20 min well spent.
Derivative Musings
Opinions or things of interest to a veteran futures trader.
Thursday, March 2, 2023
Thursday, December 29, 2022
Monday, September 27, 2021
Saturday, September 11, 2021
Tuesday, April 20, 2021
Saturday, March 13, 2021
Is it that time in the market?
Todays market is characterized by HFT, ETF's, Passive Indexing, Zero commissions, day traders, crypto, NFT's, ARKK and a seemingly endless array of fast money speculation, I find it has all happened before with slightly different accessories.
"The object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment today is "to beat the gun", as the Americans so well express it, to outwit the crowd, to pass the bad ,or depreciating half-crown to the other fellow.
This battle of wits to anticipate the basis of conventional valuation a few months hence ... does not even require gulls amongst the public to feed the maws of the professional; it can be played amongst the professionals themselves. Nor is it necessary that anyone should keep his simple faith in the conventional basis of valuation having any genuine long-term validity. For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs -- a pastime in which he is victor who says Snap neither too soon nor too late, who passes the Old Maid to his neighbor before the game is over, who secures a chair for himself when the music stops. The game can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops some of the players will be unseated."
This quotation is pulled from SUPERMONEY by Adam Smith (nom de plume of George Goodman) a book written in 1972. The quotation was originally written by John Maynard Keynes in THE
GENERAL THEORY OF EMPLYMENT, INTEREST AND MONEY published in 1936.
Speculative mania appears again and again in history, and leads one to believe it is a feature of human behavior rather than of the market mechanism itself. None of this to say the current manifestation is certain to immediately collapse but merely to wave a caution flag or perhaps a wet blanket. But I am an old Boomer seeing events through the biased lens of an old futures pit trader bearing the scars of many mini-booms/busts.
Sunday, February 21, 2021
An early step in the plan to move Kamala to the top job.
A clip from a recent newcast that is being blocked. I hope it will play here.
Wednesday, July 8, 2020
Thursday, May 25, 2017
Mentor Moments
"The market will find and exploit any flaw in your personality." R. E. McMaster
I spent 40 years in exchange traded markets. Most of that time in futures markets as a floor trader. An unorthodox career path meant I never enjoyed the benefit of a mentor. Instead I had "moments of clarity" when I recognized I was hearing or reading something important to trading. What follows was one of those moments.
Three of us were having breakfast after a very busy morning in the bond markets. Bill (name changed) a scalper in the bond pit had been trading 6 or 7 years straight out of college. He traded his own account, a classic local floor trader. Joe asked him how the trade was going and what kind of size he was trading. Bill said he was trading 10 to 20 contract positions and things were going well. Joe remarked that he remembered Bill trading 100 or 200 contract size positions a few years back.
Bill responded - and here the lesson begins - "I did trade bigger size but I found I didn't make any more money, only endured more risk. Finally I realized the larger size trades didn't suit me and led to poor decisions. So after evaluating my history I gave myself three rules. Now I am performing consistently with much less stress. First: limit myself to 20 contracts or less. Second: if I am down on the day by more than $2000 I exit and quit for the day, no matter what time of day. Third: If I am profitable by more than $4000 on the day I quit for the day as soon as the position is closed, no matter what time of day . I realized when I get outside those parameters my performance worsens and lose discipline."
Now this was a guy who accumulated and kept a million dollars in t-bills as a backup against a bad trading accident. A very successful trader. But he recognized his own limits and incorporated that into his methodology.
Get to know your own psychology as well as Bill and you stand a very good chance finding a trading style that will allow you to succeed.
Friday, September 11, 2015
Tuesday, September 23, 2014
Great Interview of Lacy Hunt
Highly recommended. Comes from the Peak Prosperity website.
Tuesday, September 16, 2014
All Cultures Are Not Equal - Some Of Them Suck
Subject: Kindness repaid
I was instrumental in establishing the "Israeli National Skin Bank", which is the largest in the world. The National Skin Bank stores skin for every day needs as well as for wartime or mass casualty situations.
This skin bank is hosted at the Hadassah Ein Kerem University hospital in Jerusalem where I was the Chairman of plastic surgery.
This is how I was asked to supply skin for an Arab woman from Gaza , who was hospitalized in Soroka Hospital in Beersheva, after her family burned her.
Usually, such atrocities happen among Arab families when the women are suspected of having an affair.
We supplied all the needed Homo-grafts for her treatment. She was
successfully treated by my friend and colleague, Prof. Lior Rosenberg and discharged to return to Gaza.
