Feedback in from my recent DVD offer:

Here is the picture of the main entrance of my university with the ‘Broke‘ DVD case as you requested for the complimentary copy of your documentary. Thank you for the free DVD. I really enjoyed your film and have found it (and your work in general) exceptionally enlightening. In particular I liked your Austrian/Libertarian perspective which is hard to find these days. I’m surprised you didn’t include any Ron Paul clips as he appears to represent very similar ideas. At Saint Mary’s I’m a member of IMPACT. This is a student run investment fund where I get the chance to work with some exceptionally bright people. However the concept of trend following is a little lost on most them. Here are some of the funnier rebuttals I’ve received:

- LTCM blew up using a mechanical trading strategy
- John Henry is in the middle of a lengthy draw down
- Day trading is risky.
- You make more money timing tops.

Once again thank-you for the complimentary copy of your DVD. I appreciate the resources and insight you provide and, as always, will continue to refer others to your website. Robert B.

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Check this brilliant piece of wisdom from an article talking about how the government will sell its shares in Citigroup:

“Like any investor, the government will likely hold on to its shares if prices fall steeply. However, Citi shares have been steadily rising with the broader market in recent months, which means the government is likely to pocket a hefty profit.”

Marcy Gordon, AP Business Writer, please, please … keep writing! You make me smile!

The first edition of my book “Trend Following” was released about 6 years ago and as today’s screen shot below shows…the book has had some serious staying power!

A quick clarification: there have been essentially 4 editions of my book since 04. As each new event or market period happens, I update the book. It is a living, breathing work that I expect to keep on top of for the next 20 years!

What do the notes mean? Of all books available on Amazon it is the #4406th best selling book (out of millions). Of all books available on Amazon related to the stock market it is the 18th best selling book (out of thousands). The top 18 stock market related books by sales as of this afternoon:

1. How to Make Money in Stocks
2. The Intelligent Investor
3. Jim Cramer’s Getting Back to Even
4. Intelligent Investor The, Revised Edition
5. The Neatest Little Guide to Stock Market Investing by Jason Kelly
6. The Little Book That Beats the Market
7. A Random Walk Down Wall Street
8. You Can Be a Stock Market Genius
9. Market Wizards
10. Stock Investing For Dummies
11. Trading in the Zone
12. Trading for a Living
13. Liar’s Poker
14. Free Cash Flow
15. High Probability
16. Technical Analysis for Dummies
17. The Investor’s Manifesto
18. Trend Following (Updated Edition)

I have linked to the ones that I feel are worth reading. Many of these are absolute nonsense.

Put aside trend trading for a second and let’s consider economics. How in the world is there ‘recovery’ and a strengthening business cycle in the face of massive government intervention (spending, new debts and interest rate manipulation)? I just don’t get it:

That makes 73 countries. Now we have to update Latvia everywhere!

We will see the law of unintended consequences arrise from this:

“[Senator] Dodd’s 1300-plus page proposal includes a laundry list of items: a new consumer financial protection agency, new supervision of hedge funds and derivatives trading, a reshuffling of banking industry regulators, investor protection, new federal authority to handle too-big-to-fail financial firms meant to limit taxpayer bailout funds and the creation of a systemic risk council as part of an early warning system.”

Kids, repeat after me and tap your ruby red slippers three times: you can’t legislate away human behavior, you can’t legislate away human behavior, you can’t legislate away human behavior…Followed by: bigger bubbles will follow, bigger bubbles will follow, bigger bubbles will follow…

Seriously, doesn’t it appear the United States federal government is attempting to strap a diaper on all of us? I get the idea of a diaper’s job, but guess what: When everyone shits away it might not hit the floor, but it will still smell awful — diaper or not.

Here is how I see the future of U.S. stocks:

- They will go up…or
- They will go down…or
- They will go sideways.

This is the best prediction you will ever hear.

An excerpt from Andrew Lo:

A few years ago, I was contacted by a major pension plan sponsor. This is a sponsor of a pension plan of a Fortune 500 company. And, he called me up to ask whether or not I would be able to work on a consulting project having to do with asset allocation. And, I said, “Sure. I’ve done that before,” you know, “What are you looking to accomplish?” And, he said that, “We’d like to have you develop an asset allocation model for us using [neural?] networks.” And, I said, “Well, I do know something about that, but why in particular would you like to use [neural?] networks?” It was a rather strange request because this individual wasn’t particularly familiar with those sets of tools. And, he said, “Well, you know, we’ve heard that asset allocation problems are a very difficult and challenging one, and we don’t really have the staff to work on that. And so, what we’d like to do is to develop a system that essentially learns on its own so that, you know, you can develop it for us and then after a few years it will get good at it and we don’t need to worry about it anymore.” And, now, you laugh at that, but I mean, this was an absolutely serious request…

People love ‘black box’ nonsense.

Feedback:

“Hi Michael, I’m sitting in a class on cognitive psychology and there is a term the professor has introduced called transductive reasoning. Here’s an example: A child hears a dog bark and then sees a train arrive. He concludes that the train comes because the dog barks. The professor told us that transductive reasoning is characteristic of children between 2 and 7 years of age. I think she could add economic and financial media blitz to her list.”

There are many to add to the list:

“Dow goes up. Economy must be improving!”

Reminds me of Pavlov. Or a little different?

An excerpt from my Turtle book that I like:

No matter what ‘price’ is the variable that the great traders have lived and died by for decades. Making trading decisions more complicated than the simple heuristic of ‘price’ has always been problematic. Eckhardt knew it was hard to do much better: “Pure price systems are close enough to the North Pole that any departure tends to bring you farther south.”

A question posted recently here on my blog:

“What value do individual traders provide society with? I can understand that fund managers earn fees by helping clients earn profits. But what about individual traders who trade their own account? I think Anthony Robbins said that what you earn is directly related to the value you provide, so to earn more you should provide more value. What value do traders provide? A couple of things I can only think of: capital and liquidity. But how do returns relate to the value a trader provide?”

If you take traders and speculators out of the market what are you left with? Of course that ignores the point that everyone (including this poster) is a trader to begin with — whether they understand that point or not.