Oct

1

Darwin's notebook: The Tree of LifeThere appears to be at work one of those ascending branches you see in the tree of evolution where each branch gets more and more specialized, ( without disregarding the species that die out). The current most extended branch is not to generalize about what the fed is doing, but taking the example of today to release the Chicago purchasing managers report to the shadow elite 15 minutes before it takes 1 trillion or so out of the market. I don't find that as innocuous as my learned colleague, especially when I'm so often on the wrong side of those trades.

Rocky Humbert writes: 

I'm sorry that you got hurt by the price move. With all due respect, I find it improbable that you're "so often on the wrong side of those trades." Rather, I posit that when you are wrong, you attribute it to others having an unfair advantage, and when you're right, you attribute to your own brilliance. I have a similar tendency, however, I attribute the losses to either bad luck or my own incorrect analysis. And when I'm right, I attribute it to my own brilliance. Ha.

Interestingly, had I told you 15 MINUTES IN ADVANCE that the Chicago Index would come in 5 points above consensus, we probably would have been inclined to short the bond market (which perhaps explains the dip … if there was a leak.) Yet, when the news hit the wire, the market rallied. The people who got hurt were the people who shorted the market on the leak — and covered at a scratch or loss. So the people who shorted knowing inside information… got spanked. And the people who followed the people who shorted knowing inside information … got spanked too.

It would seem that the "invisible hand" gave market participants a spanking today? 

Craig Mee writes:

Rocky, its a good point, that you bring up, that profitable outcomes are never guaranteed even with "an edge".

Though it would seem this is where risk management can provide the difference, also trade duration, and whether you have a standard set plan, with each "trade".

Quite possibly, though this ones going to be hard to backtest, but surely there's a few home runners out in amongst the trades.

Interesting Nikkei down 190 last night, ..has been taught here …east to west, and US equities couldn't hold on. 


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