Five books about philosophy and psychology of traders, written by or about some of greatest investment minds of all time. It's like getting mentorship from an Olympic champion.
1. "Reminiscences of a Stock Operator" by Edwin Lefèvre.
Typically, the first choice is a timeless classic written about 100 years ago about life and financials adventures of (allegedly) greatest trader of all time - Jesse Livermore. Written very nicely by popular financial columnist of the Roaring 20's. Original text from good publisher is hard to find - they all out of print.
There were several attempts to publish Reminiscences with modern day commentary and explanation of historical backdrop. I think the best one is by Markman. It contains original text, his annotations and many photographs, which helps since book covers important historical events and prominent people of that time.
This book is definitely not my first choice, but if you really liked Reminiscences, you will love this short book written by Livermore himself near the end of his life. It corroborates stuff Lefevre wrote, adds more color and includes last iteration of his trading system with notes and records. Jesse Livermore wrote this book for his son. Original text is tiny - less than 100 pages, but I was never able to find one. I have this variant with modern commentary, that is completely unnecessary imnsho and can be mostly disregarded.
3. "How I Made $2,000,000 in the Stock Market"by
Nicolas Darvas
A true story about non-financial guy (he was a dancer!) going thru every "circle of hell" of professional trading, figuring out an elegant, repeatable and teachable approach to speculation ... known today as Darvas Box. Written in light and playful style by Darvas himself, it's a short and fun read... and works today with only slight variations ;)
4. "Pit Bull: Lessons from Wall Street's Champion Trader" by Martin Buzzy Schwartz
The most current of five, this one takes place in 80s-90s, when Buzzy was (and still is) an undefeated champion trader. Guy #2 lost his mind (literally went crazy) trying to beat Pit Bull. He still lives, now in Florida, breeds champion horses, trades differently than before. Periodically he can be found on YouTube, giving interviews to independent channels mostly about "old times". Although his methods don't work as well in modern markets, alot of it still applicable, but stories themselves are pure gold and written very well. Incidentally, this book was quite popular and loved by trader's wifes and daughters lol.
Of note: reading description and editorial reviews on AMZN, I am convinced that either none of those people read the actual book or they are tasked with character assassination (for whatever misguided reason).
Last but not least, this story is probably one of the most amazing, unbelievable, controversial episodes of financial markets in second half of 20th Century. A $1 bet that speculating can be taught and traders can be bread like turtles in Asian farm. Shrouded by secrecy to this day, many Turtles went on to become some of the biggest money managers nobody ever heard of. This story is told by one of original Turtles (supposedly the failed one), and although he broke NDA agreements and vows of silence, he wasn't sued or made to stop selling trader's "educational products". People involved usually neither confirmed nor denied, and nobody afaik ever disputed the tale of Turtle Experiment and its results, as Covel described it.
Dow Paradox has been my modus operandi for many years.
Five years ago, almost to the date, I wrote here (link):
The purposeful manipulation of index components is designed to produce
positive outcome, thus creating an upward equity slope- an illusion of
increasing wealth and prosperity - The Dow Paradox!
In a sense of this phenomenon, 2018 is off the charts. A great calamity started in a beginning of this year, when S&P Global (the main purveyor of indexes galore) and MSCI (the other snake oil peddler) announced massive changes to their industry classification structure - GICS. The monumental reshuffle of sectors and industry groups (started with removal of REITs from Financial sector not so long ago) continues with introduction of all new and shiny Communication Services sector. https://us.spindices.com/documents/index-policies/sector-classification-system-dj-indices.xls?force_download=true
I am not about to second guess wizards of S&P Global, besides it makes a whole lot more sense to keep Google and Facebook out of Technology sector, but this thingy will have quite an eclectic mix. Alongside of presently defined Telecoms (like AT&T and Comcast), new sector will also include publishing, movies, entertainment and interactive media - companies taken from Tech, IT and Consumer sectors.
