October 30, 2011- FOMO, Performance Anxiety, Critical Few and Fickle Pickle

Pardon if this post came a little late.  I had been undergoing quite a few important transitions in my life, and while now is perhaps not a time that’s going to change anything, it does make the world at least for me better in appreciating the things I have and the things I can’t have, the things I want to have and will not have, the things I can have and I cannot have…

Some Basic Realizations

I’m a person who loves to have everything, is used to having everything and tries his best to have everything and succeed in everything, which is why I ended up with nothing.  Remember those Chinese fables, where a chicken pen owner lost one chick, and around ninety nine still remained, but the owner couldn’t allow that chick to be lost, and so he ended up losing all of his chicks?  I believe Jack Ma once said something similar to it.  So, anyway, these past couple of days, literally and figuratively, I ate more than I could bear, and so I had to swallow my pride, eat my own horse sh*t, and accept consequences like a real man should. All in all, what just happened these past couple of weeks isn’t just one for the history books in the markets, but also in my own life as well (but that’s a story, an autobiography, if it ever happens in the future will only explain).

Thanks for reading my posts.  I know I sometimes talk more useless stuff.

*****

Some Interesting Pictures I’d Like To Share:

1.) Homage to Steve Jobs

Kinda’ makes Jobs look like a robot, right? Which is entirely fitting. Jobs was a technocrat whose tremendous output and vision made him seem, until the day he died, superhuman.  Found Via Fast Co. Design

2.) A Tale of Two Italians Found Via The Economist

3.) Organizational Charts Found Via Wired 


*****

Here’s something very personal to me.

I’m not a very good trader.  At best, I’d keep myself your average Joe.  I hope I could join the Big Leagues one day, but truth be told, I’m just your average Joe.  I’m a better story teller, though, or else I think or I hope I am.  Now if only, I can get paid writing my stuff, hmm…? Nah. 
So here’s what you do, whenever you come to this site:
You listen to stories about trading, investing, failures, successes and everything in between.  I have strong feelings, an extraordinary ego, and an inexplicable need to be productive all day long (Seriously recipes for disaster trades).   Product– ive, with a highlight on products.  Thus, there are times when despite the very clear fact of life, that doing nothing is also a “product” of fruitful exercise, something intangible is not always what I like to eat for my dinner, or bring with me as I sleep.  This need to always do things, learn things is similar to an addict trying to find his daily “fix”.  Writing, somehow helps me relieve me of that “fix”.   TED videos, TV series and the incessant ticks of quotes somehow add to that ADHD syndrome.   Bear with the information overload.  You’re reading a mind of a person who has some serious brain abnormalities (I kid you not.)  Unless you’re willing to accept that the person you’re reading right now has some serious emotional issues (not a recipe for a good trader), and occasional delusions of saving the world (God-like beggar, if you ask me).  You have been warned.  Okay. You can now proceed.
*****
“You follow drugs, you get drug addicts and drug dealers. But you start to follow the money, and you don’t know where the f— it’s gonna take you.” – Lester Freamon, HBO’s “The Wire” Series”
FOMO – Fear of Missing Out
I know this feeling.  They say there are two fears in the market, fear of losing money and fear of missing out.  Most of the time, people don’t like to miss a party.  Wait, it’s not most.  All of us don’t want to miss a party giving freebies.  I kid you not, when everyone’s having a party, and you’re stuck in your room finishing papers, you feel like a loser.  Yeah, that’s what it feels.
Many, including hedge funds, were caught wrong-footed by the rally.  The markets behaved like a steamroller which would just flatten anybody who tried to short it. And so the shorts went away, bruised, bloodied, and beaten.  Anyone who tells me that they knew the markets were going to head straight north, who bought on October 4 and stayed heavily long all throughout the month are a variety of people , but I’d reason they’d fall into these categories:
1.) Breakeven Buy and Holders. 
(So, in a sense, they’re always relying on the government to bail themselves out, whenever a crisis happens)
2.) People who Never Check Their Equity Performances – Buy, Ignore and Forget.
3.) People Who Don’t Give a Damn Whatever the Market Gives Them – I don’t care what the markets does.  My Mutual Fund Manager Takes Care of It For Me. – Leave it to the Managers.
Seriously, by and large, traders and day traders who nailed the rally were always switching the risk-on/risk-off every now and then.  So, if you take volatility for granted, and think it was an easy straight up, you’re just fooling yourself.
Dynamic Hedge (Bull Market Guys Get All The Chicks)  writes:
Please no dancing on graves.  If you were long, don’t say it was easy or sooo obvious, you’re just being disingenuous.  The balls-to-the-wall long trade was a very hard one.  The gains however are real and well earned.  Book ‘em.
The Market Is Not Concerned with the Macro Picture.  More Importantly, Greed is not new to Wall Street.


