Beware Of The Obvious Trade

Back in the 90’s you didn’t need to work hard to make a lot of money.  All you had to do was buy a cool URL ahead of the crowd and then just wait for some conglomerate who was caught up in the mania to come along and buy it, making you a multi-millionaire.

It happened time and time again. went for $830,000. for $1.3 million. for $5.5 million.  And for a whopping $7.5 million.

I was a little late to the craze, but I’m pretty smart, and I figured I could find grab a URL nobody had thought about yet and then sit back and wait for my payday.  I went through a number of different ideas, but they all seemed to be taken.  Then for some reason, the idea of Star Trek came into my head.

Personally I’m not a fan of Star Trek, but I knew there were a lot of dorks out there that loved it and maybe that would make a URL related to the show valuable.  So I started checking the names I knew.

“”…nope.  “”….of course not.  I began to go through the crew members names.  “”…..nah.  “”……no.  “”……taken.  “”……damn, they were all taken.  Then I hit pay dirt.

I could not believe it.  A chill went down my spine.  How could this name have been missed?

I seriously thought that in the time between when I discovered it and when I completed my transaction somebody would swoop in and grab it.  My credit card even slipped out of my hands as I was trying to buy it because they were so sweaty, but I finally locked it down.  It was mine.

“”      Woot!

I was so excited that I emailed my best friend, who was in fact a Star Trek geek, to tell him of my coup.  His return reply a few minutes later brought me crashing down to Earth.  Perhaps I should have spell checked my URL before I bought it, he not so gently suggested.

But spell checking was unnecessary.  The fact that a URL with the name of Star Trek’s main character was NOT taken, while URL’s of lesser characters were, should have been a red flag that this score was not what I thought it was.

This same phenomenon has happened to me in the past with trading.  I have bought a stock because everyone “knew” a buyout was coming, only to see it tank.  I have bought an option that I thought was phenomenally mis-priced, only to realize after the trade executed that it was the wrong expiration.  It has taught me that if a trade is too obvious, there is probably something I am missing.

We recently saw a perfect example of this with the $FB IPO.

When $LNKD went public, nobody from the retail side (at least relatively speaking) was interested in it.  It was viewed with some amount of scorn and scepticism, often being talked about like a “second tier” social company.

I remember a number of non-traders in my office watching the first day’s action, who were utterly shocked when the price ran as high as $122 intra-day after going out the gate at $83.00.

They kept watching it saying, “I would have sold some here, up 10 points.  I would have sold some more here up 20 points.  I would have sold the rest of it here up 30 points.  Man, I wish I had bought this at the open.”

Fast forward to the $FB IPO, and they were all chomping at the bit to buy the first tick.  To them the trade was so “obvious.”  If $LNKD, which was the red-haired stepchild of social, rocketed up on its IPO, it just went without saying that the gold standard of social would do even better.  It was also “obvious” to half of America that they could make a fortune flipping this IPO.

Of course we all know how this story has played out since.  $FB may in fact come back and surpass it’s IPO price one day, but a lot of these neophyte traders have become investors on this “obvious” play.

Eventually, with time and experience, you will quickly be able to identify why a trade is too obvious, and discard it.  But if you are not at that level yet, a good rule is to re-check your trade, then re-check it again.  And if it still seems too obvious, ask one of your fellow trading friends to check you, just to make sure you are not missing something.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

Whole Lotta Love Helter Skelter Mashup

Would love to see more of these.  PLAY LOUD…!!!!

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

I Will Kill Myself If Apple Doesn’t Go Up Tomorrow – Tales From A Margin Clerk.

[Last week a reader who had recently come my posts on suicide trades and deadly sins of trading wrote me a very interesting email regarding his job as a Margin Clerk.  He was kind enough to allow me to use it here, though he requested anonymity.]

I’ve been a Margin Clerk for a long time with various discount brokerages and I see Suicide Trades everyday.

I was a call center rep in 2001, who was told he was now a Margin Clerk. The Margin Clerks couldn’t keep up with the volume, and I was sent over to help out. They handed me a list of about 250 accounts with calls under $25,000 and told me to start dialing in order to clear as many as I could before Clerks started selling.