I will be updating and revising System9 Consolidated Watch List, once 'rotation of 2018' is over. These type of changes are nothing new to me and don't cause any disruption to my investment process, because I operate strictly according to Dow Paradox and generally geared towards capitalizing upon its nature and reality. As for everybody else - watch out when walking under tall buildings - they will be tossing all that laborious intermarket relationship research and weighty sector rotation models right out the fucking windows.
On June 19, Walgreens pharmacy (WBA) replaced General Electric (GE) in Dow Jones Industrial Average. GE had been a longest continuous member of DJIA, stayed in it from very beginning, but visibly lost its way over past couple of decades. Formerly the bluest of blue chips, and seemingly perpetually biggest industrial company in the World, is now a pale reflection of itself. GE never recovered from the financial crisis (GFC), moreover - it sits now near 2009 lows, priced at 1/5 of its 2000 high. (chart from Yahoo)
This is not the first rotten 20 years stretch GE had to endure. Presented in a chart below is a period from 1962 to 1982 (prices adjusted for splits and dividends, i think), with big green candle of August 1982 that kicked out a monster 60x bull run culminated in a chart above.
Before my dear readers (all two of you) get all hot and bothered about long term prospects of banned light bulb maker, jet engines and locomotives and nuclear reactors builder, hospital and biomed equipment manufacturer, lending bank and more of god knows what - I want to remind that all this gobbledygook and squiggly wiggly lines on a chart means exactly dick (for making money in trading). GE is sort of an index of itself - a gigantic conglomerate of businesses that changed hugely overtime. So much so, that essence of Dow Paradox must be applicable to this single and somewhat unique stock.
From the same article of 2013:
What is a point of doing long term technical analysis on a price chart
of $INDU or DIA, or SPX, or many other so called 'indexes' ,when
composition changes so much - its not the same index, not even close.
Companies dropped from major index suffer massive outflows, sometimes
for years, and often even go bankrupt (remember Kodak).
I don't think that fate of Kodak will befall upon General Electric. Unlike Kodak (who's product went extinct), GE still makes important things, employs 300 thousand people, with sales of over 100Bil (P/S is 0.89!), almost 4% divi, and presence in 180 countries (out of 196 total).
I will not be making any predictions about GE future price movements, nor I will offer a trade recommendations. Rather, I want to make an observation - GE was one of 12 biggest stocks in USA for years. As such, its been a permanent member of System12, and I traded it on several occasions with last trade sold a bit over $30 in September 2016 (post link). System Rules never provided a new entry into GE up until October 2017, when this thing fell off Mega Dozen, tumbled through Second Dozen and became disqualified from System12.
Read more about System12 here (link).
I generally don't read market-related blogs, so not to get influenced by somebody's opinion, but today I got a terrible back pain, had a hard time concentrating on my work and was looking for a brief distraction. One of my favorite writers is a very smart Molecool of EvilSpeculator.com - probably the best place in the interwebs for un-biased opinion on a markets, actionable trading setups and time-tested wisdom. Plus, he writes beautifully - so I always enjoy his style and try to learn something every time.
Lo and behold, the beginning of his post was all about yesterdays Super Bowl - the game that turned dramatically to the benefit of underdog. I don't watch sports in general and would never bet money on a game, but apparently there where million dollar bets on a favorite team to win... with expected results. Constant game fixing is well documented and many cases proven in court, so it bedazzles me why anybody would gamble on sports... but I digress.
Molecool begins: "Okay, so let’s get this out of the way once and for all. I can
totally understand if you don’t care that much about American Football
and may just have better things to do than spend your weekends watching
22 guys in helmets and spandex have at each other. But if the annual
Super Bowl doesn’t make your heart jump at least a little then you may
as well just buy yourself a ticket to 1980 Soviet Russia and stay there."
