Trading markets

It appears some of us are interested in the business of trading, hopefully for both fun and profit.
Here's a place to talk about that. I suggest two main categories. How to trade (timeless), and what are you trading now, and why, and how it turned out. Those tend to be missing from the pro boards, so pundits can have selective memory....but that's not all that is important. Being wrong is part of the game, and how to handle it and make money anyway is crucial, for just one example.
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Re: Trading markets

Postby Doug Coulter » Fri Jul 11, 2014 11:47 am

Yeah, ZH is always the first with the worst exaggerated bad news, important if you're long anything in the markets - to know when to get out, or at least explain why a dump just happened. Or they used to be. Since they are now owned by ABC, they've kinda become just a doom site, predicting 5000 of the last one depression (hey, we can call it what it is - if all the people on EBT/SNAP were in soup lines, we'd see it more clearly, and there'd be riots...).

I can't believe I wrote what I did way above in this thread about manipulation before I even knew about this - Jesse Livermore's autobio, one of the original "great" players and manipulators of the market.
I'll just leave this here.
Livermore.pdf
Livermore's autobio (lots of OCR errors, sorry)
(502.15 KiB) Downloaded 115 times


A few things have actually changed since, but not the ones that count - human nature being prime among them. A few of the things he did legally are not legal anymore, but if we have a government that doesn't enforce the laws, at least on the really big guys, I can't suppose that those things have changed, really. And when even those laws have become the "best money can buy" well...we see the results. In quite a few cases, the reasons no major bankers are in jail is they bought the laws before they did the thing - so it wasn't actually a crime when they did it(!).

FWIW, this market, if you can call it that, is so hinky now that even I, pretty much a trader-cowboy - am out. All in cash or hard assets. I'd hit my last straw even before it was discovered that the QE and POMO ops around the world were flat out lies in regards what they were doing - while claiming to "taper" a "mere" $85 bill a month input - they were in fact (CB's around the planet) picking up $29 trillion in direct equity purchases. No one can win against that kind of thing - it works till it doesn't - we all know it'll have to end (after all, the fed is a private institution in it for profit) - but no normal trader can know when, or be near enough the door when the stuff hits the turbine. You can't even go short safely if there is significant counter-party risk. What gain from winning if the other guy can't pay his side of a bet?

Sing with me - re re re re, re re re re hypothecation (in case you're not old enough - the Supreme's song, Respect). There is no real collateral behind most of this at all, even though in theory leverage is limited to 33::1 in the US, 100::1 in london (which is why so many major banks work from there) and, well, whatever you can get away with in China, as ZH recently exposed.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Trading markets

Postby solar_dave » Thu Jul 17, 2014 11:48 am

Yep and their at it again with the real estate. The big boys have loosened up the requirements for mortgages and Whoosh! the market prices climbed abruptly and real estate is again in the starts of a big run for as long as the loans live without foreclosure rates climbing. Prices here have climbed to near 2006-2007 peaks in many places and construction has started on a fair number of new home developments. An agent told me the numbers resale market available for sale has recently dropped which bodes of more price rises.

Stocks are all smoke and mirrors right now. Everybody is doing buy backs with borrowed money because it is currently cheap, what happens when that leverage starts costing more to refi.
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Re: Trading markets

Postby Doug Coulter » Thu Jul 17, 2014 7:31 pm

Not just real estate, but yeah. And they are still making the same basic mistake - that of letting a guy sell you a loan who doesn't have any skin in the game, but sells it on before the ink is dry. Therefore, they have no reason to care if you can pay. It shouldn't be legal, but it appears that it is. Making that illegal would cut down the dumb loans considerably. We'd hear wails to the sky from bankers - almost as loud as from those who lost their homes last go-round. Good.

Yeah, I saw all those buybacks based on cheap bonds and loans. Companies (not so much so, their executives personal insider buys/sells) seem to always get it wrong and buy at the top - that's one reason this market scares me. But it's their (in their eyes) only way to improve earnings/share in an otherwise stagnant market (hey, lets just call this the 2nd great depression and be honest). I'd guess they are betting that the Fed will do everything possible to keep interest rates down, because if they don't, the USA debt burden tanks the country utterly - if interest rates go up, the US gov is toast. And maybe they feel that if that happens, it's game over anyway, why not make hay while the sun shines? I dunno. I know leverage is at all time highs - performance anxiety of fund managers (driven by grandma's desire for yield) makes them do it - as long as the ride lasts, they want all the way in, as deep as they can get. Despite they all know that a margin-call based selloff is something to fear, and it kinda has to happen at some point - they all can't lose their jobs today over getting out "too soon" and missing some of the ride. After all, if it all goes down - they'll have plenty company and the blame pointing finger won't know where to point....strange how the human animal works.

