Sunday, August 8, 2010
8/8/10 Same Old Lang Syne
I started reading Harry Markopolos' 'No One Would Listen' (thanks to a recommendation by t3d) this morning.
Everyone in the business is smart. So the only way to get an edge is through inside information (defined here as what one is able to glean from casual conversations, piecing together remarks and observations the way a journalist might), which is most effectively obtained via social networking- the 'pub culture,' for instance. Beyond that, one pretty much has to resort to stealing money.
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Jodie Fisher-
ReplyDeletehttp://www.mercurynews.com/bay-area-news/ci_15712227?source=rss
How come I'm not surprised by info in that link.
ReplyDeleteRe: An interesting post newSubmitted by 2nd_ave (4467 comments) on Sun, 08/08/2010 - 22:35 #66888 (in reply to #66875)
ReplyDeleteBev- You may be interested in Harry Markopolos' 'No One Would Listen,' an account of the Madoff investigation by the guy who first alerted the SEC.
The author points out in the first chapter (wherein he describes his own background in the financial industry) that the only way to gain an advantage in a business filled with smart people is to have more information. And the only way to obtain information others don't have is to gather data via social networking, one relationship at a time.
He doesn't say much beyond giving examples such as being able to glean valuable input from trades put on by traders whose idiosyncracies you have come to know, but it's easy to extrapolate the principle to other aspects of trading. For instance, it's possible to make consistent money trading only one stock/ETF- watching the daily ticks of a single stock or commodity certainly gives one an edge when interpreting its price movements. Another example might be piecing together remarks and observations the way a journalist would, allowing one to bet with better-than-even odds on how well/poorly a company is doing. Personally, I enjoy trying to fade my 'read/interpretation' of crowd behavior.
However, what stood out for me was his account of the degree of corruption that is considered 'acceptable' in the financial industry. Trading violations in the industry (if/when anyone bothered to report them) were routinely ignored by the NASD. He jokes that one learns quickly that dishonesty has consequences- often one ends up making a lot more money.
Trading can be a pretty dangerous game. Running stops, squeezing shorts, shaking out weak hands- is it any wonder traders enjoy reading Sun Tzu?
Mark- It's b/c one can almost set clocks based on the predictability of human nature..
ReplyDelete2nd said
ReplyDelete(defined here as what one is able to glean from casual conversations, piecing together remarks and observations the way a journalist might
IMHO; i think cb is a gold mine, if only we could coax him him into being less with holding. he has communicated that in the past he created complicated computer code . i've known a couple 'code warriors'. they have a special creed of secrecy.
what is intriguing is his response to
employing algos to trading. taken at face value, his amazing formal ability to drill down and weave together step by step tiny pieces of logic has convinced him that currently less is better and ST scalp works best. how ever once in a while he drops nuggets comments in re relative correlations. thank you bob.
you have at least one fan willing to read what correlations you are thinking about.
david and tof both do a great jobs in comparing long term chart trends to potential current swing fundy evaluations. by google,i see that bsi87 is back demo-ing elder, atr and etc. he was and is now again fun, and for me a super short cut.
and of course there is our own prowling observer of tortured souls who supplies a form of mkt viscosity measurement tell that defies code algos.
e5
Was it predictable that Bill Clinton would almost give up the presidency for a liaison with an intern? Or Nixon (not almost) based on initiating/covering up a punk burglary? Maybe, but a contributing factor was the modern media and political polarization leading the attack. At those levels, human nature succumbs to the dictum "power tends to corrupt and absolute power corrupts absolutely." (Lord Acton).
ReplyDelete2nd,
ReplyDeleteMy coding ability isn't as good as you or I wish it was.
In my view, it isn't the ability to code that is going to make money, its finding the idea that actually works to enter likely prior to an upmove, and another that works to exit profitably, and one that works to exit at a small loss when the odds of a profitable exit don't justify the risk of holding.
If one had these methods down pat to where it could be coded, and it became common knowledge how it worked, I suspect someone would find a way to fade it.
There are some here willing to share a good chunk of their methodology, and others who might pretend to, but never will. I guess its just human nature.
I think I have an entry strategy that works pretty well. Every once in a while its a big loser, but the winners far outweigh the losers. I still don't have a decent exit strategy either for small losses, or to try to ride a winner without getting creamed. Someday I'll figure it out, with or without help. I'm a persistent SOB. I don't give up on ideas for years and years and years, till I find something better, I guess.
Coding it isn't the problem. Its the concepts of how it needs to work to drastically improve the odds that needs to be defined.
Sorry, guess that reply was to e5.
