Category Archives: General Ramblings

The 7 Deadly Sins Of Trading

Posted by Brian Lund in General Ramblings and tagged with , , ,

Trading is wrought with all sorts of trading sins, any one of which can lead you down the path to making a suicide trade.  And although there are probably hundreds that I could come up with, these seven are perhaps the deadliest ones to avoid and help make my post title sound more liturgical.

Playing Earnings –  Holding into earnings is just begging to be hit over the head with a black swan.  Not unlike playing Russian roulette, even if you have the odds on your side, in the event that things go against you, the effects can be so devastating that your account may not be able to recover.

There are complex ways to play earnings with options that can limit your downside, or help protect the profit of an existing open position, but for the average trader it is just best to be flat or have a very small position going into an earnings call.

Pulling Stops - Every 5% loss starts with a 1% loss.  So does every 10%, 25%, 50% and 100% loss.  Just don’t do it.

Trading Tips – I have probably been give more than fifty “sure thing” tips since I began trading.  The thing about tips is that they always sound like they have rock solid provenance, yet the vast majority of them are a bust.  Don’t be fooled by the story or the storyteller, who may actually believe the info they are telling you.

Once I got a tip on Home Base, which a friend assured me was going to be bought out by Lowes.  His “source” actually saw the deal memo on the desk of the CEO’s secretary. They eventually went BK.

Another tip I once got was that Platinum Software was going to get bought out.  This tip came from the cousin of Platinum’s CEO, and it turned out to be true, they did get bought out.  Unfortunately it was a “takeunder” where the target company gets offered less per share than it is actually trading for.

Stay away from trading off of tips.  Remember that line in Wall Street where Gekko asks Bud Fox, “What are you, 12th man on the deal team?”  By the time you hear about a tip, Bud Fox (pre “I bagged the elephant Marv”) will look like an insider compared to you.

Technical Rationalization –  This is a sin that those who use technical analysis are often guilty of.  To better explain it, let me channel the spirit of my dinner guest from last Friday night.

“It’s not so bad.  It’s not so bad.  It’s not so bad.  It’s not so bad.  It’s not so bad.  Hey, why is that bclund guy ripping open my abdomen and pouring drawn butter all over me?”

In trading terms it work like this…

“My stock failed a breakout, but it’s still in the upper end of the range.  It’s still holding the 5ema.  The 9ema.  The 20ema.  It’s still holding the trendline.  Still above a support level.  It’s below the bottom of the Bollinger Band.  Still above the 100sma.  The 200sma.  Still trades on an exchange.”

You can always find a technical reason to hold a losing stock if you want, which is why it is critical to use price action and money management techniques in tandem with technical analysis.  Don’t allow yourself to rationalize away your account equity bit by bit or you will end up in worse, and less delicious shape than my lobster friend.

Chasing – Very rarely does chasing in any aspect of life pay off.  You chase fashion and you look like a Project Runway reject.  You chased that girl around in college and now you’re married to her, so that didn’t work out too well (note to self, remember to duck when entering the house tonight).  It’s no different when trading.

Here is the thing about chasing; there is almost no way that you can chase a stock and still be able to use good risk/reward ratios on the trade.

By definition, if you are chasing a stock it means it is breaking out (or down) through a congestion zone,  a S/R level, or a pattern, all of which you key off of to set your risk ratio. The farther you have to chase a stock past those inflection points, the larger your risk factor becomes.  Even worse is the psychological aspect of chasing.

When chasing you often feel you are “missing out” on a move, which puts you not in a mental position of power and control, but of weakness and helplessness.  That is not a good mindset with which to enter and manage a trade.

Avoiding Decisions – A very good trader I know once told me that whenever he began cleaning his office, he knew he was in trouble in a position.  It was a defense mechanism and his way of avoiding having to make a decision about an open trade.

“I’ll just give this position some more room,” he would say, and then organize his desk, empty his wastebasket, and neaten up his bookshelf for 30 minutes or so, hoping that when he came back to his screen his position had righted itself.  More often than not, it didn’t.