That was followed by some gobbledygook about quarterbackand his wife, but it was already enough to set me off:
The story of Jesse Livermore, a legendary speculator of 100 years ago, is widely known in a narrow trading circles. Any list of trading books I ever saw included 'Reminiscences of Stock Operator' - a fictional account of Boy Plunger, loosely based on his life and endeavors. Surprisingly, I never saw a mention of his own book. Jesse Livermore himself wrote a small book in 1940, shortly before he taken his own life. Aptly named 'How to Trade in Stocks', this short text is an instruction manual for an intelligent stock market operator, with major concepts and techniques just as valid today, as they were 100 years ago.
Have a taste:
"...let me warn you that the fruits of your success will be in direct ratio to the honesty and sincerity of your own efforts in keeping your own records, doing your own thinking, and reaching your own conclusions." "To be consistently successful, an investor or speculator must have rules to guide him. Certain guides that I utilize may be of no value to anyone else... No guide can be 100% right." "Confine your studies of movements to the prominent stocks of the day. If you cannot make money out of the leading active issues, you are not going to make money out of stock market as a whole.... Keep mentally flexible. Remember, the leaders of today may not be the leaders two years from now." "It would be simple to run down the list of hundreds of stocks which, in my time, have been considered gilt-edge investments, and which today are worth little or nothing. Thus, great investments tumble, and with them the fortunes of so-called conservative investors in the continuous distribution of wealth." "There are times when money can be made investing and speculating in stocks, but money cannot consistently be made trading every day or every week during the year. Only the foolhardy will try it. It just is not in the cards and cannot be done." "... you must entirely ignore personal opinion and apply strict attention to the action of market itself. "Markets are never wrong - opinions often are."" "As long as stock is acting right, and the market is right, do not be in a hurry to take profit. You know you are right, because if you were not, you would have no profit at all. ... Profits always take care of themselves but loses never do." "It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let that thought be written indelibly upon your mind.' "What i am trying to make clear to that part of the public which desires to regard speculation as a serious business, and I wish deliberately to reiterate it, is that wishful thinking must be banished; that one cannot be successful by speculating every day or every week; that there are only a few times a year, possibly four or five, when one should allow yourself to make any commitments at all. In the interim's you are letting the market shape itself for the next big movement. If you have timed the movement correctly, you first commitment will show you a profit at the start. From then on, all that is required of you is to be alert, watching for the appearance of the danger signal to tell you to step aside and convert paper profits into real money."
The second part of the book (Livermore Market Key) is a detailed description of his trading system, with rules, explanations and examples of JL's own trading sheets. You must see it for yourself. It's a gem!
I don't know what happened with the original book - I couldn't find it on Amazon. The only option is this publication, including some guy's 'commentary' which can be completely disregarded. http://amzn.to/2bY2MjW Clicking on this link will take you to Amazon.com. If you buy this book
or something else I will receive small commission that helps to support
this free website.
Being a student of the market n' stuff, I love to study old original theories. How they self-distracted, or changed, or endured through decades that follow? What can we learn from the original thinkers of the past?
I got seduced by definitive title "Dow Theory", thinking its a complete text with strict plan to follow. Mr Rhea performed a valuable service in thematically combining excerpts from newspaper articles to form a general outline, but its hardly a step-by-step manual. Basic tenets of Dow Theory are plastered all over internet and they are just as vague and contradicting as Rhea's own book. Here is wiki link, if you don't know.
An unexpected and pleasant surprise was an Appendix, taking up more than half of this book. In it, there are 26 years of periodical editorial column by William Peter Hamilton, one of original editors of Wall Street Journal, from 1903 to 1929. A weekly-to-monthly review of market movement with interpretations of Dow Theory. As it happened, in real time, in a words of participant...
Its like blog, only 100 years ago. Awesome!
October 27, 1913
"It is well to repeat the occasional caution given in this column, that the averages make a good barometer, viewed from disinterested point, but are calculated to ruin anybody if treated as a 'system' for playing the market."