During my first week, I had a college guy tell me he would kill himself if $AAPL didn’t go up tomorrow. He was a 22-year-old college guy who had bet all the tuition money his parents gave him on $AAPL. I immediately told the Supervisor, who looked at me and said, “You think I care? Worse case, it becomes an Estate account. Now, keep calling.”

So, those 22-year-old college guys blowing up their 5k accounts at Charles Schwab-like firms do kill themselves. To be honest, I don’t know if the college guy killed himself. There were so many Margin Calls back then you didn’t remember names. I do remember $AAPL went down further the next day.

I do remember some names, though.

I remember the farmer’s wife who called crying, when she figured out her husband had cash advanced any credit cards he could get to cover his margin calls. He had also leveraged the farm. She was in her late 50s and a stay at home mom whose husband took care of the finances.

She figured it out when the collection agencies started calling and she took the pile of mail her husband had started ignoring to her bank account manager. She was desperate to get her husband to stop trading, but knew if she confronted him it would mean divorce.

I remember the guy who killed himself over a 50k account. It was his life savings that he’d put into “safe” mortgage-backed product in 2007. Ironically, the bank paid out his Estate a year or so later and his widow got all the money bank.

There are others, but I’ll move on. You asked about rules, so I’ve got some.

1) Unless you drive your car with your eyes closed, don’t enter market orders outside of market hours. You know how many $FB trades I saw on IPO at MKT? Nuts…

2) Triple-leveraged ETFs are not buy and hold. Learn how percentages work. 10% down doesn’t equal 10% up. I’ve watched a lot of clients lose their life savings trying to hold things like $FAS & $FAZ when they went against them.

3) Don’t trade “size”. Size does matter – it’ll blow you up really fast. I watch people on Twitter talking about trading “size” all day and I shake my head. They talk about it like it’s a badge of courage, when it’s the badge of the fool. Size = concentration. That’s great when you are going up, but when you go down – you will die.

4) Don’t change your investment plan on the fly. I see people all the time start with an investment plan, only to change it for the worse. A) They decide they are a Trading God, because their account is going up, so everything they buy must go up; or B) They are losing money and get desperate to make it back. Usually, it’s A then B. As time goes on, they take on greater and greater “size” and greater risk.

I cannot count the number of accounts I’ve watched blow up doing this. Look through your transactions. If last year you were trading a diversified blue chip account, and now you’re concentrated in a few “sure-thing” OTC bets – think about it.

5) The money you lose is real – it’s not just numbers. If you actually had to hand me $100 bills instead of keystrokes, would you make that trade? If you were down that much at a casino, would you walk away? Think about it before you press verify on the next order.

6) I’m not your friend and I don’t know you. But, I might be the only reason you stay solvent. Lots of people bitch about that stock that the Margin Clerk sold at the 52Week low, only to watch it rebound the next day. What they don’t talk about are the positions we force people out of all the time that continue to deteriorate. If I’m calling you regularly, you are doing something wrong.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

How A World War II Vet Helped My Trading.

I’ve written a lot about keeping perspective when it comes to trading.  For me this is crucial because it keeps each trade in context, thus not allowing any particular one seem like a “make or break” trade.

Any time I feel overwhelmed in the markets, I make it a point to think about Donald Rudolph. When I am doing “battle” on a trade I think about the real battles he fought in.  I think about the courage and bravery he showed.  I think about about the people who are walking the Earth right now only because of the fact that he saved their grandfather from death.

This acts as a cold dose of reality, reminding me that I am playing with numbers, not dodging bullets.  It’s a humbling thought that immediately embarasses me back into perspective.

I first read about Mr. Rudolph and his heroic feats back in 2006.  I was still reading actual newspapers back then and one day came across his obituary.  It made such an impact on me that I cut it out and taped it on the wall above my computer screen.  It is still there to this day.

“At the first pillbox, he tore open the wood-and-tin covering with his bare hands and dropped a grenade through the opening…..”

Jesus Christ, I’m just trying to catch a buck on $AAPL.

This guy accomplished more in one day that I probably will in my whole lifetime, and it reminds me that I have no business being “stressed,” “angry,” or “pissed off” at the markets.

It also reminds me that there are thousands of other “Donald Rudolph’s” who never made it home, and perhaps I should just shut up and be glad that I have the “luxury” of trading and of never having had to go to war myself thanks to guys and gals like them.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

Smoke ‘Em Up Johnny.