I have heard of successful traders who put on trades and then turned off their computers or even left their offices until near the close of the markets, the most famous being Ed Seykota from the ‘Market Wizards” book.  But these traders had stops and often target orders live and in place before they “checked out.”

They were avoiding the markets in order to “take themselves out of the trade” and let it work, not to avoid dealing with a position that was going against them.

Bottom Picking - The problem with bottom picking is that it can work for a while.  Even if you don’t pick the exact bottom of a stock or the market, you can sometimes get in close enough to the bottom and then make some good money when the rebound comes.  This gives you a false sense of security that you know what you are doing and deceives you into thinking you have a sound methodology, even though you really have no methodology at all.

It always works until it doesn’t; and not unlike trying to play earnings, the losses when it doesn’t work are so devastating that they can end your trading career.

When the markets are imploding, the key is to wait until you think they have hit bottom, and then wait a little bit more.  When you think it’s getting bloody, wait for more blood.  When you think the financial structure of the markets is about to collapse, kick back and have a beer for a while.  But most traders don’t have the patience for this, nor to they have the discipline to take small initial positions, saving enough dry powder to add when the first “bottom” fails.

Hey, I said “seven deadly sins” but I am a giver, so here is a “bonus” sin.

Blaming - There has always been somewhat of a “blame game” in trading, but in recent years it seems to have reached epic proportions.  Brokers, market makers, HFT, algos, analysts, The Fed, Bush, Obama, Greece, hedge funds, the list is endless of who I see getting the blame for people losing money in the markets.

If you blame anybody but yourself for your losses you are destined to blow your account up and get washed out as a trader; it’s as simple as that.

Got some more deadly sins?  I would love to hear about them so send them to me at bclundblog@gmail.com.

Why not subscribe to bclund.com 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).

“Drat! I Suppose The Market Has Already Discounted This, Too.”

Posted by Brian Lund in General Ramblings and tagged with , ,

Some of my favorite old school Wall Street comics from “The Golden Age Of Trash” by Lee Lorenz.

Why not subscribe to bclund.com 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).

Touched By Death

Posted by Brian Lund in General Ramblings and tagged with ,

You ever think you were dead?  Or more clearly put, have you ever thought you were seconds away from dying?  I’m not talking about a death that is imminent but still arms length away; everybody has had that “death” experience.

Once I thought I had a brain tumor.  My father had died from a brain tumor so it didn’t seem like it was that far-fetched.  For weeks I had an odd pressure around the base of my skull, and eventually I decided to go to my doctor.  After examining me for a bit he suggested that I have a CAT scan done, and immediately the room went blank.

I remember thinking at that exact moment, as the nurse was rushing to get me a glass of water, that it really did happen the way you saw it in movies.  People did hear terrible news and their bodies did in fact collapse and withdraw from the conscious world.

I spent a number of long, sweaty, sleepless nights pondering the possibility of my death between that doctor’s appointment and receiving the results of the test.  But even in that context I knew that I would have time before drawing my final breath.

Time to make amends.  To right wrongs.  To say things that I have been derelict in saying to those that I loved.  To knock a few “bucket” items off the list in my waning days.  It was a feeling of impending death, but not of acute death.

I can honestly say that I never felt such a joyous relief as I did the day I found out my scan was clear.  I pulled over to the side of a busy freeway in Southern California and wept like a child in my car for what seemed like hours.  I then proceeded to call everybody I loved and told them I was “okay” and how much they meant to me.

After that I drove first to a liquor store and then to the beach.  I walked out onto the sand, feeling the sensation of each grain squeezing between my toes like it was the first time ever.  I sat down on a small dune just past the tides reach.  I watched a sunset like no sunset I had ever seen before.  I drank the best beer I had ever tasted in my life.  I pondered what I was doing in my life and how I could be a better person and make a difference in this world.

I made a vow that I would change my life.  That I would make good use of my “second chance,” and that I would live every day to its fullest.  That lasted roughly until the following Friday night when I went out and got shitty drunk with my friends.  That night I came home in a haze, somehow managing to empty my pockets, peel my clothes off, and fall into bed.