She was invited for regular follow-up visits to the outpatient clinic in Beersheva.
One day she was caught at a border crossing wearing a suicide belt. She meant to explode herself in the outpatient clinic of the hospital where they saved her life.
It seems that her family promised her that if she did that, they would forgive her.
Sunday, August 17, 2014
It's Not the Gold, It's The Standard.
Whenever the idea of returning or not to some kind of gold standard backing of currency is discussed
both sides seem to focus on the gold (barbarous relic etc) which is in fact a secondary issue. The critical portion of the debate is the "standard". The standard merely needs to be a real item of measurable quantity and useful intrinsic quality, it need not be gold. It could be silver, barrels of oil, bushels of corn, or tons of iron. Gold just has some useful advantages.
But the important part is an unambiguous value for the standard. Paper or fiat currencies have many conveniences but ultimately must rely on the integrity of the governing authorities. Unfortunately the governing authorities have inevitably failed this task. Throughout history failed every time, I repeat, every time.
The standard acts as a fence or boundary reining in abusive fiscal behavior. Governments grow and assume more power when unchecked, apparently this is just part of human nature. When the public users of a currency have the ability to express concerns about excessive spending and currency creation by turning in the paper and demanding the promised standard (gold, corn or whatever) it acts as an important brake on bad governing behavior.
Paper currency and legislators are like an un-fenced yard full of puppies. Sooner or later something shiny is going to draw them into the street.
Good Fences Make Good Currencies too.
Sunday, August 10, 2014
My Favorite Warren Buffett Quote
Mr. Buffett is famous now and is widely quoted as he deserves to be. But my favorite comes from an answer to a question asked at one of the annual meetings for Berkshire Hathaway a decade or so ago. The shareholder asked Mr. Buffett's opinion on the outlook for Japan. Mr. Buffett responded by saying it was a good question, but he did not feel particularly qualified to answer. Then he continued (from my memory, not word for word) when I think about something I decide if it is important or not and is it knowable or not. If it isn't important or if it isn't knowable I don't spend time on it. Your Japan question is important, but for me it is not knowable so I don't think about it.
That remark stopped me cold as I realized how smart that is and how completely I failed in that regard. I still fail at it but I am improving.
Is it important, is it knowable? If it isn't both don't spend time on it.
Saturday, July 5, 2014
ukrainian journalist speaks more truth than the entire U.S. media complex
July 4th holiday weekend is a very good time to be considering what this Ukraiian journalist wrote in his commentary on change in Ukraian governance. " “Why don’t we use the American Constitution? It was written by really smart guys, it has worked for over 200 years, and they’re not using it anymore…”
Sunday, June 15, 2014
Fathers Day 2014
"My father passed away yesterday. His death was not tragic nor unexpected since his health had been failing for a long time and we had been told to plan for less than 6 months. He passed quietly in his sleep without the stress and trauma of heroic medical efforts. Yet I am crushed. Dad was not particularly successful in any of the ways that greatness is usually measured. He achieved neither fame nor wealth, but, he may have been the best person I know. Generous to a fault, scrupulously honest, he treated everyone of any station with respect and kindness. I am a father and grandfather now and could not have had a better role model. Dad was the best.
Bruce Blackmore Lawrence
March 18, 1918 San Antonio, Texas -- June 16, 2007 Dallas, Texas
Awarded the Bronze Star and several other combat medals during service in World War Two.
Survived by his wife Ruth, children Laird, Rees, and Bruce Jr., granddaughter Kate and great granddaughter Isabelle.
He was the world's best Dad and I will miss him."
Saturday, June 7, 2014
Tim Price: We All Lost
includes this great quote of Ludvig von Mises;
“The most important thing to remember is that inflation is not an act of God, that inflation is not a
catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.”
Friday, June 6, 2014
Frankfurt we have a problem
Sunday, June 1, 2014
Richter: The Big Hoax Of The Wall Street Hype Machine
The Big Hoax Of The Wall Street Hype Machine
Monday, May 26, 2014
Central Bank Speak translated.
Central bank action continues to dominate market swings with accommodative policy stances expected to help underpin and boost economic growth. But, last week both the FOMC and the ECB acknowledged they are in uncharted territory. The Fed Minutes revealed policymaker concerns that there has never been a tightening while holding a large balance sheet, and thought it might be best to consider a range of policy options and be prepared to mix tools as warranted.
