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Trading 101 | April 2nd, 2011

Caught this from Zero Hedge, leading with this Newsweek cover:

Black swans? The ONLY way to trade the unpredictable is trend following.

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Gene

I love the smell of huge magazine sales in the morning.
Art Ross

At least Newsweek is not selling FEAR!! OMG. Or better yet, how many people are buying into the fear?
Aaron W.

If history is correct, this Newsweek cover should indicate things are going to get a lot better soon.
http://investment-models.com Jim Rohrbach

Aaron: I agree. That cover makes me feel much better about this market up trend.
http://www.lawrenceclarkeim.com Chris

well said Aaron – I think we can now safely predict absolutely nothing will happen for years – the media – usually a decade behind any curve
C
DGDye

Aaron,

Your right…major magazine covers combined with large company analysts have an 86% contrarian success rate. Find another indicator with that kind of success.
http://www.topbreakoutstocks.com Trader Ken

DG, this is a great example of why Im not buying into the china/india “taking over” fear/hype. Time and time again things are simply not what they appear to be on the surface:

http://online.wsj.com/article/SB10001424052748703515504576142092863219826.html

“India projects an image of a nation churning out hundreds of thousands of students every year who are well educated, a looming threat to the better-paid middle-class workers of the West….But 75% of technical graduates and more than 85% of general graduates are unemployable by India’s high-growth global industries, including information technology and call centers, according to results from assessment tests administered by the group. ”

“Business executives say schools are hampered by overbearing bureaucracy and a focus on rote learning rather than critical thinking and comprehension”
http://www.topbreakoutstocks.com Trader Ken

The line that cracks me up the most in the video on that page? The lady that says there are 700,000 technical engineers that graduate every year and 2 million non-technical engineers. What the heck is a “non-technical” engineer?? It’s b.s. is what it is. I remember about 10yrs ago overhearing a bunch of indian guys laughing about how they just call anyone an engineer and americans believe it. It’s true!
DGDye

Trader Ken,

I agree with you…things are almost NEVER what they seem.

However, this mass of engineers you refer to in Asia are doing the majority of OUR engineering work RIGHT NOW!

I work with engineering and construction firms across North America and they all send their dailies to India for overnight detailed engineering work. This is for pipelines, manufacturing, roads, gas plants, infrastructure, etc.

You see, it’s not that Asia will take us over some day…they already have.

If you go back to the late 19th Century you can read comments from hundreds of intellectuals, businessmen and politicians who found it inconceivable that this upstart United States would ever be a significant player aginst the mighty British Empire…Sound familiar? No doubt they laughed at the unsophisticated “yanks” and their naive can-do attitude.

Yes, as you say, things are almost NEVER the way they seem…
http://www.topbreakoutstocks.com Trader Ken

Yeah, only one slight difference, the upstart U.S. was capitalist. China is communist. I don’t consider a country with a GDP that’s only a fraction of ours, and a per capita GDP ($3k) that’s even tinier, as having taken us over but hey that’s just me

The executives can send all the work over there, cut costs, boost the stock price, and bail out of the company in a few yrs. But 5-10yrs from now when the pipelines, roads, gas plants, etc fall to pieces we’ll know who to blame.

Anyway, I like the stuff you post about trading, but man I just disagree with you about the china/india thing. It will be interesting to see how it all works out though.
http://www.topbreakoutstocks.com Trader Ken

Another interesting view:

The Facts About American ‘Decline’

http://online.wsj.com/article/SB10001424052748704415104576251292725228886.html

“Nor do the numbers foretell how China’s so-called “Red Capitalism” will fare in long-term competition with the multi-hued U.S. prototype.”

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Books & Film by Michael Covel

- Trend Commandments Aggressive-take-no-prisoners trend following manifesto. Buy & holders might weep.
  
  Purchase | Reviews
- Trend Following Classic trend following bestseller with 100,000+ sold & now in 10+ languages.
  
  Purchase | Reviews
- The Complete TurtleTrader Nurture trumps nature in Wall Street's greatest rags to riches trading story. Bestseller #2.
  
  Purchase | Reviews
- The Little Book of Trading Behind the scenes part narrative & part interview in the spirit of Market Wizards.
  
  Purchase | Reviews
- Broke: The New American Dream Covel's directorial debut: trend following meets the financial crisis. Winners tell how (DVD).
  
  Purchase | Reviews

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Michael Covel serves as president of Trend Following™, a privately owned research firm. His trend following books include The Little Book of Trading (2011), Trend Commandments (2011), The Complete TurtleTrader (2009, 2007; bestseller), and the classic Trend Following (2009, 2007, 2005, 2004; bestseller). Covel's books have been translated into 10+ languages. His first film, a documentary, is Broke: The New American Dream (2009). Learn why.

Books & Film by Michael Covel

- Trend Commandments Aggressive-take-no-prisoners trend following manifesto. Buy & holders might weep.
  
  Purchase | Reviews
- Trend Following Classic trend following bestseller with 100,000+ sold & now in 10+ languages.
  
  Purchase | Reviews
- The Complete TurtleTrader Nurture trumps nature in Wall Street's greatest rags to riches trading story. Bestseller #2.
  
  Purchase | Reviews
- The Little Book of Trading Behind the scenes part narrative & part interview in the spirit of Market Wizards.
  
  Purchase | Reviews
- Broke: The New American Dream Covel's directorial debut: trend following meets the financial crisis. Winners tell how (DVD).
  
  Purchase | Reviews