ReplyDeleteRemember that algorithms site you posted? I think it was you? That stuff was very tricky. I was a business systems designer and coder, admittedly a natural at programming with almost no formal training, but what made me special was my ability to understand the real business problems at hand, and to come up with creative solutions for them that actually worked, not my ability in complex mathematics.
2nd- How true and so sad. I guess some of are a lost breed.
ReplyDeleteI would rather have the respect of the people who are close to me more than anything else.
The greatest accomplishment to me is having people be able to count on you.
Ane the same goes here.
Latest from Hussman:
ReplyDelete"As of last week, the Market Climate for stocks was characterized by unfavorable valuations, generally favorable trend action, weak price-volume sponsorship, strongly overbought conditions, moderate but not yet overbullish sentiment, and hostile economic pressures. Overall, this is not a favorable set of conditions in terms of the expected return/risk profile for the market, but urgent downside concerns would require more internal damage than we have at present. Over the short-term, the market appears likely to be driven by speculative considerations such as whether the S&P 500 crosses above or below some technical support or resistance level. This is clearly the most prevalent "game" that investors are playing at present, but that game is likely to end abruptly if we observe further deterioration in new unemployment claims, ISM data and other coincident measures.
As I noted last week, the deterioration we've seen in various leading economic composites would be consistent with a sharp deterioration in the ISM figures for August and September, as well as a spike in new unemployment claims closer to the September - October time frame."
China closed in the green again, Europe is following and very strong. Japan is suffering the slings and arrows of a stronger yen?
ReplyDeleteMost people don't realize the wide cultural divide between the Boomers and my generation, the X generation.
ReplyDeleteMy generation was the first to become widely screwed by Reaganomics and the new culture of straightness and geekiness brought on by The Gipper. We missed out on the inflationary high-wage economy and free-partying culture of the mid-late 70's only to be left high and dry later in life as the true "last of the hippies", left to smoke pot alone while listening to the Dead and wondering WTF happened to peace freaks and free love.
My point? I detest this song. I have always hated this song and it's sappy sentamentalism.
Needless to say, Dan Fogelberg isn't on my heavy rotation playlist.
However, from the same time period and a much better songwriter, Do you have any Andrew Gold? He was a savage wimp also, but his "Lonely boy" resonated with me as a kid in the 70's.
I went flat and am waiting for any identifiable actual trading opportunity to arise.
I am looking to get long yamana, rubicon
(again, in both cases) and maybe even PAL but pal hasn't been anybody's pal lately.
Again, timing is the key:)
In my version of this song, we get drunk in the car and she %^&*s me right there in the front seat, and then goes home to her husband and kids:)
ReplyDeleteLOL! In my boomer version, Regan %^&*s you in the front seat of your car, then can't remember it.
ReplyDeleteSeems like we all got %^&*ed by Reagan. Hopefully that makes you feel better. According to a story on Ritholtz' page, NONE of us has made any more money or increased our standard of living since 1973. That feels about right here in my front seat.
BTW Shark, it wasn't Reagan that ruined the fun, that was AIDS. Nobody listed to 'just say no' but Nancy, and she got in the front seat of your car too. The rest of us couldn't afford the car after the screwing we got. X'ers aren't alone, we boomers got it too.
ReplyDeletePolitical consciousness is a funny thing. I remember little tyke school hearing that my best friend was attending a Reagan fundraiser early in '80 or late '79, with his parents of course, who were it turns our rabid Rebublicans. His mother hated me, btw:)
ReplyDeleteI recall viscerally, if no other way because I knew nothing of politics at that tender age, but I just FELT that Reagan was a right-wing prick.
I have in the ensuing years read that political proclivity is a heritable trait.
Anyone else get the feeling things just might done for the rest of the month.
ReplyDeleteYeah, well his own kids thought he was a prick too.
ReplyDeleteout of my DZZ at $11.33. I'm not fighting this one any more.
ReplyDeleteAnother dumb move.
UNG coming back to us.
ReplyDeleteFed set to downgrade outlook for US
ReplyDeleteBy James Politi in Washington
Published: August 8 2010 19:15 | Last updated: August 8 2010 19:15
The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery.
Faced with weak economic data and rising fears of a double-dip recession, the Federal Open Market Committee is likely to ensure its policy is not constraining growth and to use its statement to signal greater concern about the economy. It is, however, unlikely to agree big new steps to boost growth.
EDITOR’S CHOICE
Analysis: America: States of distress - Aug-08Editorial: Congress should get a grip - Aug-08Fed faces key decision on monetary policy - Aug-08In depth: Central banks - Jul-07US labour force shrinks amid jobs market woes - Aug-08In depth: US downturn - Aug-08Smaller measures to help the economy could initially take the form of a decision to reinvest proceeds from maturing mortgage-backed securities held by the US central bank, thereby preventing the Fed’s balance sheet from shrinking naturally.
