trillion in value globally this week and someone’s got to pay for that. But who? The hedge funds, of course. After all, didn’t they bring us tooth decay, Lou Gherig’s disease, cancer and government-created killer nano robot infection? The answer is yes, naturally. Certainly stocks taking such a beating is not an indication of their lack of desirability (really, who does not want to buy a boatload of financials right now?) but of the presence of pernicious forces at work that must be stamped out. Here’s how the U.S. and U.K. are once again teaming up to fight the latest wave of global evildoers. Think of them as financial terrorists. And remember, we are not halting the basic functions of our beloved financial system without good reason. We are fighting for our freedom.
Posted in Trading 101 | 3 Comments | Friday, September 19th, 2008
Times are crazy. Stocks up. Stocks down. Bonds up. Bonds down. Commodities up. Commodities down. Extreme volatility is everywhere. Does anyone really think that prediction is remotely possible? Does anyone really think the best way to weather this storm is to “buy and hold” long only? Does that feel like a solution? The Turtles may have started back in the early 1980s, but the messages and lessons derived from their success then and now are timeless.
Posted in Book News | 1 Comment | Friday, September 19th, 2008
A deal to translate “The Complete TurtleTrader” into Simplified Chinese has been reached.
Posted in Critics | 9 Comments | Thursday, September 18th, 2008
Let me get this straight. Investment banks make really bad bets on real estate, their common stock is shorted into oblivion, so now we “probe” the short sellers?
Posted in Multimedia | 3 Comments | Thursday, September 18th, 2008
My film is done. Trailer soon.
Posted in Economics | 7 Comments | Tuesday, September 16th, 2008
So if AIG can’t fulfill its end of the life line given to it by the United States government what happens? Well, that’s simple. The U.S. government will own the largest insurance company in the world. Think about how disgusting that fact is for the country that likes to crow about being a beacon of capitalism.
Posted in Holy Grails | 4 Comments | Tuesday, September 16th, 2008
Fannie and Freddie looked so good on paper (the fundamentals), but oh what secrets they were masking. As usual though the charts were always telling the truth even when the CEOs were not.
Posted in Trading 101 | 1 Comment | Monday, September 15th, 2008
Michael Gibbons sent me this note today (that he sent his subscribers):
“…you should know that I rarely (if ever) talk about the news. My view as a trader for 38 years is that market moves create the news, not that the news creates market moves. Therefore, to say that this news event caused the market to do thus and so - is absurd. No one knows why the markets do anything (although many traders with great hubris think they know), but it is a claim that cannot be epistemologically defended in my view. I have made immense trading profits for my clients and myself precisely because I do not listen to the news or any outside influences. I follow a 100% non-emotional and highly disciplined mechanical trading strategy. And finally, to make money trading, we need only to know that markets move- not why they move. All of my trading methods are primarily based on price because price is reality. Trends in motion will stay in motion until they reverse.”
Posted in Statistical Thinking | 4 Comments | Saturday, September 13th, 2008
A nice piece from Cato talking to all of the people who think they can forecast market prices.
