Improving Market Structure - December 12, 2011

[manucastle]

It would seem that the market gods are giving us nervous bulls another good entry point.

Attachment 11844

Does anyone wish to shout out a louder than usual warning?

Be well...

Hi Nickola,

How would you analyse your emotional state at this moment in time :O)

Trev

[nickola.pazderic]

I went through EV/VIT archives and found you as one of the earliest posters.

Emotional state? I'm a natural bear. So, naturally, I'm uncomfortable going long and always sell out of my positions too quickly.

I'm delighted to have a re-entry permit. But I'm thinking seriously about slapping on a TZA hedge. We might trend down, down, down in a ring of fire.

And you?

[grems8544]

But I'm thinking seriously about slapping on a TZA hedge.

You may want to pick up some TZA for intraday hedge when it touches the VWAP from above.... Seems to be holding above intraday VWAP quite nicely.

[manucastle]

I went through EV/VIT archives and found you as one of the earliest posters.

Emotional state? I'm a natural bear. So, naturally, I'm uncomfortable going long and always sell out of my positions too quickly.

I'm delighted to have a re-entry permit. But I'm thinking seriously about slapping on a TZA hedge. We might trend down, down, down in a ring of fire.

And you?

Hi Nickola,

I am quite long in the tooth at this investing game, 22 years full time, and I have been through the complete gamut of emotional experiences.

This long apprenticeship has made me VERY, VERY conscious of the value of the non-emotional signals of the Robots and reduced my own inputs to virtually nil. (I still tend to day-trade a little when I get bored, but this will have to stop !).

Hedges are for investors who lack confidence in their systems IMHO and are subject to our emotional state at the moment in time we enter them . We have stops to replace hedging.

How confident am I in the Robots ? I only trade the 3X ETF's which gives you some idea.

The most important thing I have learned in 22 years ? ALL HUMAN EMOTION MUST BE CUT FROM THE PROCESS.

In other words, I am not allowed the luxury of an opinion of the market direction. !!!!!

Trev.

(The only thing I am concerned about is that the Robots do not perform as well going forward as they have in the past but if they only perform half as well I will be very pleased) :O)

[nickola.pazderic]

Hi Nickola,


(The only thing I am concerned about is that the Robots do not perform as well going forward as they have in the past but if they only perform half as well I will be very pleased) :O)

Trev,

This is my concern, too. Let me list them all in random order:

1. How could something so wonderful/good happen to me? (OK, some psychological set up that allows for child-like pleasure should it succeed).

2. I'm sure no matter what, I've missed the boat. (This is a clear anxiety that a lot of post-boomers feel. I got to Taiwan/Asia too late for the biggest growth but too early for "China", 1989).

3. If an investing system really allowed us only 20% per year, we'd probably own the stock market via compounding returns in 30 years or so. Think about that!?

4. Look at all those failing hedge funds, wouldn't they love to realize returns similar to those posted on the front of the website?

5. Morales and Kacher are setting up managed accounts. Now I know we operate in a different time frames, but aren't we filling up one side of the boat or acting like the apocryphal lemmings herding ourselves into sea?

6. The stock market is....

Truly, having been an academic for years, who saved pennies and dimes under the mattress, the stock market has always seemed like one of the above. In fact, as an anthropologist I can assure everyone that belief holds up the entire edifice. For these reasons, I am a predisposed bear.

7. My spouse will run out of patience with me, and something like following will occur:




Fears. Petty fears. Nightmares even.

Perhaps all these fears stem from a simple and undeniable fact: the entire edifice is so enormous I cannot imagine it. I cannot reconcile Brussels, London, New York, Shanghai, Tokyo, New Dehli, Dubai etc... with the comfortable downstairs office where I operate. Trillions of dollars, billions of people, jillions of dreams/desires/diseases...Yet here we are.

Pascal and Billy have made this available to us. A gift to people. As Pascal writes in the book:

...the stock market provides people with a simple way to take part in ...high growth sectors by investing in companies that offer solutions to...problems

This is a beautiful vision, and it sustains my hope.

[manucastle]

Trev,

This is my concern, too. Let me list them all in random order:

1. How could something so wonderful/good happen to me? (OK, some psychological set up that allows for child-like pleasure should it succeed).

2. I'm sure no matter what, I've missed the boat. (This is a clear anxiety that a lot of post-boomers feel. I got to Taiwan/Asia too late for the biggest growth but too early for "China", 1989).