Investors will also examine closely any changes to the pledge made by the FOMC in June to “employ its policy tools as necessary to promote economic recovery and price stability”, which could be hardened if policymakers choose to signal the potential for more aggressive move to boost the economy in the future.
But even if that happens, most economists believe that it would take several more months of poor data for the Fed to actually begin a new round of asset purchases on the scale of those carried out during the recession.
In congressional testimony last month, Ben Bernanke noted “unusual uncertainty” in the economic outlook and in a speech last week the Fed chairman warned of a “considerable way to go” before the US achieves a full recovery.
Although Fed policymakers still believe the basic trajectory of the economy remains one of moderate expansion, there may be more attention given to heightened dangers of a sharp slowdown. “The FOMC will have to tone down its assessment of the economy in view of recent weak indicators on real growth, real consumption spending and employment,” said Brian Bethune and Nigel Gault, economists at Global Insight.
The latest poor reading came in Friday’s monthly employment report, which showed the US private sector creating only 71,000 jobs in July – not enough to keep up with population growth, let alone bring down the unemployment rate. That followed news a week earlier that growth in US gross domestic product slowed from an annualised rate of 3.7 per cent in the first quarter to 2.4 per cent in the second quarter.
“Given how low inflation already is, and given the potential for the recovery to falter, we expect Fed officials will highlight downside risks and signal a bias to ease in the FOMC statement,” said Jim O’Sullivan, chief economist at MF Global.
There is little, if any, doubt that the FOMC will maintain interest rates at their current low target range of 0-0.25 per cent.
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web(oops:)
I'm still interested in V.
ReplyDeleteLater.
ReplyDeleteGMO looking hopeful.
ReplyDeleteV looks good too mark it's just gone up a lot in the past day already.
UNG [HNU.to] just popped back into my watchlist. Back below where I bought the Thursday open July 15th.
ReplyDeleteWe're looking at a POTENTIAL higher low on the dailies in GMO. Very buyable if it goes up from here:)
ReplyDeleteGMO - Should be interesting to see what happens when Aug 13th comes and goes with no news... or if maybe there's a positive news surprise.
ReplyDeleteEBIX looks very interesting to me. This is in the same space as CRM and trades at only about 15 times FCF (versus 60 for CRM) and 13 times current earnings per share (versus 100 or so for CRM). Revenues and earnings are growing around 50%. Only 2 analysts cover this company. I suspect as more analysts cover it the multiple will expand to around 30 times earnings.
ReplyDeleteper the earlier note on the fed statement, I'm thinking tomorrow is going to be a major sell-off. so, at the close today I'm going in on TZA, FZA (2x normal position), TYP and SDS.
ReplyDeletelet 'er ride!
the hurd/hpq stuff has been hilarious, gotten a bunch of emails/notes for hpq guys, not to many of them sad to see him go.
ReplyDeleteIVN - Ivanhoe's Friedland sees "Blue Skies for Copper"
ReplyDeletehttp://www.theage.com.au/business/friedland-sees-blue-skies-for-copper-20100808-11qd6.html
Chicken,
ReplyDeleteWhat happens August 13?
August 13th was the original date GMO's Hanglong financing approval was supposed to be complete but was pushed out two additional months for lack of progress.
ReplyDeleteWouldn't it be a hoot if someone were still anticipating a news surprise by then?
UNG is getting more interesting by the minute. I put a sink bid in when I left for 7.20. Pulled it just now. If it doesn't hold here, 6.86 is the next target. I'm guessing the reaction today is about the change in the hurricane forecast.
ReplyDeleteJB- Do you know EBIX?
SGG is also getting interesting again. Although the seasonality aspect of it is less prevalent.
ReplyDeleteI will be going long GMO today.
ReplyDeleteThanks Chicken:)
ReplyDeleteI like the higher low were seeing developing in GMO, it's very buyable.
ebix is a small co that offers a web based solution for various ins providers. i bumped into them recently - we're building out a new ins sol w/hpq.
ReplyDeletedon't have any idea about them from a investment perspective.
That last little spike through 7.20 is not constructive.
ReplyDeleteOne trade in TZA- opened @ 30.59 on the impulse move down, closed @ 30.81 on the 'bounce.' $200. That's probably it for the day.
ReplyDeleteUNG is in the self-destruction mode once again. Oh well... I just bought another 500 shares of HNUZF at $5.10 and placed a sell limit order for them at $5.75.