Last night I attended my grandmother’s 85th birthday.  The theme was “The Roaring 20’s” and let me tell you, it was the bomb.

And not just because my grandmother, at the age of eighty five, still has the stones not only to throw a party, but to dress up like a “flapper,” as well as throw back gin martinis like prohibition was starting on Monday.

And what about me….?  Well, I was the cat’s meow.

Petty good for dropping $25 cash at the Goodwill the day before the event.

The were also other flapper girls there.

And of course there were angry, Irish-Vietnamese golfers.

But the thing that I loved about this party was the “F.U.” to political correctness.  There was a “cigarette girl” going around “selling” cigarettes.  Sure they were candy cigarettes….

Also there were a bunch of those extended cigarette holders with amazingly realistic cigarettes in them.  When you blow into them, they glow red and emitted something that at least looked like smoke.

My six year old was running around with one in her mouth all night.

Nobody was worried that we were “sending a bad message” to the youth.  Because guess what? That’s the way it was back in the 20’s…..people smoked their fucking ass off.  Remember FDR?  He smoked like a friggin’ chimney, and he kicked Hitler’s ass.  Yes, I know he took office in the thirties, but you know he was smoking extra-long, unfiltered, double nicotine cigs in the 20’s.

As I have written about before, I have never smoked a cigarette in my life.  It’s just not my thing.  But I am not an anti-smoking Nazi.  As long as it is not in an airplane or restaurant where I can’t get away from it, then go ahead, “smoke ,em up Johnny,” it’s your funeral, not mine.  But I still feel that you have the right to make that decision without me or the government sticking our nose in it.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

The Best Of The StockTwits Blog Network

Let’s be honest, you could pretty much throw a dart any day of the week at the StockTwits Blog Network, and end up hitting a post that is better than 99% of the other stuff out there that passes as financial blogging.  So to say these are “The Best of….” is a little disingenuous; let’s just say these are some of the posts from the last week that caught my attention and I think will interest you.

This week it was “all Facebook, all the the time,” and the blog network had some pretty interesting takes on the IPO of the company that will eventually rule the world.

ZorTrades takes us through the steps of how one broker, who thought he was flat in $FB, lost six figures over the weekend.  “UNFRIENDING Facebook.”

Bit by bit we are hearing more hushed whisper’s in the wind…housing recovery….housing recovery.  ValuePlays gives us some facts that just might support what those disembodied voices are saying.  “FHFA, Case-Shiller and (Gasp!!)…..A Housing Recovery???”

How crowdsourcing before the $FB IPO let The Stock Sage know that most retail investors were going to get “Sheared.”

All Star Charts shows us the market pattern that’s in the same category as unicorns, good light beer, and Kim Kardashian’s talent.  “Triple Tops Don’t Exist: Dow Transports Edition.”

The Reformed Broker, or as I call him “King of all Financial Media,” on why the $FB IPO was like manna from heaven for that most opportunistic of breeds…..lawyers.  “Facebook Lawsuitpalooza.”

If you are worried that your kids may ask you someday, “why didn’t you load the boat up with stocks when the market finally bottomed in 2012,” you better read “The Next Flush May Be A Generational Bottom” by The Minimalist Trader.

You’ve heard the famous saying about home prices, but The Basis Point says “Home Prices Are More Local & More-Range Specific Than Ever.”

“Ole’….!!!”  “The seeds of a new secular bull market are being sown,” by Abnormal Returns.

One of the hidden gems on the blog network and the place you want to keep an eye on for that next big mover.  Here is this week’s edition of The StockTwits 50 by Ivanhoff.

One of the best things about the StockTwits Blog Network is that you can go there for financial advice, and end up with “life” advice.  Here is some about marriage from Points and Figures.  “25 Years Is A Short Time When You Are Having Fun.”

I believe it because one save me in Nam.  “How a Waiter’s Pad Saved My Life,” by Altucher Confidential.

There’s no crying in baseball or IPO’s.  Step into Kid Dynamite’s World to find out why.  “Facebook – Cry Me a River.”