The next morning I got up around noon and stumbled into the shower.  As the warm spray from the nozzle began soothing my pounding head, I heard “tink, tink….tink.”  Perhaps a post binge delusion was taking hold I thought.  But there it was again…”tink, tink, tink.”  I turned around and saw an assortment of shiny coins on the shower floor.  As I looked down the back of my legs I saw the familiar faces of George Washington and Abraham Lincoln imprinted into my skin.

The day I thought I was closest to death was a beautiful green grass, blue sky type of day. Definitely not the type of day on which you expect to die.  I was sixteen years old and on the infield of the running track at my high school with some friends.  Nobody felt like practicing on such a beautiful day, so like most kids our age we decided just to fool around instead.

This took the form of taking the pole vault mat and flipping it end over end down the length of the field.  The mat was a massive foam type structure, easily six feet high and twelve feet long, and as we would topple it, it would curve over from its own weight before completely collapsing flat to the ground, somewhat reminiscent of a breaking wave.

Being that we lived in a surfing town, it didn’t take too long before somebody got the bright idea to “surf” the mat.  This involved waiting until the mat, which had been tipped up completely on its end, began to “crest” and then running underneath before it went completely flat.  When it was my turn to go, I shot under the beast as it rushed towards the ground, but lost my footing half way through.

And then it was dark.  Darker than any night I had ever seen.  I don’t think I was trapped exactly in the middle of the mat, but it didn’t really matter as I was covered completely on all sides.  I immediately panicked and tried to push myself up off the ground.  The mat was both heavy and soft so my efforts yielded little result.  On one side I could see a slice of light, and I yelled and tried to move towards it, but I couldn’t and the light went away.

I was genuinely afraid for my life at this point.  And then it got worse.

Not knowing the true peril I was in, my friends started to jump on and roll over the top of the mat.  I let a blood curdling scream that no one could hear.  I was having a hard time breathing as my face was smashed into the soft dirt below the grass.  I tried to cup my hand around my mouth to form a small cone, anything to allow a bit of air in my lungs, but it didn’t matter.  The weight of my friends on the mat was so great that I couldn’t expand my chest to inhale a breath.

I figured I had less than 60 seconds left on the earth at that point.  The thing was, at that moment I truly thought I was going to die, but my life did not flash before me.  Maybe I was too young for that to happen.  Nor did I think about the things I would be missing out on, or the loved ones I would leave behind.  All I could think of was the headline that read “Teenager Dies In Freak Accident.”

I don’t know what happened next, but suddenly the pit was lifted and I was free.  Just like that.  I think that someone else just wanted a turn to “surf” it.  I knew that there was no way I could impart to my friends what I had gone through in those terrifying moments so I didn’t even try.  By the same token, I never really mentioned this story to anyone in the years since because I didn’t think I had the ability to truly convey how fearful I was for my life.

Every now and then my mind will wander back to those moments under the mat, but I have to force it to stop.  Its like contemplating the universe while looking at the stars on a moonless night; if you let your mind go past a certain tripwire of thought, it will not end up in a good place.

Anyway….I was thinking about death today.

Ever hear of the blogger who died because not enough people subscribed to his blog?  Don’t let me be like that guy.  Subscribe to bclund.com 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).

“I’m Tired Of F*cking Earth Day” – George Carlin

Posted by Brian Lund in General Ramblings and tagged with , ,

The late great George Carlin talks about “saving the planet.”

No trees were harmed in the creating of this blog post.
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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).  Subscribe for free Via E-mail or Via RSS and follow me on StockTwits and Twitter.

Why New York City Used To Scare Me To Death.

Posted by Brian Lund in General Ramblings, Just for fun and tagged with , ,

There I was, laying on one of those “avenues” or numbered streets, as the blood from my crushed skull pooled up on a manhole cover.  My arm was broken in two places, my kneecap busted, and I had internal bleeding.  This is what happens when bat wielding maniacs from one of the boroughs find an outsider trying to cross their “turf.”