ReplyDeleteMark, I think the next support for UNG is not at $6.86 -- it is at $3.86 on front month futures, which would set UNG at $6.50. The f*ing contango is creeping up on us. November futures are at $4.60 now and they'll probably stay at that level no matter what. If NG futures stay at this level for another month, then contango will destroy 30% of UNG once again.
ReplyDeleteTOF- Did you see CAAS today?
ReplyDeleteDavid- Good point. I've been watching the potential for contango also. Thanks for putting a number to it.
ReplyDeleteIt will be interesting to see how natty closes on the floor...about 15 minutes.
ReplyDeleteJB- Just to makes sure I totally F up your play on the fed decision, lately the market has drifted high into the release. You might get a better entry just before.
ReplyDeletethx bro, on the road early tomorrow so I need to get my trades in before I head out.
ReplyDeleteTZA back in the crosshairs...
ReplyDeleteLong GMO 3.25
ReplyDeleteWow, there must be a lot of NG longs trying to unload this week. They should have gone to cash at the end of July. Looking for NG to be down another 5% to 10% before buying again. One look at the general market shows the professionals are not here and the amateurs are playing a wicked game. The Market Makers should take NG down this week for a great buying setup/opportunity.
ReplyDelete29.76 is S2 for TZA.
ReplyDeleteBought back into STT at $39.59. Will be moving 25% of my LT account into SPY index fund at close. Market ain't going down.
ReplyDeletetof-
ReplyDelete(a) patience
(b) cash
I see no reason to part with either right now...
TZA- I tried to reopen a position at 30.06, which would dovetail well with peering through crosshairs, but my bid didn't get hit....
ReplyDeleteSo I send a youtube comment on my UNG long and someone ate it? Where's my homework?
ReplyDeleteFF
I did a quick and dirty calculation/projection for UNG and I figure $6.56 is what I will watch for now. So David's 6.50 is probable.
ReplyDeleteFF- I saw it for a second. Re post it.
ReplyDeleteThat's okay. I thought it would be perfect for one of 2nd's musical introspective's, since I ask myself the question all the time.
ReplyDeleteFF
Where's you photo/name?
ReplyDeleteI see TZA is coming back to me, but it's kind of late in the day.
ReplyDeleteI'm incognito for now since I'm posting political stuff on another local blog.
ReplyDeleteWe have some real assholes around here....so it is what it is if you know what I mean.
People have had dogs missing, their cars vandalized, phones disconnected, etc.
I don't want to have to f'ing shoot someone....
Shit, be careful man.
ReplyDeleteLet me save y'all a little time-
ReplyDelete'Another day of nothingness. Low volume, narrow range. No one wants to increase exposure ahead of tomorrow's FOMC policy statement. Bulls need to see a break above 1150, bears need a break below 1100.'
"tof-
ReplyDelete(a) patience
(b) cash
I see no reason to part with either right now... "
2nd - yeah, i agree. with my opening positions today i'm only 20% invested in all accounts. rest in cash.
How do you know for sure if your gun is an effective deterrent unless you actually use it?
ReplyDeleteLoad that sucker with rock salt, shoot first, ask questions later. I wouldn't hesitate!
Rock salt? Nah. The first two shells are bird shot in case I need it in the house, then 00 buckshot, then a slug. My fallback is my Ruger mini .30 but it would tear the hell out of stuff.
ReplyDeleteMy only hope with NG now is that its recent drop is mostly due to investors bailing out ahead of the contango season (September-November) -- they don't want to repeat last year's experience. But why should the NG spot price drop so low this season? The storage level is currently below the one recorded last year at this time. If we get another good storage report on Thursday that will move the current storage curve even further away from the last year's one, I'll buy more HNUZF. Until Thursday, however, I'll try to be on hold.
ReplyDeletePlacing a buy stop limit order on SGG at $50/50.05 for a small starting position (100 shares). If my order gets triggered but then SGG will drop below $50 again, I'll stop myself out.
ReplyDeleteDavid- Did you see my comment on NG regarding hurricane season?
ReplyDeleteanyone following APWR? Sure looks cheap to me.
ReplyDeleteI saw it, Mark. The hurricane season lasts until September, so there should be more chances for panic with NG. :)
ReplyDeletethe RSI site I check up on from time to time is showing pretty overbought conditions. not sure if its yet at a top but its a good warning sign. i'm looking to add longs here to about 1,150 and then i will probably start buying up a BGZ or SDS position. subject to change of course
ReplyDelete2nd...ever been to Yoshi's?
ReplyDeletehttp://www.youtube.com/watch?v=G7JBgw6tm4U&feature=player_embedded#!
new post
ReplyDelete