3. If an investing system really allowed us only 20% per year, we'd probably own the stock market via compounding returns in 30 years or so. Think about that!?

4. Look at all those failing hedge funds, wouldn't they love to realize returns similar to those posted on the front of the website?

5. Morales and Kacher are setting up managed accounts. Now I know we operate in a different time frames, but aren't we filling up one side of the boat or acting like the apocryphal lemmings herding ourselves into sea?

6. The stock market is....Attachment 11852

Truly, having been an academic for years, who saved pennies and dimes under the mattress, the stock market has always seemed like one of the above. In fact, as an anthropologist I can assure everyone that belief holds up the entire edifice. For these reasons, I am a predisposed bear.

7. My spouse will run out of patience with me, and something like following will occur:

Attachment 11851


Fears. Petty fears. Nightmares even.

Perhaps all these fears stem from a simple and undeniable fact: the entire edifice is so enormous I cannot imagine it. I cannot reconcile Brussels, London, New York, Shanghai, Tokyo, New Dehli, Dubai etc... with the comfortable downstairs office where I operate. Trillions of dollars, billions of people, jillions of dreams/desires/diseases...Yet here we are.

Pascal and Billy have made this available to us. A gift to people. As Pascal writes in the book:

...the stock market provides people with a simple way to take part in ...high growth sectors by investing in companies that offer solutions to...problems

This is a beautiful vision, and it sustains my hope.

Hi Nickola,

If I ever get too bullish I know who to contact !!!! :O)

Trev

[manucastle]

Trev,

This is my concern, too. Let me list them all in random order:

1. How could something so wonderful/good happen to me? (OK, some psychological set up that allows for child-like pleasure should it succeed).

2. I'm sure no matter what, I've missed the boat. (This is a clear anxiety that a lot of post-boomers feel. I got to Taiwan/Asia too late for the biggest growth but too early for "China", 1989).

3. If an investing system really allowed us only 20% per year, we'd probably own the stock market via compounding returns in 30 years or so. Think about that!?

4. Look at all those failing hedge funds, wouldn't they love to realize returns similar to those posted on the front of the website?

5. Morales and Kacher are setting up managed accounts. Now I know we operate in a different time frames, but aren't we filling up one side of the boat or acting like the apocryphal lemmings herding ourselves into sea?

6. The stock market is....Attachment 11852

Truly, having been an academic for years, who saved pennies and dimes under the mattress, the stock market has always seemed like one of the above. In fact, as an anthropologist I can assure everyone that belief holds up the entire edifice. For these reasons, I am a predisposed bear.

7. My spouse will run out of patience with me, and something like following will occur:

Attachment 11851


Fears. Petty fears. Nightmares even.

Perhaps all these fears stem from a simple and undeniable fact: the entire edifice is so enormous I cannot imagine it. I cannot reconcile Brussels, London, New York, Shanghai, Tokyo, New Dehli, Dubai etc... with the comfortable downstairs office where I operate. Trillions of dollars, billions of people, jillions of dreams/desires/diseases...Yet here we are.

Pascal and Billy have made this available to us. A gift to people. As Pascal writes in the book:

...the stock market provides people with a simple way to take part in ...high growth sectors by investing in companies that offer solutions to...problems

This is a beautiful vision, and it sustains my hope.

Hi Nickola,

I don't quite understand your point 3. Can you elaborate a bit please.

3. If an investing system really allowed us only 20% per year, we'd probably own the stock market via compounding returns in 30 years or so. Think about that!?

Trev

[nickola.pazderic]

I exaggerated the time needed and the result by half, but here is the analysis I recalled, Pragmatic Capitalism. The message is the same. Such returns will tilt the market.

I listed this point as a fear. I also noted that my fears are a little, well, like ghosts; and ghosts are not quite rational, are they? That said, I emphasize that the system developed and deployed by our leaders is a well thought out system. As Billy noted, the fear factor has been calculated into the mix, so has the max draw down.

Nonetheless, no one and no thing can last and multiply without change forever.

[roberto.giusto]

I exaggerated the time needed and the result by half, but here is the analysis I recalled, Pragmatic Capitalism. The message is the same.

I don't think such a return is absurd, but I guess that one cannot totally reinvest the earned money forever, for the basic reason that there is not infinite money in the markets.

At some point "size" must become an issue. I base this thought on intuition, because I unfortunately have no way to know based on experience.

Maybe someone here has an idea of the treshold beyond which the size of the money invested in a trade becomes a matter.