I was twelve years old, born and raised in sunny Southern California, and had never been farther East than Colorado, but I knew that this was going to be my fate if I ever happened to go to New York City.

I didn’t always feel that way about the Big Apple.  My perceptions of the city were completely formed by how I had seen it depicted on TV or in the movies, and it seemed like a gritty, fast paced, but fairly benign place as far as I was concerned.

I knew that this was where the Mafia was, but they only seemed to “whack” each other, not nice “civilians” like me.  I heard that you could get “mugged”, but even that seemed only to happen to socialites who went down the wrong side street after leaving a night of opera at “The Met.”

Then one Sunday afternoon, everything I though I knew about New York City changed in a horrifically fascinating 92 minutes.

My mother had dropped some friends and I at the local movie theater to watch some saccharined up kid’s movie like “The Apple Dumpling Gang Rides Again,” however we had different plans.  Once inside we looked to see what other movies we might sneak into instead.  As I scanned the marquee board one title jumped out at me…

“The Warriors.”

“Hey, let’s go see that movie, it sounds cool,” I told my friends.

Thinking we were going to see some movie about war or perhaps Indians, we slipped into the theater, popped our feet up on the chairs, and got ready to cheer for the good guys and yell at the bad guys.  Instead we got hit in the face with cinematic a two-by-four.

I’m sure to native New Yorkers this movie seemed like a comic book send up of their city, but I felt like I was watching a real-life depiction of a feral and out of control world, as alien to me as the surface of the moon.  I was scared by what I was seeing, but at the same time I could not look away.

Then came the scene that literally filled me with a speechless terror.  The “Baseball Furies” scene.

There were a lot of movies that scared me when I was a kid.  I remember jumping out of my seat when I saw “Alien” and having that weird creepy doomsday feeling after watching “Invasion of the Body Snatchers.”  But with both of those movies there was a disconnect with reality because they were science fiction based stories.

They were the movies you enjoyed getting scared by because you knew that they were fantasy.  I mean I wasn’t really worried that a small alien creature would burst out of my stomach or that a pod would sap my body in order to create a clone.

The Warriors provoked a different type of “scared” in me as what I saw in the movie seemed like a “real life” danger; something that could actually happen to me.

And those Baseball Furies…..what in the name of all that was holy were they about?

I got that gangs might wear clothing that associated them as a group, but what sort of sick, twisted individuals (even by gang members standards), went so far as to put on evil clown type makeup, dress in a full baseball uniform, and use the symbol of our national pastime as a weapon?  These guys were not just into petty theft and upsetting old ladies; they wanted to seriously fuck some people up.

This movie, and that scene in particular, gave me serious nightmares for a number of years.

I’ve since traveled to New York City a number of  times, each time enjoying my trip tremendously and not once was I shanked by some colorful but dangerous malcontent.

Every few years I hear rumors that The Warriors is going to be thrown on the funeral pyre of movie remakes but I pray it doesn’t happen.  Some things you just don’t mess with.  It may not be Casablanca or The Godfather, but to that twelve year old Brian, it was a brilliantly twisted urban allegory that can’t be improved upon.
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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).  Why not subscribe for free Via E-mail or Via RSS and follow me on StockTwits and Twitter.

5 Ways To Guarantee Your Idea Won’t Be The Next Instagram

Posted by Brian Lund in General Ramblings and tagged with , ,

The original title for this post was going to be “Instagram Is Great And Your Ideas Are Crap,” but I thought that a bit too harsh.

I have an issue with most ideas.  There seem to be too many people with too many ideas these days.  They flit around like gnats; buzzing in my ears and constantly annoying me.

Perhaps I am oversensitive to ideas.  In my previous business I had a partner who fancied himself an “idea man” and a “big picture” type of guy.  He was always coming up with new ideas, convinced that each one of them was going to make him a billionaire.

We parted ways on December 24th, 1999.  I went my way and he went on his merry idea way.  Last I heard, he was forced to flee the country in order to avoid creditors, loan sharks, and fraud investigators.

