January 26, 2009
An NYMag article that seems to agree with what I and many other market-watchers have noticed, regarding its profitability for daytraders versus those interested in longer timeframes:
The percentage of traders like Milman is small, but it’s not just day traders who are approaching the market with a short time-horizon these days. Investment bankers and hedge-fund managers who might have once based their trades on extensive research and elaborate models are finding that their models don’t work in this chaotic environment. Some who otherwise would have shunned this kind of day-trading are finding it profitable to chase the minute-by-minute momentum. “It’s definitely not a buy-and-hold market,” says one investment banker. “This is a trader’s market.” Some out-of-work I-bankers are also trying their hands at day-trading, with varying degrees of success. Scott Redler, a partner at the trading group T3live.com, hired (then fired) a trader who had lost his job when one of the major investment banks closed last year. “He lost more than any of our traders because he didn’t understand the smaller time frame and risk,” says Redler. “They think they know how to trade and they lose because they don’t know what it takes.”
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Posted by Nelson Yee
January 25, 2009
The Lonely Trader has a view on forecasting that I think is consonant with my own, and makes good points about trading timeframes. I have always been more interested in fairly long-term trading (tending to weeks, months and occasionally years, rather than days or minutes), although in the paradigm of “investing” I would probably have been seen as a medium-term investor, and ultimately that has been quite successful for me, but in my opinion the most recent market conditions have been more rewarding to shorter-term traders. I’m wondering if I should adjust my strategies to adapt to the market as I see it, rather than being too rigid and “sticking to my strategy”, or perhaps just stay out of the market until there are more obvious, larger-scale movements (this could take a while to play out, however). Philosophically, I like the idea of adaptation and being able to work in any environment, but that may be the realm for only the very best, much like only a fraction of people in any field have the ability to perform in any situation.
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Posted by Nelson Yee
January 15, 2009
Being an ex-Torontonian, I used to think that the Toronto Star was a decent paper, but in recent years it’s taken a turn for the worse. Due to the difficulties in the media business in general and the newspaper business in particular, they’ve started to lean a lot more on things like “advertorials”, paid advertising sections and editorials that offer biased views on a particular subject. The reason I mention this is because I was just made aware that they have an advertising section on “online trading”, which seems to have started around June 2008, and which fooled my mother as being legitimate. Given the emphasis on seniors doing online, active trading and such, this seems particularly sketchy. To paraphrase Emanuel Derman, it’s embarrassing to be part of a business with so many scams.
I did like this Q&A, which taken with the other Q&A of the seniors reminds me a lot of the Globe and Mail’s profiles of investors, except with the addition of brand name-dropping of brokerages. Clearly, these are real people they’re interviewing, and a few tidbits of reality slip through the cracks:
Q How do you handle risk?
A Not very well. Some days, you may be able to hear my fingernails clawing on the rock face of the cliff as I slide into the abyss.
Even still, I find that this very thin line between ostensibly unbiased journalism (or at least journalism without a direct financial tether) and advertising pretty depressing.
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Posted by Nelson Yee
January 14, 2009
As I watch the risk-aversion trade do very well (looks like those who saw through the late December-early January rally have been well-rewarded) and I sit on my hands a little, I decided to update the links on the sidebar. For the most part, the commentary section is self-explanatory; lots of good economic and financial punditry there, although frankly 90% is useless for actual trading, in my opinion. I’m still trying to work out how much macroeconomic awareness is really useful to making money versus being a more highbrow version of noise.
The traders section is new and reflects my shifting interest to vehicles outside of equities and equity options, which has been going on for some time. I still keep track of those markets, but frankly they’ve never sat too well with me, a one who does not really find doing deep accounting analysis of individual companies that interesting — although in my opinion, the jury’s still out on how effective that is, too. Although I don’t necessarily agree with the methods of the folks I linked, I do find them some of the more articulate of the slew of trading blogs out there, and I probably read them more for that than to get any insight into the markets.
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Posted by Nelson Yee
January 13, 2009
I have to admit, I watch Dragon’s Den occasionally and even Squeeze Play on BNN if I happen to be channel-surfing past it. I really enjoy Kevin O’Leary’s schtick, which is basically a no-bullshit view of the world, and he comes up with some devastating put-downs. Lately, I’ve discovered that he’s decided now would be a good time to get investors for his O’Leary Global Income Opportunities Fund. (At least, I just got the IPO notification from E-Trade Canada.) I guess perhaps now it seems like there are more “opportunities” and that this is the time to see what interest is out there?
Anyhow, on doing a little Googling about it, I found this detailed article about the man and some of the other funds he’s launched, particularly this not-so-high-flyer. Although I do like his jaundiced take on the world and think that his world view actually makes for a really good investor, I don’t know how much of it is for show and how much of it is just a variation of “Jim Cramer” financial celebrity-ism. I suspect investing solely based on “liking how the guy thinks” isn’t really a great move.
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Posted by Nelson Yee
Ratiocination
January 19, 2009Riz Din makes a good point about being a bit cautious using various ratios as a predictive measure.