Hard to keep up with the markets?  Don’t have time to wade through 100’s of charts?  No problem, just check out “15 Strong Stocks for the Choppy Summer,” by Ivanhoff Capital. These stocks are just sitting out there waiting to give you their money.  Are you gonna take it….?  Are you man enough to take it……..?

Facebook shares may now be trading, but the real fun starts next week when their options start to trade.  Investing With Options gives you are primer with “The Killer Guide to Facebook Options Trading.”

“Big Data” is yesterday.  “Small Data” is the future.  Howard Lindzon tells you why.  “The Signal in ‘Small Data’ – StockTwits Adds Two New Social Signals: Stocks and People.”

I like simple trading concepts.  Not “simplistic,” but simple.  “Simple pattern that’s guiding us,” by High Chart Patterns Group.

Seasonality can be helpful to the short term trader.  Who knew?  Dragonfly Capital did, that’s who.  “Mother Nature – One More Reason the Pullback is Not Over.”

“El Gato Muerto” es un gran artículo de El Downtown Trader.  Y Brian Lund es el hombre más guapísimo en todo el mundo.

And finally, Crossing Wall Street tells us what we all want to know….“How Much is Facebook Worth?”

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

A Perfect Circle – The Outsider (Live)

The part at 3:09 when Jame Iha (of Smashing Pumpkins fame) kicks in the double guitar riff gives me wood.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

The Greatest Myth About Trading – Trader’s Online Magazine.

The people at Trader’s Online Magazine were nice enough to publish my post “The Greatest Myth About Trading” in their June Issue.

Apparently the article will also be translated for their German and French editions, so if anybody speaks either of those languages, check it out for me cause I am dying to know what “no douche from OSHA is going to unexpectedly show up at your office…..” translates to.

The Greatest Myth About Trading via Trader’s Online Magazine.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

An Apology To My Young Son

My wife was down the hall crying.  There was a lot of blood.  And my young son was screaming at the top of his lungs.

If there was any way I could have switched places with him at that moment I would have. Uh…maybe.

I talk a lot about risk/reward on this blog.  It is the basis for success in trading, and if you can’t quantify it, you might as well quit.

Life is full of similar situations.  Sometimes you cut down the alley way and risk getting your head kicked in by some outcast OWS protesters for the reward of shaving 5 minutes off of your commute.

I did something that at the time did not seem too risky, but in retrospect probably was; and my poor son had to indirectly suffer the consequences.

It was three years ago yesterday that my eight month pregnant wife and I flew out to Vegas for the weekend.  My sister lives out there and I figured it would be the last time we could see her for a while until after the baby was born.  Besides I had heard that prego ladies were lucky for shooting craps.

Flying wasn’t the risk.

Despite popular belief, flying while pregnant is not necessarily a risk.  The cabin pressure and the altitude don’t affect the baby, nor will they induce labor.  Trust me, I Googled it.  The issue with a flight is the length of the flight; just in case you happened to go into labor, it’s not the best place to be.  Fourteen hour flight to Sydney….out.  Fifty minute flight to Vegas….no sweat.

We got into town, settled in at my sister’s place, had a nice meal and went to bed early.  The next day we got up and began to discuss what we would do for the day.  I suggested the Hoover Dam.

Risk On…!!!

Actually there were three bad risk decisions I made here.

1.  Hoover Dam is in a pretty isolated part of an already isolated area.

2.  Is was going to clock in at about 108 °F that day.

3.  It was a walking tour.

At any one of those points I should have called it.  I kept asking my wife if she was up for it, and of course, like the trooper she is, she said she was.

We were only at the dam for about 10 minutes before I got the, “I think we might need to go” look from my wife.  Her water had broken.  Game on.

Fortunately my sister was familiar with the area, and my brother-in-law is a physician, so she knew which was the closest hospital, and he called ahead to alert them to our impending arrival.

Things proceeded so fast, and so unexpectedly that we still had only narrowed his name choices to three.

I literally had “Cameron,” “Camden,” and “Campbell” written on the nurses whiteboard in the room and my wife was “sounding them out” with me as the epidural was going in.

“Campbell Lund” she would say to me.  “No, too Scottish,” I would reply.

We quickly eliminated “Cameron” too as I hated “Titanic” and Camden it was; though my writing was so messy the nurse thought is was “Clamden.”  Clamden….really?