He never could have created something like Instagram because he believed in the five following concepts, and if you practice these yourself, you’ll never create the next Instagram either.

Over market and under develop your idea –  My ex-partner was big on “show.” Appearances were most important to him and he constantly wanted to put money towards marketing at the expense of product development.  His philosophy was that if you could get in front of 1 million people, you could surely attract 1% or 10,000 new customers.

The problem is, if you put a piece of crap in front of 1 million people, not only will you not get any customers, but those who are exposed to your lame product will spread the news about your crappy company to thousands of others.

How much does Instagram, Costoco, or Facebook budget for marketing and how much do they put towards creating a terrific product/service that provides a top-notch user experience?

Make your idea too complex – If my ex-partner had worked for Instagram he no doubt would have suggested that the company develop a mobile mini-printer to connect to your phone in order to print out pictures.

He would have figured that since you were sharing photos with your friends, why not add the ability to share recipes as well.  Then partnering with Groupon would have been suggested so that coupons could have been imbedded into each photo that was sent.

People say to me all the time, “I can’t believe Facebook is paying 1 billion dollars for a company that lets you share mobile photos.”  But they are missing the point.  It is not about the dollar amount Instagram is being valued at, it’s the fact that they took a very simple and focused model and did it better than anybody else out there did.

Your idea doesn’t have to be complex to add value, it just has to be good.

Create your idea in a vacuum – Every Monday morning my ex-partner would bound into the office with a whole batch of new ideas; and there was a specific reason for this.  Over the weekend he would be surrounded by a sycophantic group of buddies who, as he was picking up their bar tabs and paying for their meals, would reinforce every idea he would come up with as “brilliant.”

The fact that none of these people worked at our company, understood our business model or customer base, nor had any practical life or work experience didn’t seem to matter to him.  His ideas would continue to germinate in this isolationist environment, with no reasoned or intelligent critique or counter balance, until he had married himself to them so completely he couldn’t back away from them.

One Monday he told me about his idea of manufacturing pool tables, but in different shapes; like stars or in the outline of the United States.  I tried to ask how this would work.  Since you wouldn’t really be able to use them to play pool, why not just create them as tables, you know, without the pockets?

He replied, “but they are pool tables.  It would be cool to make them in these shapes.”

Once again I tried to explain that yes, maybe the tables in those shapes would be cool, but by making them in those shapes, you couldn’t play pool on them.  And hence they weren’t really pool tables.

He told me, “You just don’t get it.”

Let customer demand drive every idea - This one may seem a little counter intuitive. How can your ideas work if they are not what your customers want? Obviously you have to create a product or service that there is a demand for, but you also have to know where to draw the line with that demand.

My ex-partner’s ideas wanted to be everything to everybody.  He wanted to create services and products that would cost us tremendously in terms of time, money, and man hours, but were asked for by only a few customers.

I have no doubt that there are some people out there that would like an Ipad to have a built-in bottle opener.  Others might want it to be able to float.  And others might want it to only be priced at $199.00.

Your ideas have to be “core” ideas that make sense to the largest amount of customers, and each “outlier” idea that you try to incorporate will take away from your bottom line success.

Think that the idea is most important – The alternative title to this post could have been “Ideas Without Execution Are Crap.”

I had twenty trade ideas on Wednesday, and I couldn’t execute on any of them, and thus they were worthless.  And that is that is what Instagram would be, worthless, if the founders could not execute.

Sure, in an abstract sense the process of coming up with ideas builds the mental framework to develop newer and better ideas in the future, but no matter how many great ideas you come up with, if you can’t execute on them, they will fail.

You need to brainstorm to find ideas, but all the brainstorming in the world without a strategy and an effective way to implement it will lead to nothing.

The best way to give your ideas a fighting chance is to know how to execute them, or failing that, know how to surround yourself with those that can.

So perhaps it is not ideas that I am upset with, after all, ideas are what this country was founded and built upon.  I suppose it is just the people that present ideas as if they are the end all, and be all that I have an issue with.  Those that think the mere fact that they have ideas entitles them to some special consideration.