January 5, 1911
"There is nothing in the averages to dogmatize about. They are an immensely valuable guide when studied over long periods in the past. They frequently give useful indications of the tendency of market's short swing. For day-to-day trading they are not only valueless but would probably be dangerous as well."
March 29, 1926
"The passionless barometer is disinterested
because every sale and purchase which goes to make up its findings, is
interested. Its verdict is the balance of all the desires, compulsions
and hopes of those who buys and sells stocks. The whole business of the
country must necessarily be reflected correctly in the meeting of all
these minds, not as an irresponsible debating society but as listening
jury whose members, together, bring more than the counsel or the judge
can ever tell them in finding what has been called the bloodless verdict
of the marketplace."
January 20, 1913
The market does not trade upon what everybody knows, but upon what those with best information can foresee. There is an explanation for every stock market movement somewhere in the future, and the much talked of manipulation is a trifling factor."
July 19, 1910
"There is in Wall Street a small but very useful section of traders which is oftener wright than wrong, and its methods, often unconsciously, are strictly technical, bearing very little reference to conjectures based upon crop prospects or politics."
April 4, 1923
Evey day brings its new experiences, but it is tolerably certain that we shall not have the record of a bull market in which the little speculators successfully liquidated at the top, getting their information from the comic strips in the newspapers."
July 30, 1923
"...the man who picks a wrong stock for speculative purchase, or, more rarely, the right stock at the wrong time... He has no use for the stock market as a barometer of the country's business. He believes he can make money by reading the barometer first and reading business afterwards, or not studying it at all. ...attempt to do both things leads to inextricable confusion."
December 10, 1929
"Mr Hamilton's editorials were widely read and there is an abundant evidence that time and again they exerted a positive and practical influence. Their appeals to thinking men and women may perhaps be attributed in large part to the facility with which he brushed non-essentials aside and went straight to the hart of the question."
Get the book. Go straight to appendix. You'll love it!
Clicking on this link will take you to Amazon.com. If you buy this book or something else I will receive small commission that helps to support this free website.
"When you take up a sword, you must feel intent on cutting the enemy. As you cut an enemy you must not change your grip, and your hands must not "cower"." - Miyamoto Musashi, 1645
Have you ever had a situation when you buy two similar looking
stocks, place the same bet ... and then see one of them go up as the other go
down. The extent of both moves look pretty similar on a chart, but (o, horror)
your loser is down way more than your winner is up. The scale of the chart played
a trick on your eyes and got your position sizing all screwed up, my friend.
There is no easy remedy for this problem, since we don't know the future and
can't tell in advance how far and how fast things will move, but here are some
guidelines to help along the Way.
There is a concept of 'R', popularized by Van Tharp in his own books, that
simply states that you should risk the same dollar amount on each trade and
adjust position size accordingly. I encourage readers to further explore this
topic on their own, as I don't find it applicable to small accounts (less than
1 million), but the basic idea is valid, no doubt. Specifically, it was
mathematically proven that traders should not risk more than 1% of their equity
on any one trade. This way 100k account will risk $1000, and 20k account has to
allow for only $200 risk per position. It’s a start, but still doesn't tell me
how much to bet. I want to put out a line big enough, so the win will be
meaningful; split the wad down enough, so to buy all I need; keep it modest
enough, so not to blow a hole in an account. Decisions...decisions...
Let’s look at a market of stocks. There are about 2000 active tradeable
stocks in the US market (price over 5, average volume over 300K). The vast
majority will move 1-5% per day on average and shoot 10-30% over a period of
few months, so this is what we need to be ready for. Think about it this way:
if I can risk 10% to make 30%, I can lose three times, win once, and still be
okay. Dollar-wise, $3000 position will win or lose $300 to $1000, which is a
great news for a 100k account, because 3-4K positions size will allow me to
have 25-30 positions, so I can run a diversified portfolio (which is what I
want). I found that position size of less than $2000 is absolutely impractical,
because costs (commissions) really cut into any profits and accentuate losses
to a point of erasing any positive results into zero or worse. Therefore I
decided to call $3000 (up to $4000 for less volatile stocks) my Standard
Position Size and try to stick to sensible securities to avoid wipe-outs.
