Nazis, UFO’s, And Curve Fitting The Markets

I am NOT a famous historian.  I don’t even play one on TV.  But despite this somewhat large gap in my resume, I feel pretty confident in going out on a limb and saying that UFO’s never made contact with the Nazi’s.

What, you say?  What is this madness you speak of?  Well, I know this for a number of reasons.

First off, I’m not currently wearing lederhosen.  Second, my name is Brian Christopher Lund, not Karl Günther Lundburg.  And finally, Hogan always got the best of Col. Klink….not the other way around.  Because it only goes to reason that if the Nazi’s ever were in contact with UFO’s, they would have had gotten some pretty bad-ass technology, with which to dominate the world, and that would have included all of us right here in the USA.

Besides, everybody knows that all the best extra-planetary visitors are aligned with America; like Superman, The Silver Surfer, Uncle Martin, and The Great Gazoo.  Even space mutts like Alf side with ‘Merica.  Of course you would never know this is the case from all the content to the contrary that comes down the sluice box of popular media.

On television for example you have The Discovery Channel’s Nazi UFO Conspiracy and The History Channel’s Nazi UFO Hunters.  Check out Amazon and you will find a cornucopia of books and DVD’s disputing my claims, with titles such as Nazi UFO Secrets of World War II, Hitler’s Secret Flying Saucers, and UFO’s, Nazi’s Secret Weapon.  And don’t even get me started on the internet; if you want to believe in Der Aliens, well there are plenty of websites that will help support your delusions.

Typical of the type of crap you will see on Al Gore’s invention related to this subject are sites dedicated to one of the most ridiculous theories, that of the Nazi Bell, or “Die Glocke.”  The Nazi Bell is reported to be some type of anti-gravity device, born out of extraterrestrial technology, that The Third Reich was working on in the waning days of the war.  The problem is, its complete bullshit.

The was never any reference to the Nazi Bell in any literature, by any eyewitnesses, or in any documentation for fifty-five years after the end of World War II, and then magically in 2000, it was described by a Polish Journalist, Igor Witkowski, in his book The Truth About The Wonder Weapons.

Here is an excerpt from the Wikipedia page (yes, there is a Wikipedia page about the Nazi Bell), that describes how the idea came into existence, and how it gained traction….

 Witkowski wrote that he first discovered the existence of Die Glocke by reading transcripts from an interrogation of former Nazi SS Officer Jakob Sporrenberg.  According to Witkowski, he was shown the allegedly classified transcripts in August 1997 by an unnamed Polish intelligence contact who said had access to Polish government documents regarding Nazi secret weapons.  Witkowski maintains that he was only allowed to transcribe the documents and was not allowed to make any copies. Although no evidence of the veracity of Witkowski’s statements have been produced, they reached a wider audience when they were retold by British author Nick Cook, who added his own views to Witkowski’s statements in The Hunt for Zero Point.

So to recap….

An unknown writer for some reason gets access to classified documents, that nobody else has seen, and that he is not allowed to make copies of, that refer to claims a long dead war criminal made that supposedly proves the existence of the Nazi Bell.  Then another writer repeats his wild claims as fact in his book, and so on, and so on, with each subsequent book, or TV show, or website referring to the others claims as “evidence.”

Sounds pretty solid to me.

Now let me take a quick moment to guess at what your inner dialogue is saying right about now…..

“What the hell is Brian talking about?  I know he likes to “stretch” a bit in his posts, but Nazis?  UFO’s?  Some friggin’ bell?  I have no idea how he is going to bring this back to the market?”

Well just sit back and watch me!

Fifty years ago if you had some crazy ideas that you wanted to put out there, on any subject, your options were pretty limited.  The powers that be and the limited bandwidth of their format prevented you from using television or radio to spread your message.  Even if you were somehow able to self-publish your theories, and were able to convince your local bookseller to stock a couple copies of your tome on their precious shelf space, that is where the distribution model ended.

With the leaps we have had in technology in the last twenty years, now literally any idea, no matter how insane, can be made available for the world to see.  And this is a very, very dangerous situation for investors who come to the market with their own biases and beliefs because it allows them to curve fit “data” and information.