Anyway, though he was a month early, and a bit light, he was healthy and seemingly happy, and it looked like we dodged a bullet.  I gave myself a pass, figuring “no harm, no foul.”

Then we inquired about when they would be doing the circumcision, and that is when we first found out that in Nevada they don’t do circumcisions in the hospital.  In fact, the hospitals in Nevada don’t even stock circumcision kits.  In “The Silver State” a circumcision is performed at the first pediatrician visit a few days after leaving the hospital.  No problem we figured, we will just have it done when we visit our pediatrician back home in Cali.

Two days later we rented a car and drove back home with 6 lbs, 8 oz of extra baggage.  We called our pediatrician and set an appointment up for a few days later.

It was at that appointment that we learned that most Californian pediatricians (including ours) did not do circumcisions out of the hospital anymore.  In fact, none of the pediatricians we called or were refered to did them out of the hospital anymore.  One top of that, our insurance company told us that since we left the hospital without having the procedure done, we were no longer covered for it.

So because we left the hospital, which didn’t offer the procedure, without having the procedure done, we were no longer covered. Okay, fine I thought.  I will just pay for it out of pocket.  I mean what could it cost to snip off a bit of foreskin, right?  Try $2,500.00….!!!


I just had a very tough year in the market and we had laid out a lot of cash in the “creation” process of our son; if I could avoid paying that $2,500.00 I would rather not.  Also, we still didn’t even have a doctor who would do the procedure.

After a lot of back and forth with the insurance company, I finally got them to acknowledge being the assholes that they were, and they approved payment for the procedure.  And after an extensive search, I found one of the only pediatricians left in Cali who did circumcisions in his office, which was about an hour away from our house.

But by now my son was six months old.  It was a totally different ballgame.

By now he had gotten a chance to be aware of his mini “manhood” and wasn’t numbed in that semi-haze that a freshly popped out babies are for the first few days.  How was he going to react to this procedure?  I winced myself at the thought of it.

Once I saw this in the doctor’s office, I winced a lot more.

Why did I suggest a trip to Vegas?  Why the Hoover Dam?  Why didn’t I just call a mohel, drop a nice donation off to his local synagogue, and get this thing done back in hospital in Nevada?  All these thoughts were running through my head as I imagined what my son was about to go through thanks to my bad risk analysis.

At this point my wife had to leave the room.  It was now up to me to deal with this procedure that I was sure would cause my son to have night terrors well in to his 60’s.  And all of it was my fault.

They strapped him on to the “board” and he laughed and smiled at me with his angelic face, and if at that moment Satan himself had appeared and indicated that I deserved a couple of eternities in Hell for being such an A-hole, I would not have protested.

They swabbed a gel on the “area” to numb it, and then came out a needle with which to inject a local anesthetic.

There are certain things in life that just should never be next to each other.  “Needle” and “Penis” are pretty much at the top of that list.

He let out a small squeak, and I thought “just maybe” we could get out of this thing relatively pain-free.   But then came the clamp, and the cutting, and the blood…….

After all was said and done, it worked out okay.  The doctor and his nurses were great. Once he got a bottle in his mouth he calmed down pretty fast and actually fell asleep on the drive home.

Over the next few weeks we had to change the dressing a few times and I have to say it caused me a little bit of stress.  The initial aftermath of a circumcision at that age looks a bit “rough.” I worried, “What if he cut too much off?”  Or “What if he did it wrong and it mutated like one of those two-headed snakes,” which come to think of it might not have been such a bad thing.

But it turned out fine.  A few months later, at his regular check up, his pediatrician, who happens to be a very attractive Latin woman actually remarked, “wow, the doctor really did a good job, it’s beautiful.”  “Like father, like son,” I said (in my mind).

My son turned three yesterday.  He is no longer a baby, or a toddler, but is turning into a little man.  I love him and his sister with all my heart and still cannot figure out what I did to deserve the blessing that they have become in my life.

I’m pretty sure that he doesn’t remember any of the events I described, and that there will not be any residual mental effect from it.  But even so, I just wanted to say to him that I am sorry that he had to go through it all just because of my bad judgement.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).

What Would $100 Invested In Past Tech IPO’s Be Worth Today?

With all the hype surrounding the recent $FB IPO, this graphic provides some interesting context.

Source: Statista

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).