Tuesday, October 29, 2013

Tolerance - A Trader's Mindset

I am increasingly amazed by the quickness of people to condemn others.  Examples include road rage, comments on the internet, political parties, and yes, even participants in the stock market.  Somebody once said, "Just because we disagree, that does not mean we should be disagreeable".  Disagreeing is normal - attacking the person we disagree with is not.  It is almost as if proving the other point of view as wrong, automatically proves us to be right.  Worse yet, assassinating another's character proves that they deserve no say in the matter, even when the two are not even related. Often the truth lies somewhere in between various points of view.

Once And For All
What works for one, seldom works for all.  I have to laugh at the advertisements which suggest if we are not using their solution, or their product(s), that can only mean we are obviously doing it all wrong.  The fact they try to suggest that they know what is best for me, without even knowing me, is comical, if not misguided. But to attack me because of what I believe, is nothing but intolerance, plain and simple.  When did we become so intolerant of other points of view?  Maybe it just goes hand in hand with our intolerance of other people who don't look like us.

Buy and Hold
Can we really believe there is only one correct approach to the stock market?  Again, I laugh when "experts" look down their noses in disdain at anyone they believe is behaving contrary to their "buy and hold" approach.  It is as if traders are of the lowest class of people while (buy and hold) investors are what everyone should aspire to be.  Clearly, there is no such thing as timing the market, so not only is anyone attempting it, ignorant, they are probably really, really bad at managing their financial affairs, as well!  Not.

Trading Costs
One of the reasons many can't believe timing the market could ever work, despite evidence to the contrary, is the so-called high cost of trading.  Everyone knows, the more we trade, the less we earn.  I have just discovered an interesting concept which would help explain why that is not always the case.  Next time, I will go into more detail.

Mindset Matters
I did not start this blog post with the mindset that all traders are tolerant, and all investors are not.  Believe it or not, markets actually represent people of all viewpoints.  What one person wants to sell, is exactly what another wants to buy.  We don't (and shouldn't) judge the person on the other side of the trade.  The market is able to exploit any weaknesses we might possess, and makes us pay the price, no matter what our strategy.  Still, if there were only two choices, (which I don't believe is true),  I think I would rather be less wealthy and tolerant of others, than rich and falsely believing I was smarter (and hence, better) than everyone else.  Why? Because being able to let go of judgement, I believe, makes me a better person as well as a better trader.

What are your thoughts?

Wednesday, October 23, 2013

Looking Ahead With Christine Hughes

Click Here To See The Video

Quantitative Easing
Christine Hughes, of Otterwood Capital Management says the driver of equity markets has been quantitative easing by the US Federal Reserve.  This approach is hugely beneficial to the banksters, and as a result, the financial markets, but does nothing for job creation.  Even with a new Fed. Chairperson, she expects more of the same next year, despite rumours of the Fed. withdrawing stimulus.

Not so for Japan.  She feels it is only a matter of time until Japan defaults on its huge government debt.  Because government bonds in Japan are owned mostly by the Japanese, she sees the affect of a default being even worse than would normally be the case.  In the case of a world-wide liquidity event (banksters unwilling to lend to other banksters) she says there will be no government bail-out next time.

Next Year
It isn't all bad news, however.  At least for next year, she sees as much as a thirty percent return on US equity markets next year.  Just don't confuse that with the beginning of a long term bull market (no matter what those selling financial products are going to say).  My father always told me, "The bigger they are; the harder they fall!"

What do you think, much higher, or much lower from here?