Too late guys…that ship has sailed!

Bill Eckhardt, the systems trading pro and former partner of Rich Dennis, once offered:

“…many prospective clients have asked me what’s the most I’ll lose on one trade. I can look up these statistics, but this is not something I would ordinarily pay any attention to. It doesn’t matter how little you lose on an individual trade, but how much you might lose on your whole portfolio. You’re not going to keep a ship afloat just by making sure the leaks are small. The important thing is to limit portfolio risk, the trades will take care of themselves.”

Eckhardt may have lost the bet with Dennis over the Turtles, but it was his hands on instruction that was critical to the Turtles’ development. How do I know? Almost all of the Turtles I talked to were quick to credit Eckhardt. It should also be noted that Eckhardt, not Dennis, has the 15+ year continuous perfomance record going back to the early nineties!

Much more on Eckhardt is in my book.

Guns and butter baby (report)! If we get a second October 08…I am blaming it on the Mayan calendar! More on that report:

Panic!

From Bloomberg:

“Someone who has made a successful living as a poker player for a few years would more likely be a good trader than someone who hasn’t,” said Aaron Brown, a 53-year-old former poker pro who is now a risk manager at AQR Capital Management LLC in Greenwich, Connecticut, which oversees $23 billion. “They know to push when they have the edge and they know how not to bust, and that’s a tough combination to find.”

Thinking in odds is a crucial point of my film.

Some wise views from Larry Hite:

“We don’t really trade silver…we don’t trade the S&P…we trade the differences. We really are risk managers. We take on risks, try to exploit them and we leave when they turn against us. That is what we get paid for. Basically we are in the risk transfer business. We take on what people want to sell, sell what people want to buy and hope to make a profit. The reason why one goes to a portfolio is because there are real limits to perfect knowledge. I’ll give you an example. Say you knew which commodity, stock or currency would appreciate the most in the following year, and you knew exactly what its price would be. We did this experiment looking backwards in fact in our database. The question of when you take a position is how are you going to trade the line…how much of a position are you going to leverage. Now, if you have perfect knowledge, would you leverage 5 to 1, would you leverage 10 to 1, 2 to 1? Well it turns out that if you leverage more than 3 to 1 that you are a loser. Because we found that if you did 3 to 1 you would have, even with perfect knowledge, you could go down a third. So that, the only perfect knowledge you could have, would be if you knew every wiggle on the line. Then you would know exactly how much to leverage. But you don’t.”

Read.

I was not going to post this, but his comments for 25 seconds starting at 1:50 are brutal:

I disagree with his government solution, but his analysis is spot on.

Cats 4 Gold.

The only thing that any of us can control is how much we are willing to lose at any given time. We can control that. Can’t control how much we make, but we can control the downside.

Why stop with the busy work of roads and potholes? We too can build whole cities to keep the proletariat occupied!

Tick tock. Tick tock. Sounds like 0% interest rates are not indefinite!