October 17, 2008
Good article on recent historical attempts to regulate the swaps/OTC derivatives markets from the Post.
And on another note, Andrew Lahde quits his hedge fund and tells people to regulate their lives:
Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
Couldn’t say it better myself.
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Posted by Nelson Yee
October 7, 2008
Sort of a continuation of my last entry and a further meditation on things…
I look at my latest writing here, and for the average investor or trader who might happen by, it probably seems like a whole load of nothing, especially for the ones who seek answers, who want to learn other people’s opinions about things, who need someone to tell them what to do, or at least give them ideas about what to do. My earlier posts, when I started writing this blog, were about individual stocks, musings on various companies, and speculations on what might happen to them in the future, and I got much more attention for it. I’ve fallen for the trap of “other people’s opinions” many a time, but it’s my firm belief now that the best ideas come from within, perhaps after long and continuous exposure to the market environment and the various attitudes toward it, but nonetheless from something that isn’t influenced.
It’s analogous to the art of writing; the best writing comes from within, but only after long periods of reading and absorbing other writing, until it becomes part of your core and the words come naturally and unbidden. Those writers who consciously mimic other writers’ styles and techniques may occasionally come up with something readable and interesting, but often the results are only a shadow of the original.
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Posted by Nelson Yee
October 5, 2008
I’ve been following a lot of trading and investing blogs as my professional life has moved more into this realm, and I find that it’s solidified my own philosophy about the markets, especially in the past several months. One of the things I still find fascinating is the incredible faith people have in systems trading, “technical indicators” and algorithms they’ve created for themselves, that they stick to rigidly. It seems like such a strange thing to be wedded to, especially when the only thing that is clear about the markets is that they are often unclear, changing, mutable.
When their system points them to some trade that they don’t take, these people grumble that they should “always be following the system” and it’s their lack of discipline in doing so that causes the issue. When their system starts to put them in harm’s way, they get defensive and stop using it and begin to doubt themselves. When the system puts them in a bad trade, they often blame their mistaken reading of their system: “it needs tweaking”, “I’m misusing it”. In some way, it seems almost religious, the need to devote oneself to a rule-set and the self-flagellation that happens when one fails to follow it.
In fact, for me, the need for discipline is not in following a system, but in money/risk/bankroll management, which all refer to the same concept. One, don’t take outsized risks and two, cut your losses. It’s the simplest thing in the world, but also the hardest thing in the world; saying it is one thing, but following it is a whole ‘nother story… and where human behaviour lies. In Vancouver’s frozen property market, with its record level of homes for sale, I’m sure there are more than a few people who aren’t willing to take their losses and will wonder why they weren’t able to, in retrospect. Everything seems so obvious until you add in human nature. People have been doing the same thing for years; they haven’t changed in aggregate, and they probably won’t in any of our lifetimes.
I try to bite my tongue around people who advocate a system that doesn’t revolve around the mechanics of defensive trading — it’s bound to encounter a market that’ll teach it a few lessons. These people are cultivating the wrong thing, I believe. They want, like good religious folk, to subsume their wills to something they feel is bigger than them, that they can abdicate their responsibility to. I think being open-minded towards the markets will be much more profitable in the long run than being close-minded; if you can learn adaptation, you’re much better served when the environment starts to turn.
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Posted by Nelson Yee