Curve fitting has some very specific and technical definitions in regards to mathematics and statistical analysis, but for the purposes of this post I mean when someone wishes to see specific evidence pointing to a specific future outcome that in reality does not exist.  It is almost always driven by an emotional input instead of an analytical or objective one and it allows an investor to “prove” to themselves that their opinions are correct; no matter what the evidence is to the contrary.  But it wasn’t always that way.

When I was a young kid my great-uncle used to tell me of the years he spent in Germany as a missionary during the early twenties, when hyper-inflation was at its worst.  It made a real impression on him and convinced him of the importance of owning a “fixed” store of value like gold, especially when the value of currency and stocks could disappear almost overnight. This was further impressed upon him during the Great Depression of 1929.

Yet despite the effect these massive economic events made upon him during his formative years of investing, he did not let this “fix” his ideas on investing.  This was partly because he did not seek out only that which reinforced what he had experienced, but more so, that there was not access to overwhelming amounts information that specifically and hyper-aggressively championed those views. Instead, that forced him to pay attention to the realities of what was happening in his business, in the technology of the day, and in macro trends of the country, which allowed him to invest in stocks which greatly outperformed gold.

Nowadays, if an investor brings pre-conceived ideas with them into the markets, they can choose to dogmatically believe those ideas, and justify their validity by searching out only the book, or video, or website that confirms those ideas–no matter how outrageous they are.  They no longer have to pay attention to facts or to reality, instead they can just bore deeper into the content of their chosen “expert,” taking comfort in the fact that it so closely mirrors what they believe.

In 1999, when the book Dow 36,000 came out, it was the investing equivalent of saying Nazi’s were visited by UFO’s.  Those who had experienced the bull mania of the dotcom days, and never wanted to believe it would end could just reference that book as proof that the party was going to continue on–no matter what the the indexes and their P&L statements were saying–and no matter how detached from reality that idea was.

At the height of housing bubble in 2006, if you wanted to believe that your home’s value would go up forever, providing you with a constantly replenished ATM with which to draw from, all you had to do was cite real estate guru Barbara Corcoran’s statement that “this is one of the best times ever to buy.”

If you thought that market was going to crash, but after it did, you didn’t think the low put in at the start of 2009 was low enough, then you just subscribed to the cult of Roubini and all was good.

Do you think gold is going to $5,000?  Oil to $10.00?  $AAPL to $1,000?  $TSLA to infinity and $NFLX to zero?  Whatever your take on a stock, a commodity, or the economy is, you can find someone who will support the idea you want supported; you can find you own “Nazi Bell.”

That is why it is important, now so more than ever, that you come to that markets with no bias and no set agenda, and that you seek out as much objective information as you can to help you with your investment decisions.  Technical analysis goes a long way towards achieving this because by its nature it strips away emotions and subjectivity.  But even if you only stick to fundamentals, you should try to find information that challenges your ideas instead of that which just confirms them.

If you want to learn more about investing, trading, and the markets, all while helping to kick pediatric cancer’s ass, check out my book, Trading: The Best Of The Best – Top Trading Tips For Our Times.  It includes over 200 market tips from 60 active traders and investors, and all proceeds go to the McKenna Claire Foundation to help support research for a cure.  Just click the banner below or go directly to Amazon by clicking here.

Updated Amazon Banner

Why not subscribe to for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

7 Reasons NOT To Attend Stocktoberfest

I made the journey down to Coronado last year to attend Stocktoberfest which is put on by StockTwits and hosted by Howard Lindzon, and it was so successful that they have announced that Stocktoberfest 2013 is scheduled for Oct 17-18th. The event is open to anyone that wants to attend, but if you are thinking of going you might want to first look at my seven reasons NOT to attend.