I bet, and I'm a cowboy, but I don't gamble. When I have won at the casino, I pick up my chips and leave the table. They hate me at those kinds of places. I bet when things are in my favor - it's kind of dangerous to bet against me, because I don't do it unless after due consideration, I think I have an "edge" of some sort, and am gonna win with high probability. I can't find that edge in what we see now, so, out, not even small bets in anything paper other than some PM's I'm hoping will get green so I can ditch those too (change to physical if anything). They're only a small part of my stake as is, it's mostly just either hard assets in my hand - or cash (also quite a bit in my hand, but you'd be dumb to try and burgle a gunsmith who has alarms running on a UPS, right?).

Every signal - fundamentals, emotional, actions of players - says this turkey's goin down. No one knows when, that's the issue for any trader. Shorts have been killed for being too soon, over and over. I'll just wait...till a dip doesn't get bought. If we still have a system, I might at that point re-enter the game.
If not, I'll be glad for the first bank of Sealy.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: Trading markets

Postby APynckel » Tue Aug 26, 2014 9:19 am

Doug Coulter wrote:Not just real estate, but yeah. And they are still making the same basic mistake - that of letting a guy sell you a loan who doesn't have any skin in the game, but sells it on before the ink is dry. Therefore, they have no reason to care if you can pay. It shouldn't be legal, but it appears that it is. Making that illegal would cut down the dumb loans considerably. We'd hear wails to the sky from bankers - almost as loud as from those who lost their homes last go-round. Good.

Yeah, I saw all those buybacks based on cheap bonds and loans. Companies (not so much so, their executives personal insider buys/sells) seem to always get it wrong and buy at the top - that's one reason this market scares me. But it's their (in their eyes) only way to improve earnings/share in an otherwise stagnant market (hey, lets just call this the 2nd great depression and be honest). I'd guess they are betting that the Fed will do everything possible to keep interest rates down, because if they don't, the USA debt burden tanks the country utterly - if interest rates go up, the US gov is toast. And maybe they feel that if that happens, it's game over anyway, why not make hay while the sun shines? I dunno. I know leverage is at all time highs - performance anxiety of fund managers (driven by grandma's desire for yield) makes them do it - as long as the ride lasts, they want all the way in, as deep as they can get. Despite they all know that a margin-call based selloff is something to fear, and it kinda has to happen at some point - they all can't lose their jobs today over getting out "too soon" and missing some of the ride. After all, if it all goes down - they'll have plenty company and the blame pointing finger won't know where to point....strange how the human animal works.

I bet, and I'm a cowboy, but I don't gamble. When I have won at the casino, I pick up my chips and leave the table. They hate me at those kinds of places. I bet when things are in my favor - it's kind of dangerous to bet against me, because I don't do it unless after due consideration, I think I have an "edge" of some sort, and am gonna win with high probability. I can't find that edge in what we see now, so, out, not even small bets in anything paper other than some PM's I'm hoping will get green so I can ditch those too (change to physical if anything). They're only a small part of my stake as is, it's mostly just either hard assets in my hand - or cash (also quite a bit in my hand, but you'd be dumb to try and burgle a gunsmith who has alarms running on a UPS, right?).

Every signal - fundamentals, emotional, actions of players - says this turkey's goin down. No one knows when, that's the issue for any trader. Shorts have been killed for being too soon, over and over. I'll just wait...till a dip doesn't get bought. If we still have a system, I might at that point re-enter the game.
If not, I'll be glad for the first bank of Sealy.


Please, don't let the almighty bankers feel some pain from a bad economy :lol: !! No, we have to bail them out with $17 trillion+ from the Fed.

