In Houston today addressing a group of investors. Good group. Skeptical and challenging–just the way it should be! Cool point? At least 3 hands went up of people who had been to Canadian, Texas. Canadian is not a pass through place…you have to be going there!

Shout to ritholtz.com for the find.

Even if you could find a perfect fundamental explanation (or prediction) it doesn’t guarantee the ability to make money.

Think about it.

Saw an article at The Big Picture titled “About Those Eight Million ‘Lost” Jobs…” An excerpt that caught my eye:

In lieu of another asset bubble, maybe the nation ought to collectively lower its expectations about the labor market rather than harping about the unemployment rate all that time.

More:

But, now it seems pretty clear that we’ve run out of bubbles and maybe we should get used to the idea that the jobless rate will be high for a long time to come (think Europe) and that many of those eight million “lost” jobs were like that mid-2000s housing wealth — fleeting.

More:

These jobs weren’t “lost”, in the sense that they’ll somehow be found again, that is, unless Ben Bernanke inflates another asset bubble.

All true. A foundational view of my film.

Caught this comment floating in the blogosphere:

I agree that we are heading to 1370+. However we are very close to a correction of 5% or more to finally launch that last run. Being long here for the 70+ points is not bad in the long run but for ST you could be looking at a significant draw downs. This to me is analog to 2010 so I will play it accordingly.

No fight with whoever penned that. No gripe. No hate. Just a big head scratcher from me that so many think like this. James Brown had it figured out a long time ago–at least the part about talking loud and saying nothing.

An excerpt from The Little Book of Trading:

One final important gem from Larry Hite is that being wrong is okay. He says he was never very good in school and not much of an athlete either. But he turned that to his advantage because he was able to grasp the idea that he could be wrong. In fact, it came as no surprise to him when he was wrong. Hite recalls with pride: “I’ve always built in an assumption of wrongness [in my trading]. I always ask myself: What is the worst thing that can possibly happen in this scenario? Then I use that worst-case scenario as my baseline. I always want to know what I’m risking, and how much I can lose. And sometimes, when you really look at it, there’s really not all that much risk [which is why you can get rich].”

More on Hite.

PROTECT IP / SOPA Breaks The Internet from Fight for the Future on Vimeo.

These days well read blogs are the engine of growth. In that world guys like Barry Ritholtz drive debates. He just listed his The 10 Most Popular Books Bought By Big Picture Readers in 2011 and my book Trend Commandments came in at #2 for the year. Very cool.

My firm is planning a group seminar Feb 11/12 in Las Vegas for prior students. If interested drop me a line for more details and pricing.

***

In the spirit of our seminar announcement consider a great article that appeared in The New Yorker on checklists. An excerpt:

We now live in the era of the super-specialist—of clinicians who have taken the time to practice at one narrow thing until they can do it better than anyone who hasn’t. Super-specialists have two advantages over ordinary specialists: greater knowledge of the details that matter and an ability to handle the complexities of the job.

But it’s not enough. Too much can go wrong in the ER. Checklists are the key:

The checklists provided two main benefits, Pronovost observed. First, they helped with memory recall, especially with mundane matters that are easily overlooked in patients undergoing more drastic events. (When you’re worrying about what treatment to give a woman who won’t stop seizing, it’s hard to remember to make sure that the head of her bed is in the right position.) A second effect was to make explicit the minimum, expected steps in complex processes. Pronovost was surprised to discover how often even experienced personnel failed to grasp the importance of certain precautions. In a survey of I.C.U. staff taken before introducing the ventilator checklists, he found that half hadn’t realized that there was evidence strongly supporting giving ventilated patients antacid medication. Checklists established a higher standard of baseline performance.

Pilots were some of the first to get it:

…they came up with an ingeniously simple approach: they created a pilot’s checklist, with step-by-step checks for takeoff, flight, landing, and taxiing. Its mere existence indicated how far aeronautics had advanced. In the early years of flight, getting an aircraft into the air might have been nerve-racking, but it was hardly complex. Using a checklist for takeoff would no more have occurred to a pilot than to a driver backing a car out of the garage. But this new plane was too complicated to be left to the memory of any pilot, however expert.

More:

But, really, does it take all that to figure out what house movers, wedding planners, and tax accountants figured out ages ago?

Yes! That doesn’t mean some like it:

Some physicians were offended by the suggestion that they needed checklists.

Offended? That’s the crazy ego talking. Whether saving patients or making money in the markets, success measured in dollars is the name of the game, not being right or feeling smart. Checklists facilitate profits, bottom line. It’s part of our seminar.

It’s the end of the world [says Felix Zulauf in Barron's] as we know it (and I feel fine):

The members of the euro zone agreed in December that each country could have a structural deficit of no more than half a percent of GDP. If a deficit goes above 3% of GDP, the country will be sanctioned. This agreement now has to be ratified in all countries. But when you agree to such a prescription and you are uncompetitive, your currency is overvalued by 30%, you can’t devalue, and your nominal interest rates are too high, that is a recipe for a depression. It is a death sentence. Several countries won’t ratify the contract, and the next day their markets will be repriced accordingly. They will exit the euro, and the turmoil will go to the next level. Greece is bust in either case. If you can devalue your currency by 40% or 50% in that situation, at least you will have the chance to see the sun again and recover.

The banking system goes bust. Assume Greece won’t repay anything, or at most 10% of its total debt. It is not just the government but the private sector that is bust. That means banks in other countries will be in trouble, which means they will be nationalized. Governments won’t have the money to pay for this, so they will assume even more debt. That is the chain of events I expect in 2012, and if you believe it won’t affect the U.S. you are dreaming. The estimated notional value of the over-the-counter fixed-income-derivatives market in Europe is estimated to be about 60 trillion euros. There are many links to the U.S. banking system, although we don’t yet know who is positioned how. If one country exits the euro, all hell will break loose.

Every European country will be in recession in 2012, and probably in 2013.

Hat tip to pragcap.com.

Paul Tudor Jones as quoted in the Foreword to The Alchemy of Finance:

In Patton, my favorite scene is when U.S. General George S. Patton has just spent weeks studying the writing of his German adversary Field Marshall Erwin Rommel and is crushing him in an epic tank battle in Tunisia. Patton, sensing victory as he peers onto the battle field from his command post, growls, “Rommel, you magnificent bastard. I read your book!”

Every day I say the same thing to myself.

The wisest trend follower I know has said that every 5 years some famous trader blows up and everyone declares trend following to be dead. Then, 5 years later, some famous trader blows up and everyone declares trend following to be dead. Then, 5 years later…well, was the problem trend following or the trader?