  1. Boring weather.  Historically the weather in Coronado in mid-October is 75 degrees and sunny.  Who wants to sit around in a place that has the “beige paint” of climates?  Hello, wake me up when something exciting like a snowstorm or a hurricane hits the island.
  2. Have you seen the list of speakers?  Whomever was responsible for booking talent should lose their job. Where is the celebrity chef?  The reality TV star?  The washed up rock star who will teach us the opening chords to Smoke on the Water?  Now if they booked some big name financial types like Robert Kiyosaki or Tim Skyes, then we’d be talking.
  3. Watching Howard walk up to every attendee and say “pull my finger,” gets really old, REALLY quick.
  4. How can you trust an event with five syllables in its name?
  5. There’s a good chance that you will miss a Swamp People marathon while you are gone, and what would you do if your DVR didn’t record it correctly.  WHAT….WOULD….YOU….DO….???
  6. The venue is literally across the street from the ocean, which means if there is another Sharknado, you’re toast!
  7. I will be there!  Look, do you really want to run the risk of having me corner you at the bar and start making some lame comparison between the markets and my disastrous senior prom?

But seriously….

Stocktoberfest really is a great event and one of the coolest things about it is that there is no hierarchy. And no attitudes or egos.  At Stocktoberfest you’ll see million dollar fund managers chatting with trading novices.  The Saracens sitting next to the Jones Street Boys.  The Moon Runners, right by the Van Courtland Rangers.  And nobody is wasting nobody.

Oops, sorry! For a minute there I channeled Cyrus’s speech from The Warriors.

But the point is, nobody should be afraid or intimidated to attend.  Read more about this in my post Check Your Ego At The Door: Notes On Stocktoberfest and and if you decide to go, don’t forget to review The Rules Of Stocktoberfest.  I look forward to seeing you there.

If you want to learn more about day trading and the markets, all while helping to kick pediatric cancer’s ass, check out my book, Trading: The Best Of The Best – Top Trading Tips For Our Times.  It includes over 200 market tips from 60 active traders and investors, and all proceeds go to the McKenna Claire Foundation to help support research for a cure.  Just click the banner below or go directly to Amazon by clicking here.

Updated Amazon Banner

Why not subscribe to for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Is Day Trading Really A Sucker’s Game?


Note: I get new stock ideas every day from the SPARK app. Download it free from iTunes.

I am a big fan of the financial blog Crossing Wall Street written by Eddy Elfenbein.  In addition to being a great writer, Eddy knows the world of investing backwards and forwards and has one of the few Twitter streams that can actually make me laugh out loud. But last week I came across a post he wrote entitled Day Trading Is A Sucker’s Game than made me twitch.  Well to be honest, it may have been a “twinge” instead of a twitch, but either way it provoked a reflexive response from me, the type you get when you hear something that just goes against your core beliefs.  Like if you heard one of your drinking buddies tell the bartender, “I really don’t want a beer tonight.  Can you get me a white wine spritzer instead?”


Eddy’s argument against day trading is based on the fact that with the increased technology and talent that now exists in the world of High-Frequency Trading (HFT), the average retail trader doesn’t stand a chance.  Which leads him to this conclusion…

What all this means for you is that now more than ever, day trading is a fool’s errand. If you were ever tempted to enter the fray, recognize once and for all that those banks of computers chugging away at their algorithms have you hopelessly outclassed. There’s simply no way an individual human being can compete against a fleet of CPUs that rivals NASA’s. Do not, I repeat, do not try it. You will lose.

The only problem with this statement is that it is wrong.  Well, kinda wrong.

When I think of something or some endeavor that is a “sucker’s game” or a “fool’s errand,” I think of something in which, due to its nature, you cannot win at; like three-card Monte or an argument with your wife.  Something where the “fix is in.”  Where you’re operating in a “clip joint.”  That you’re just some rube with a chalk mark on his back destined to get “hustled,” “bamboozled,” “grifted,” “flim-flammed,” or any other number of terms I remember hearing in The Sting.

However, this not an accurate portrayal of the realities of day trading.

With the advantage of having been on both sides of this activity; trading and broker dealer, I can tell you that it is true that HFT’s do impact your ability to day trade.  For example, I regularly see execution reports come back from the exchanges denominated six places to the right of the decimal point (.000001), which allows automated, high volume trading to squeeze profits out of nano moves.

I also often see stocks trade in a tight range, then experience very “suspicious” spikes that take price through obvious stop/limit order levels, only to return to the previous range in a matter of seconds. This too is the footprint of the aforementioned Al Qaeda-like HFT firms at work.