Honestly, I hope the market resets. We need it. The system needs to be restructured, SOMEHOW. The math doesn't work with how it's being run now. I just hope that the entire country doesn't go kaput from it. I wasn't alive during the 30's bust, but I know enough people in Texas with good sizes of land that I can escape to, and they would be happy to have the extra hands and brain, since that is all that will feed you once the market does reset, as it needs to.
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Re: Trading markets

Postby Doug Coulter » Wed Aug 27, 2014 1:32 pm

Well, I don't really hope for a reset, even though I don't have any kids myself (who'd be the ones to really hurt). I don't want to see "the hill" so degraded I'm automatically king of it, as some seem to desire. But...that which can't be sustained, won't. It's amazing to me how long they've managed to prop this up, frankly. Sooner or later a counterparty will fail, massive bail-ins will occur, and it's gonna get ugly fast = margin debt at all-time highs will do that. I've been amazed at the group of self-described "tough" visitors here who simply could not handle staying in my guest house - free - because couldn't turn on the heat at 65f or the A/C at 74, and take two showers a day. Much less, keep these guys away from a screwdriver...or get out the bandaids. That's the journalists, BTW, not the Scientists who've come to call. They don't seem to notice that I live as an ascetic - as long as there's science to be done, that's what interests them.

And now I see "survival in a can" of seeds for "only" $40, as if they'd jump out of the can as food instantly, on demand. Some people need to actually try to live on what they can produce, it's real eye opening when you do. Been there.
Seems as practical as some of the hot-shot brokers I used to talk to that were sure they would be fine with their little stack of gold coins and a hi-cap 9mm (while their apt burns around them...). Their attitude seems to be they'll demand farmland from Farmer Brown with gold - or at gun point, and live high off the land from there on. Well, I'm farmer brown and own records at shooting. I guess they'd be good fertilizer, in the event! The gold, while I have some too - has counterparty risk, despite what they say. To my cat, it's just another rock to piss on. And where's my food, human?

Here's how you know how bad it actually is. FASB rulings that let banks mark to model (unicorns) instead of to market all their bad loans. Don't you think that the first one that had a positive balance sheet at mark-to-market would be making noises, crying to the sky in full-page ads in the papers etc, to remove that FASB rule, so they look good compared to the rest? Crickets...
Medi-whatever in the red now. SS has a filing cabient full of IOU's since Clinton...

BTW, no need to quote me, it just dupes the text of the post above. Waste of bits.
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Re: Trading markets

Postby APynckel » Fri Sep 12, 2014 8:10 pm

I don't hope for a reset either, but it's bound to happen. Recently there was an article posted that the next one will be the big one, since all the big powers in money are holding all the debt, and when it's called, it will be massive, maybe the last mega bubble.

http://www.businessinsider.com/deutsche ... ble-2014-9

Sorry for quoting you, only did so to hightlight that one bolded statement, though I suppose I could have just quoted that on its lonesome.
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Re: Trading markets

Postby Doug Coulter » Fri Sep 12, 2014 10:27 pm

Todd Harrison (of minyanville fame) pointed out years ago that there are around 700 trillion (with a T) bucks worth of bad paper out there "holding things together" as the lower bound - it's probably closer to 2-3 times that. Many times the world's GDP, even using the fake inflated numbers for that. Yeah, when it happens, not if, it's going to be a mess, in large part because we've shown a lack of ability to manage such a thing while making it appear fair enough to not cause a violent revolution. It appears the Central Banks think they can sneakily inflate their way out of the problem, but it's apparent that's not working well at all - the excess liquidity is simply being used to add more leverage and therefore risk of a very harsh drop. Doesn't take much of a dip to create margin calls at 30::1 leverage, and not everyone can be by the door when someone shouts "fire".

Though I am a bit of a cynic, I also realize that even if things go completely south - I still have my skills, my tools, my land, and that human beings are remarkable at finding ways of "muddling through" stuff - history backs me up on that. Quite a few times we've lost 10% of us to plagues or other things, but we as a species have come through anyway. It could be worse this time, but... I would of course, prefer to be one of those who somehow muddles through, though I don't consider myself a prepper in the sense that most preppers seem to. I actually beat most of them at that game, but not because of that - this mess wasn't even in view when I began learning to live off-grid in '79 or so. Sure, I have all that stuff they think is valuable - the 3 B's, and in plenty. But when one of your B's runs out - and most of them would run out pretty quickly, what then? I have the all important S = sustainability - tools, skills. resources, loyal tribe. If this really goes south in a big way a few weeks or months isn't going to get it re surviving and coming out the other side smelling like a rose, eh?