With shorts getting obliterated, too much cash sitting on the sidelines, and the classic fourth quarter emotional rally, professional money managers are not going to trade in the realm of sanity. If you wanted to buy it, you needed to find somebody willing to sell it. And with the stock going ever upwards, such people were very hard to find.
The good news for the bulls is that November is another month where history is on your side.
November Statistics: (Reference: Pragmatic Capitalism, Stock Traders Almanac)

◆ #2 S&P month and #3 on Dow since 1950, #3 on NASDAQ since 1971

◆ Start of the “Best Six Months” of the year, NASDAQ’s Best Eight Months and Best Three

◆ Simple timing indicator almost triples “Best Six Months” strategy, doubles NASDAQ’s Best Eight

◆ Day before and after Thanksgiving Day combined, only 12 losses in 58 years

◆ Week before Thanksgiving Dow up 14 of last 17

◆ Pre- presidential election year Novembers rank #9 Dow, S&P, and NASDAQ.

Oh and just so you know, the month that’s just about to pass is the best October ever for the US Dow Jones Industrial Average since 1896 (115 years ago!)

*****

Here are some of the best articles I’ve found helpful in my trading:

1.) Swim in choppy waters.  (The Economist)

2.) Too many folks were short and got their head handed to them and were forced to cover their shorts. What it took was one little push and the market went the other way forcing the shorts to cover. This is a market called “Trade the trader” since early May.

– Understand the positions of your fellow men.  Trade accordingly.

“Do you buy the dips? I believe that is the case.”

3.) People use  journalism to try to influence market outcomes. (Wired) 

Because there are just too many parties involved with competing interests who have good reason to use information for their own purposes. I’m not saying journalists shouldn’t go with the information they dig up, but readers should think hard about how much they want to believe. 
4.) Malcolm Gladwell’s Lessons: The Critical Few (Business Insider)

The business of spreading the epidemic of an idea, product or preference — including your own — is why Gladwell lands on so many business must-read lists.  Understanding who changes minds and influences people, and the small but critical ways the change takes place, is the first step to sweeping your audience up in your epidemic. This theory also explores how you can convert minds from hostility to acceptance.

*****

Is there ever a man with any degree of consistency?
I believe there’s only a few who have this degree of consistency.  They are the people who just trade a system that has proven an edge for them over hundreds of years.  No opinions.  No biases.  No Malice.
Good Stuff to Watch:
The Divided Brain – RSA Animate
– Faceless Trader is waiting for a pullback on these issues ($X,$SBUX,$BKI,$DECK,$HANS) amongst others, and the overall markets (Indices, currencies, stocks) to have some sort of profit taking, backing and filling and more base building for a continued leg up for an end of year rally. There looks to be greater opportunities in Hongkong/Chinese equities, rather than Philippines as most hedgies relegated Asia as a graveyard before.  (Note that Philippines barely fell in comparison with its other South East Asian peers).  The Zombies are screaming sharply higher.
For a wide range of reasons, the future is fickle.
FT is an independent trader.  All views shared are his alone.
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6 Responses to October 30, 2011- FOMO, Performance Anxiety, Critical Few and Fickle Pickle

  1. shoyu says:

    hi FT … stay cool okie?.. u’ll be just fine 😉

    Like

  2. This is one of the reasons I follow your blog. You are very true and transparent person.

    Like

  3. I really enjoyed this post, Faceless! May I feature it on P3?

    Like

  4. marvin says:

    Happy Halloween FT! Take it easy sir! 😉

    Like

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