But here is what I also see.  I see a lot of people who make money consistently by day trading.  These are not Johnny-come-lately types jumping on a fad fueled by the bullish tape.  They bear no resemblance to the secretaries, used car salesmen, and dentists who showed up on the covers of Forbes and Fortune in the late 90’s boasting of four-hour workdays, trading on the beach in the Bahamas, and giving up their “day jobs” due to the cash they were pulling out of the markets on a daily basis.

No, the successful day traders I know have been doing it for years. They all trade through retail brokers that everyone has access to, and some of them even do it with as little as five-thousand dollars in their account.  (And before you ask, “but how can they…..,” just read my post How To Day Trade With Less Than $25,000).

These are very highly skilled, disciplined traders, who use risk based methodologies and continually adapt their trading to overcome the latest threat du jour, the one always destined to sound the death knell of day trading.  The current one being HFT’s.  In fact, most successful day traders will quietly say (or sometimes not so quietly say) “there’s the cry of the loser,” when they hear someone complain that they lost money because of HFT’s.

I won’t go into all the ways the effects of HFT’s can be minimized when day trading, as I have written extensively about this topic before in posts like 5 Ways You Can Combat High Frequency And Algorithmic Trading and How To Place More Effective Stops, but instead let me tell you why someone would want to day trade in the first place

In terms of the retail participant, successful day traders are the most elite group in the markets.  They make money based on their own actions.  They are not beholden to analysts, CEO’s, the financial press, Fed governors and heads of Central Banks, false accounting scams, or earnings announcements.  They don’t have to “wait” to make their money.  They make it today, and tomorrow, and the day after that.  And best of all, since they are always actively watching the markets and by definition are flat at the close, they are largely insulated from “acts of God” like earthquakes and hurricanes, as well as the more dangerous “acts of Man” like 9/11.

So is day trading easy?  No!

Do most people lose at it?  Of course they do!

But day trading is not an investment style or philosophy, it is a level of financial mastery that most will never achieve, but millions desire.  Trust me, dig into the deepest, darkest fantasies of even the most hardcore value investor and you will find someone who wishes they could be a successful day trader. And in that context I feel the same about a post entitled “Is Day Trading A Sucker’s Game?” as I do about one called “Is Trying To Become A Professional Actor A Sucker’s Game?”

Or “Is Trying To Play Pro Football A Sucker’s Game?”

Or “Is Trying To Be A Full-Time Musician A Sucker’s Game?”

Or astronaut?  Or Olympian?  Or neurosurgeon?  Or professional poker play.  Or hedge fund manager? Or Billionaire?

You get the point.

Anything that requires focus, drive, discipline, specific skill sets, and yes, even at times luck, is hard to do successfully, but because the vast majority can’t do it doesn’t mean it can’t be done.  Nor does it mean it shouldn’t be attempted, as long as you do it the right way.

That means starting off only risking small amounts that you can afford to lose.  This will get you familiar with the mechanics of the markets and give you time to develop both a solid methodology as well as learn how your emotions come into play, not only when you lose, but when you win as well.

If you find that you have the stomach for it and are becoming consistently profitable, then you can gradually increase your size and decide if day trading is something you really want to try to get serious at, remembering that it is not an “either/or” activity.  For example, even if you are a swing trader, day trading skills are what will get you optimal entries.

What you should NOT DO however is treat day trading as a hobby, something that you undertake lightly, with minimal preparation and in an ad hoc fashion.  If you do that then you probably are better off finding a game of three-card Monte.

At the end of the day, participating in the markets is only about one thing……making money.  And you should try to make money in the way that is not only the easiest, but historically has the highest chance of success.  But life is more complex than the markets and one compelling component of life is the desire to achieve that which most cannot and which sets you apart from the rest.  Becoming a successful day trader will bring you rewards that far surpass the majority of market participants, but it is not without risk.

If you try it and find, like most will, that day trading is not your cup of tea or that you can’t make any money at it, then you can position trade, value invest, intelligently invest, or invest with whatever passive method you are most comfortable with.  But at least you will be able to say that you didn’t let the HFT boogeyman scare you away and that you took a shot at greatness.