I don't want to lose a thousand dollars! A $3000 position has to go down
$30% to lose $1000. Are you kidding me? Is this what I am doing here - losing
thousands? NO WAY! Let’s agree that 30% is a catastrophic loss, from which
there is no recovery (trust me - been there, done that). A rational operator
should never allow such big loss to develop. As a matter of fact, I don't want
to risk more than 5-7% on single position, with 10% as a meaningful pain
threshold, 15% will have me cry in fetal position and 20% loss takes me out no
matter what. Now I am risking 0.5% or less of my total 100k account on each
trade, the pressure is off. Not one single trade can hurt me. They all are
about same small risk, ready to deliver big rewards. In words of famous Ivan
Krastins: "Just one of the next thousand trades."
I think the problem of under-capitalization is the #1 source of small investor’s
dismal performance. This curse plagued yours truly on several occasions. There
has to be a clear understanding of what is possible or feasible with $20K
account, as risk limitations get quite severe. First of all, 5-7 positions of
the same Standard Position Size will have a really hard time to offer much
diversification. Secondly, at 10% stop loss on $3000 position we already
risking more than traditional 1% of portfolio. Quite a dilemma, eh. I managed
to develop several methods that can deal with smaller accounts and will publish
them all in due course. There are Ways to 'cut enemy' strongly as intended,
without 'cutting up' an account in a process, but of course 'more money' is the
best remedy for 'no money' problem. He-he
Every portfolio, method or system I publish states clearly how much money in
how many positions it needs initially and whether these assumptions were
derived by tests, simulation or real world results. It is important to
understand that these are minimum amounts and can be easily multiplied ten-fold
without any changes to order execution. It is designed this Way for my own use.
Keep in mind, that I don't give investment advice, just Show What I Do (SWID post link), so a patient reader
can learn and make pragmatic decisions.
Proper betting and conservative risk management are crucial for
investment success and survival. If done correctly, any one screwed up trade
won't make any difference in the long run, but a wrong position sizing will
burn thru a portfolio like a wildfire.
I will have more about all this in the near future.
Meanwhile, in the words of a great swordsman: "You must practice
diligently in order to understand how to win". Practice...
I will begin to offer an annual subscription in near future.
It is not an advisory service.
I will grant access to a private Twitter feed, where I will post all my trades in real time. In fact, because most of orders are on-stop, it will be easy to follow and execute.
I will lay out in detail all my methods and systems, so a subscriber will fully understand basis of each decision, including risks and limitations.
I will not put all this out at-once. It would require a book or two, plus market is always moving and I strive to act with it. Please, don't think that I am constantly chasing some latest fad or pumping stocks. I do not. My investment style is based on systematic, repeatable, almost mechanical approach with healthy dose of common sense and experience. Systems I design, test and trade are NOT some cockamamie day-trading rules, but rational speculations with reasonable expectation of gain in near future. My research is ongoing and my methods constantly improve. I think there is a benefit to a regular reader of my journal - in understanding of reasoning and strategies I use, as educational material.
In other words: I can teach you to fish...
Gradually and according to market conditions, I will publish pertinent information, with hope that it will also spark a meaningful discussion in comment section.
Why am I doing this?
First of all, I am lonely. I don't know anybody in real world that I can have an intelligent conversation with, about what I want to talk about - investing and speculating in financial markets. With real money. In real life. My money is not inheritance or wild lottery win. Its savings... its not much... just like everybody else. The reason 'WHY' this money where put aside is to make them grow by investment, for future use. I make the 'future' come sooner.