My “idea” for them is to avoid these five pitfalls and maybe they will create the next Instagram.

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Bonus Idea

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Why not subscribe for free Via E-mail or Via RSS and follow me on StockTwits and Twitter.

bclund – The Radio Interview

Posted by Brian Lund in General Ramblings and tagged with , , ,

Last Friday the good folks over at Winning On Wall Street were kind enough to interview me about the bclund blog.

Below is my segment with host Marc Mandel:

 

 

 

 

Thanks again guys!

Check out Winning On Wall Street

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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).  Don’t forget to subscribe for free Via E-mail or Via RSS and follow me on StockTwits and Twitter.

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An Open Letter To Keith Olbermann

Posted by Brian Lund in General Ramblings and tagged with , , ,

Dear Keith,

My name is Brian Lund; you don’t know me, but we have a lot in common.  For example, you have (or had) a national TV show with a 5-year, $50 million dollar contract.  I write a blog and after running a Viagra banner ad for the last six months, got a check for $3.83 and a free trial pack.

So as one media personality to another, I am writing you to express my condolences for your loss.  I must have missed the news story, was it an airplane crash or some crazed gunman?  I can’t think of what else could have caused the death of your agent, your manager, your advisors, and all your image consultants at the same time.

I have to assume that is only reason you would have gone on The Late Show with David Letterman Wednesday night to try to explain how Current TV wronged you.  I’m sure that any of the recently deceased would have suggested that a conversation between two multi-millionaires, sitting in a television studio in midtown Manhattan is not the ideal venue to take that tact.

Keith, I want to help.  In your time of crisis I can help you overcome your tone deafness.  Let me be the guiding light to navigate the waters of public opinion so as to not look like such an ungrateful douche bag.

Here is how I can help.  Let’s take a look at this clip of your appearance starting at the 2:20 mark.

Letterman starts out by asking you…

I read in the paper the other day that you were upset with the transportation…..tell us your side of the story?

He is of course referencing the widely reported story that you were upset with your car service because the drivers “smelled” and “talked to you.”

….ah the story is that we changed car services a couple of times, uh and that I got rid of them; maybe there were eight different services.  The problem that is left out of that side of the story is (weak chuckle), that in at least one occasion, the car service stopped coming to get me because the bill wasn’t paid.

Yeah, so here is the thing Keith….let’s say that you are totally in the right.  I mean nobody likes to smell an unpleasant odor, and believe me, sometimes when my wife talks to me, I want to lose it too.

But see, this country is barely starting to come out of one of the worst economic times in the last 80 or so years.  It’s hard for most people who would be watching you to relate to what you had to endure.

Let me try to explain it in simpler terms.

Okay, you make $10 million a year for talking on TV and are frustrated because you can’t find a good car service……

….and a  large percentage of this country has been out of work for over a year, are at home watching TV, and have had their car repossessed.

It just comes across a little bit like you are an obnoxious pseudo-intellectual A-hole who is completely out of touch with the rest of the country.  Just a tiny bit.

My suggestion would have been something more like this.

…no, I didn’t have a problem with any of the drivers.  Believe me, it can’t be any fun schlepping an overpaid blowhard like me around.  These were all good guys, with an honest job, and I have a lot of respect for them…

Ta-daaa….!!!  Pretty easy huh?

So please, feel free to grasp my outstretched virtual hand, and accept my offer to help.  I will work for free, and all I ask is that you give bclund.com a shout out on your future cable access show.

If not, you can always subscribe to bclund.com Via E-mail or Via RSS and follow me on StockTwits and Twitter.

(Note: If you are new to my blog, I post about all sorts of things.  Sometimes it involves something extremely personal, like creating a 30K baby or my Monster Trades.  Other times it deals with hot ex-porn stars who trade stocks.  And sometimes it’s about how to avoid “suicide”.  But a good place to start is The Best of bclund.  If you like what you read, please tell a friend.  If you don’t, please tell two friends.)