The Markets Hate You

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Psychology | May 16th, 2011

From Yahoo:

“The market hates you. If investors made this profoundly simple premise the basis for every investment decision they made, it would vastly improve investment results. All of the organisms that make up the financial markets hate you. John Paulson hates you. Goldman Sachs loathes you. Morgan Stanley wants you to drop off the face of the Earth. Paul Tudor Jones likes you a little bit, but he still wouldn’t mind seeing you blowup.”

Harsh sounding, but thoughtful thinking.

Permalink

David Morris

Rather than thinking of the “market” as having feelings (like hate) I like to think of it as having a nature. The nature of the market is to inflict as much pain as possible on as many participants as possible. With that in mind, can I then control my feelings during the pain and simply follow my prepared before-hand plan?
Chuck

It isn’t necessary to believe this, but if it helps you avoid the alternative, go with it. (The alternative is to believe that the market is run for your benefit by a bunch of people who love you and want to see you get rich. No planning is required. All you have to do is send your money and put in your order and your friends take care of the details. This is, of course, a recipe for disaster for many.)
Gene

“Goldman Sachs loathes you”

But I thought they were doing the Lord’s work. Don’t know who to believe nowadays.
Stephen

In Trend Following the only thing that matters is taking advantage of the turns in trends. Who cares what GS, MS or for that matter Jim Cramer thinks?
Ravi

Markets are not living beings, so they can not hate you or love you.

Markets are places where people with discretionary money try to get a piece of other people’s discretionary money. They plan or hope or try to do this using superior information, superior skill or hopefully luck.

Furious buying and selling of tokens that surprises, entices, shocks and frustrates expectations forcing people to buy, sell out of emotions at prices they should not be buying at or selling at.

Talking about markets as human beings could make you fight windmills. Markets are nonliving beings that can do nothing to you that you don’t do to yourself.
Ravi

I realize that my comment here may not be relevant to the article linked above. The article makes a very good point that you are better off thinking ‘markets hate me’ than ‘markets are a lovely place’. I learnt a similar valuable idea from another source, to treat every trade as though it is likely to be a loss. Then you size is smaller than you would, you watch for signs and stop fooling yourself sticking to a losing position for long, treating it like a potential winner. Anything that helps remove the behavioral bias of overoptimism and naivette is good.
Aaron W

The market doesn’t hate you, the market is indifferent to you. The market doesn’t care or even know about your existance.
Michael Covel

The article if anything is a breath of fresh air–of a different perspective. Different = good.

Remember, I have a few books out there. There is a foundation. One post, especially one designed to get people to think differently, does not invalidate the words of my 4 books or my film.
Sam

Some comments are so obvious it is painful to read. Of course the market doesn’t hate you. The message is directed to the naive investors who believe in a perpetual long term bull market and American economic infallibility. I think it is trying to engender a sense of ownership in the way people trade/invest and to refrain from blindly following the herd.
http://investment-models.com Jim Rohrbach

The market doesn’t know anyone. I use mathematics to determine when the trend of the market changes direction. Mathematics are unemotional and they do not listen to what is going on in the world or the economy. They just calculate the numbers. If you can use those numbers to determine when the trend changes, you do not have to listen to any of the experts or their B.S. Every day I convert the action of the market into a number that represents the trend for that day. If the market goes up for several days that number will increase and visa versa. I have been identifying changes in the trend of the stock market for over 40 years. I have never been caught in a Major Decline and I have never missed a Major Up Move. When the trend changes I do not know if we are in for a big move, so I play every change in the trend to make sure I catch the big moves. Of course, I take small losses when the trend goes against me. But that is the name of the game. Catch the big up moves and take small losses. I rely on the math and I try not to listen to the “experts”. I am a Mechanical Investor and I sleep very well. Some say I am one of the best market timers in the country. I am a humble guy, so I will accept that.
Larry

Agree with Jim’s #10 post and with Michael,

I do think that anyone who views the “markets” as anything other than a set of numbers, and has any emotional attachment at all, i.e. feelings about markets, is sure to lose money.

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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