Secondly, I am in business of making money in the markets. And I do. Dollar amount of profits are not that big due to relatively small base I have to work with, although percentage gains can be quite large at times. Also they don't come on any regular or predictable basis. To smooth this out (and to allow my capital to compound at faster rate) I need an additional income. So I will sell my best skill for as long as I need to. (I don't make forecasts)
I believe I possess wealth of useful information, practical experience and sensible disposition, so my knowledge can be sold for a modest sum. The only way it can work is to give subscriber an ability to See What IDo in real time, with real money.
It is very important to understand that I am not a RIA, not giving advice on what to do, not making recommendations, not promoting any stock, website or business. I am just a regular, average American guy, husband and father, who happened to learn alot about markets over past 15 years and found a Way to turn this knowledge into profits. Anybody can do the same or better and maybe faster, if they start where I am right know. For a reasonable fee I intend to disclose what I do, with explanation as to 'how' and 'why', so committed follower can not only imitate, but also improve. Readers are urged to not blindly follow my actions, but to observe, learn and make independent rational decisions. Do your own thinking... I try...
We will start with this blog and Twitter, add occasional video and may be LiveStream and see whereit goes from here.
Last year I wrote a piece about all kinds of Horse-Shit out there (as it pertains to the markets). http://ibergamot.blogspot.com/2013/12/the-big-dogs-and-horseshit.html
Many of same concerns are still out there, world is more complex than ever and things don't fit together still. Looking outside my shaded window, I see reality slightly tilted and unclear. Questions... Many questions, so few answers... Thinking is not an easy task, process of thinking is fast becoming a lost skill in modern society... at least I try...
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Public perception is quite a trick, they like to focus on most inconsequential things to the point of complete obsession, while disregarding most basic, common sense manifestations of current conditions.
Case in point is a fixation on HFT (High Frequency Trading) as practiced by many prominent Wall Street firms and some new outfits.
There are many reasons to trade using super fast computers and speed-of-light network connections, outside of usual realm of 'front running', although it is the most prevalent type of HFT. These 'order thieves' use some really high level math in effort to jump in front of trade flow. They manage to buy milliseconds before my order hits the book, turn around and sell it to me, making less than a tick in a process. Sometimes they can do it several times in a row, and make a 'whole' penny or two. People go all crazy about it, scream and yell, write scandalous books, etc. I wrote about it before (link) and have something coming out in near future.
Sometimes HFT robots go crazy and do something nobody was expecting - kind of Black Cyber-Swan case of HorseShit.
On December 18, 2014, right before the close, SPY jumped from 207 to 213 in 1 second, but it wasn't an erroneous trade, a so-called 'fat finger'. That was 1147 trades with over 200 mil in volume... in 1 second... and back. Nothing of a kind was reflected in SPX, or printed in SSO. Exchange ruled not to break the trades, effectively giving their own 'fat finger' to one of counter-parties. Every purchase is a loss. http://www.zerohedge.com/news/2014-12-19/just-one-question-about-yesterdays-last-minute-berserk-etf-freak-out
Whatever they tried (or where forced) to do, screwed up the market, caused a severe withdraw of liquidity and spooked the players so much - we are still not able to break out from this range.
Note: price discrepancy is due to SPY dividend.
These are contra-agents I have to deal with on a daily basis. Its not the Fed or PPT or any of alike nonsense. These are the 'robots' that messing up the charts, disrupt an order flow, and break the liquidity. Made by lazy, absent-minded, careless eggheads, without skin in a game. People should be up in arms against these cretins, before they destroy the game... instead everybody all worked up about scalper-HFT shaving fraction of a penny from a round-trip...
They can have the damn penny. I don't care.
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Then there is a case of currency markets.
On January 15, 2015 Swiss National Bank un-pegged Swiss Franc from Euro 1.20 peg.