The ECB's Weidmann said negative interest rates are unchartered territory and he warned that risks and side effects need to be taken into account. These uncertainties among policymakers regarding various policy tools, outcomes, and spillover effects could make for dicey trading over the coming weeks and months. Meanwhile geopolitics will play a supporting role in the aftermath of the elections in Europe and Ukraine. Though they aren't key factors for the markets, they could have an underlying impact farther down the road.
My translation: We continue to be confident in our policies. Looking ahead we do not know what to do or when to do it, we disagree with one another, and we have no experience with this situation before. Also many other unknowns and uncertainties may cause us to change our minds because, you know, shit happens. But we remain fully confident.
Sunday, May 25, 2014
Misdirection And The Carnival Barkers Of Credit
Misdirection and the Carnival Barkers of Credit.
― Friedrich Nietzsche
"When it becomes serious, you have to lie," Juncker
Tuesday, April 22, 2014
President Peaceprize Closes In On A New War
Here Come The Boots On The Ground: US Troops Heading To Eastern Europe
It seems the truce "deal" is well and truly dead...
- 600 U.S. TROOPS HEADING TO EUROPE FOR EXERCISES: PENTAGON
- U.S. AIRBORNE TROOPS GOING TO POLAND, LITHUANIA, LATVIA,ESTONIA
- U.S. MILITARY EXERCISES ARE IN RESPONSE TO UKRAINE CRISIS:KIRBY
The question now, of course, is - what will Putin do in response to this action?
- MORE MILITARY EXERCISES 'COMING THROUGH' NATO: PENTAGON
As for where these troops may be arriving from the answer is simple: that other US military intervention success story - Afghanistan. From Reuters:
Wednesday, April 16, 2014
"In Texas we call that a lie."- John Mauldin
Speaking of which, one of my personal heroines is Ayaan Hirsi Ali. Her courage in confronting the oppression of women at the risk of her own life is inspiring. In person she is a quiet, reserved, formidable force of nature. This last week she suffered an unjust, cowardly affront to her courage and her work dedicated to helping those who can’t help themselves.Thanks to John fo speaking out. Incidentally Outside The Box is a consistently interesting newsletter.
Brandeis University decided to offer Ayaan an honorary doctorate for her efforts on behalf of women in Muslim societies. When the decision was announced, a group of students, faculty members, and the usual politically correct pressure groups campaigned to have the university withdraw the honor. Brandeis president Frederick Lawrence quickly capitulated. Not even bothering to sign his own notice, he offered that Ayaan’s story is “compelling,” whatever that means. But, he added, “That said, we cannot overlook certain of her past statements that are inconsistent with Brandeis University’s core values. For all concerned, we regret that we were not aware of the statements earlier.”
That is simply Academic Bullshit. First of all, no one requested or forced Brandeis to offer the degree in the first place; it was their own clear choice. Secondly, after two best-selling books and hundreds of public appearances, Ayaan has made her views well-known. That she has criticized certain aspects of Islamic culture is no secret. For the Brandeis administration to say that they were unaware of her views stretches one’s sense of credulity beyond the limit. In Texas we would simply call it a lie.
I would be interested in the views of those who opposed her. Precisely which of the practices she condemns would they like to see maintained? Female genital mutilation, honor killings, forced marriage, or Sharia law? Perhaps treating women as property is deemed appropriate by some people.
The simple fact is, there is a portion of the academic community that is so politically correct that they are socially useless. In the name of being tolerant they tolerate acts so despicable as to be worthy of shunning. They have the discernment of a fruitfly. And that is probably an insult to fruitfly-kind. -- John Mauldin
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Outside the Box is a free weekly economic e-letter by best-selling author and renowned financial expert, John Mauldin. You can learn more and get your free subscription by visiting http://www.mauldineconomics.com.
For more on this story I suggest you follow this link:
Feminists and others on the Left are usually very good at “outrage,” especially when it can be expressed on behalf of what they believe is an oppressed group. Which is why it is both surprising and disappointing that they missed two amazing opportunities recently to be rightly outraged on behalf of women both in America and internationally.
Friday, March 28, 2014
Penn and Teller : Bullshit
"Norman Borlaug is the greatest person ever." Penn Gillette
The US Capitol Just Honored Norman Borlaug, The Man Who Saved A Billion Lives
Read more: http://www.businessinsider.com/who-is-norman-borlaug-2014-3#ixzz2xIBNweCh
I fully endorse Penn and Teller's commentary. Watch the video.