Actually, this could lead into a philosophical discussion I've been thinking about and trying to get other smart people thinking about for a couple decades now.
Assumptions:
1. We really don't need this many people to create or extract all the resources this many people demand. Most of us could, in theory, not require employment at all. (we also don't need this many people on the planet, but I know no moral way to fix that one)
2. Capitalism (well, we've not had that in a pure form for a long time) doesn't know how to pay those who don't work.
3. The truth is, society is probably better off in some cases with a lot of people not working. I've been a CEO and I can say that there are plenty of those who are not only not worth their pay, but also hinder those who are from achieving what they are capable of - and while idle hands are the devil's playmate, letting them interfere with the productive ones continuously isn't a good answer either.
4. There is enough stored wealth in the very few extremely wealthy who actually run the world to simply build some factories that don't even need humans or lights except for occasional maintenance and we are on the verge of having all the tech to build them now.
5, They would do this in a heartbeat if there was a way they could be paid back in the kind of wealth they (think they, remember a lotta paper is bad) have now and continue to crave.

Problem: See #2.

I don't have the answer, I wish I or someone else did. It's a hard problem, and as Heinlein said - we don't have angels to work with here, we have people who have human nature, who are born with stomachs that get empty and are thus trained by just being alive better than Skinner's pigeons or Pavlov's dogs. I view a lot of the current mess as a result of messed up incentives - after all, if you don't perform, you get fired, but if you blow up the bank, you get bailed out, so why not take insane risks (and maybe get a bonus that sets you up for life)? That's just one - there are many more. In my own lifetime, I've seen teaching go from "do right, not wrong" to "don't get caught" as an overcompensation due to an over exaggerated separation of church and state (which is a good idea, while suppression of religion isn't, and I consider atheism to be one of them). I don't believe I should be made to pray, but I still don't see why I shouldn't be allowed to if I want, or why I should be denied the use of a classroom already there and costing the same whether there's people in it or not to do so, should I or others want to and volunteer our time for it.

Or why the taxpayer should have to pay to grind the ten commandments off a courthouse wall in the name of church/state separation. I view most atheists I meet as just another religion - a belief in a thing you can'r prove (really, they are anti-theists, not the agnostics they could honestly claim to be - but we've allowed our language to be perverted in even more important ways than that). And, having sampled nearly all of them, I find no one religion as practiced has all the answers, and that most of them have the most important things in common anyway, so I'll not pick one for anybody.

But I do know this - without one, there's no way possible to define right vs wrong -without recourse to some absolute, there's simply no basis, and that's our current main problem. Heinlein had a go, but failed. Everyone fails when they run up against a smart guy who can find the holes in their arguments. So far. All Heinlein could get to was "women and children first" which is based on the belief (there's that pesky word again) that our species has a duty to survive, or that it's the most important thing we do. How can we know that? Like the hitchhikers guide to the galaxy said, we think we're cool because we build big things and move heavy stuff around the planet fast (while evidently shitting in our own nest on a huge scale), while dolphins think they're cool because all they do is swim, play, and sing. Who is more important? I don't know how to answer that!

Solve the above and we all go home rich, by whatever definition you want to use for wealth. I don't use money/power alone, but they are nice too.

As of now, we can't even use the words liberal or conservative without confusion, because that confusion benefits those currently in power. I used to be able to say I was a conservative - but now that means crazy right wing nut religious statist. And liberals mean the same thing - they are not liberal at all, they want to define my every action and take my freedom, the only real difference is minor "wedge" issues like what I'm "allowed" by these busybodies to do in my bedroom or doctors office, as if all other problems were solved. Yeah, right. What makes them think any of them have the right to define such things? They aren't even as smart as most of us here, much less smart enough to "know what's best for us". Heck, in my own life, I've been poor, rich, a rock&roll star, a master trader, a homeless bum, a chemist, a professional inventor, a scientist, and engineer (I'm probably leaving out some things, yeah, I use to race too). Which me do they know what's best for? And I'm just one guy!

As CS Lewis wrote, if you can destroy a person's language, you can destroy that person. It's happening now. Conservative used to mean things like "look before you leap" or "spend less than you make" or "do the right thing". What does it mean now? We can't even talk without understanding the same words in the same way, they are "the holding places of the mind" for all our concepts.

It has also been said "give me the power over the educational system, and I can turn out any sort of citizen/consumer/slave you like". Look around and tell me what you see about the truth of that one. It is the source of some animosity between me and that system.
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