Cocaine gorilla rally ensued, with CHF advancing 20% against the Euro and 30% against Dollar within minutes (on a chart it looks down, because Franc is denominator). Epic move was fueled by HFT computers no doubt - who else can react and perform that fast, and with complete disregard of fear. Human traders must be shitting their pants, really, currencies don't move that far or that fast. They just don't. That thing was something in order of 21 standard deviations... epic, like I said.
The kicker to this story is what happen to many FX brokerages (most of whom are complete fucking scams anyway). Since the drop was so abrupt and liquidity wasn't enough to handle the volume - many stop orders where not triggered at-all, resulting in thousands (!) trader accounts going into negative balance. Popular broker FXCM reported shortfall in customers equity to a tune of hundreds million dollars, and finds itself basically bankrupt (FXCM own stock collapsed from 16 to 2).
Local joke is: "Currency markets are so rigged, even house gone broke".
Personally, I could never understand FX markets. Yes, there is a reason they exist, and there is the role they play, but to trade them... I don't know... may-be its not a HorseShit, but it sure smells foul.
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Moving on to oil.
American Light Oil contract has been sitting in $75-115 range since 2011. This corridor got tighter in a past couple of years, with tendency towards upper boundary of around $110. I wrote about it before and will have more to say soon, as I repeatedly pointed out that price of oil belongs somewhere on 50-70 range and may be lower.
Meanwhile, crude topped at 107.68 in overnight session on June 13, 2014, and proceeded to collapse by 60%, with recent low 43.58 on January 29, 2015. This is fastest drop in modern history (except 2008 crash), and approaching in magnitude to 2 previous events (after WWI and in early 1980's), which took years to complete.
So, WTF?
Various reasons and explanations are readily available:
- Oversupply of oil and/or Slowing demand
- We are breaking Putin's back and/or Saudis bankrupting american shale producers
- Strong dollar pushing down commodities
- World going into recession... etc, etc
HORSE-SHIT !!!
Very simply, here is what happened.
Every year, in time for November elections, oil and gasoline drop somewhat in price. Some say its seasonal, some say its to make lumpen fell better about their government... doesn't matter... price will be manipulated down, using any means available (including HFT). It's a fact, visible on a chart, and especially pronounced for presidential elections and midterm years. November 2014 was midterm elections, but "they" where late for some reason (which I will never know) - price was still in 90-95's in September. Extra push was required... and achieved ... by November price was in 70's with gasoline coming down proportionately, and some bottoming price-action developing as expected. I don't know why November bottom failed - may be boys got carried away, may be some big players had to liquidate, may be politicians didn't want let a 'good crisis go to waste'... doesn't matter... when financial asset gets dislocated, some violent price discovery needed to arrive towards new economic equilibrium. That's what is happening.
Me? I sold all of my oil stocks at the end of July (except last of PTR in September) for some very respectable gains, stayed out ever since, only taking small test entry's now.
I did not short oil.
Meanwhile, back at the ranch, the real economy is as dislocated from markets as ever.
I wrote extensively about my views on economic statistics, GDP and such HorseShit, however there are data points I watch with hopes for improvement.
Home-ownership, an American dream and cornerstone of financial stability, continues to drop. We are back to levels not seen since early 1990's. After last small bump in Q3 2013, entire 2014 was non-stop down.
Image above shouldn't come as surprise to anyone who is paying attention.
Really, what can be expected if less than 60% of people are working, nowhere near the numbers of early 90's and still below the level of early 2009, when recent recession (supposedly) ended.
I would be remiss not to mention that ratio advanced almost a full percent during last year, so there is at least a glimmer of hope. May be this is a start of long-awaited move in a right direction.
Literally thousands of people co-operated to make this pencil. People who don’t speak the same language, who practice different religions, who might hate one another if they ever met!...
There was no commissar sending out orders from some central office. It was the magic of the price system: the impersonal operation of prices that brought them together and got them to cooperate, to make this pencil, so you could have it for a trifling sum.
That is why the operation of the free market is so essential. Not only to promote productive efficiency, but even more to foster harmony and peace among the peoples of the world.
