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7 Ways To Bring The Fight To The Markets

This past Saturday I found myself in a very unusual place; attending a MMA Championship fight. Unusual for me because a younger, more shot-nosed, pseudo-intellectually judgmental version of myself thought that the invention of cage fighting was a harbinger of the decay of the civilized world. Neanderthals participating in the modern version of gladiator fights, thrilling over-roided audiences, drunk on branded souvenir cups full of Miller Lite, was the vision I had in my mind of these affairs.  To think I would have ever paused to watch a match on TV, let alone attend one in person, was ludicrous. Yet there I was, with floor seats, not more than twenty feet away from the action, fascinated by what I saw, and ready to fully admit that my preconceived notions were not only pompous and arrogant, but 100% wrong.

The crowd was one of the most well-behaved I have ever seen, certainly a cut above the fans of the average rock band, and I spoke to many intelligent and insightful people during the course of the night, including my row mate who though big enough to break me over his knee, was more than happy to help this neophyte learn about some of the more esoteric aspects of the sport.   The pre and post fight interviews with the fighters showed that they were not only smart, but humble and articulate as well, and as I watched a series of undercard bouts leading up to the three title matches of the night, I began to see that my new favorite sport was much more complex than I had thought, and one that embodies some very interesting parallels with the markets.

In for a penny in for a pound

Reality rarely surpasses mythology, but the fighters I saw achieved that feat, having transformed themselves through thousands of disciplined hours at the gym into tremendous physical specimens; modern-day versions of Apollo and Zeus incarnate.  These guys are not hobbyists, floating in and out of the world of MMA when their time and schedule permits, it is their life.  Diet, nutrition, training, sparing, workouts, every aspect of their life that contributes to their success in the octagon is governed by an almost fanatical discipline.

This type of discipline would not be unfamiliar to a Paul Tudor Jones or Carl Icahn, market versions of the Greek Gods.  They have risen to a rarefied level of success by dedicating themselves to the process of learning about and mastering the markets.  This is a lesson for those that think they can participate in the markets in a casual and arms length way; being active in the markets takes focus, discipline, and most of all commitment.  If you fall short in any of those areas, its best to hand your hard-earned money over to someone who does this for a living.

Proximity defines the perspective

Upon entering the arena, the cage, though central to the scene, is almost of secondary importance to the spectacle unfolding all around you.  The fighters from this view seem to be involved in a frenetic, yet painless encounter, dwarfed and drowned out by the size and sound of the crowd.  As you get closer, all that changes.  Twenty feet from the action tells a different story, one where the punches and kicks cleanly landed have a voice and a consequence.  However there is another view in which even the minutiae of the contest shows it’s impact.

For most of the night, the well-known and respected MMA photographer Tracy Lee prowled the apron directly in front of me.  She was as close as you could be to the action without actually participating in it and her camera lens filled in the final gap, giving a perspective that is more intense, more immediate, and perhaps for some, more disturbing and harder to process, as you can see from the shot below;

Courtesy of Tracy Lee (@mstracylee)
Courtesy of Tracy Lee (@mstracylee)

In the markets your time frame defines your perspective, and finding the one that suites you best, giving you the most comfort and piece of mind, is crucial to being consistently successful.  Don’t be fooled into thinking that watching every tick gives you an edge.  There are plenty of people making money while standing at the back of the area.

Have a back-up plan

Mike Tyson is famous for saying, “Everyone has a plan ’till they get punched in the mouth,” a point I saw illustrated in very dramatic fashion.  In one match, a fighter started out aggressively, stalking his opponent around the ring.  It was obvious that his plan was to keep his foe on his heels, forcing him to make a mistake that he could then exploit to his benefit. But that suddenly changed when Mr. Fist met Mr. Mouth.  With one punch his plan blatantly failed, opening the door for a possible devastating beat-down.  However, instead of riding his orignal plan down to defeat, he moved to a back-up plan which involved reversing roles, allowing the other fighter to pursue him, while he shot jabs and kicks back. Eventually his foe wore himself down, and when the time was right he was able to resume his attack and win the bout.

Punches in the mouth in the markets come in the form of missed earnings, Fed minutes, FDA decisions, political events, economic reports, and terrorist attacks.  When they happen, knowing what do, what your alternative plan is, can help you to keep a cool head which minimizes damage and sets the stage to end up back on top.

Endurance is an undervalued asset

One of the things that struck me was how evenly most of the combatants measured up when it came to the “tale of the tape.”  Heights, weights, reaches, and builds of the fighters were remarkably similar in almost every one of the matches, and on the more elite cards it would be hard to imagine that there was much disparity in preparation or skill levels.  Thus the major determining factor between “winner” or “loser” seemed to be who had the combination of physical conditioning and mental toughness to last the full twenty-five minute bout. Those that started fast, failing to vanquish their opponent quickly, soon found themselves running out of steam, leading to critical lapses in strategy, opening the door for their rivals to capitalize on.

The ability to play the long game in the markets is not generally appreciated and one of the key reasons that most participants drop out after a short time.  Being able to stay in the game for an extended time, in order to take advantage of opportunities when they present themselves, requires an investing style that minimizes risk and can endure consistent minor losses.

Courtesy of Tracy Lee (@mstracylee)
Courtesy of Tracy Lee (@mstracylee)

Know when to tap-out

Nobody wants to lose. Each fighter spends endless hours training and preparing for their match, backed my multi-man teams, and numerous sponsors, so that when they walk into the octagon they are not only fighting for themselves, but for the hopes and hard work of everyone involved in their organization.  Yet even with that extended burden on their shoulders, they know that if they are caught in an untenable position by their adversary, they have to “tap out” or risk more serious injury.  They know that there is no shame in tapping out, and that it is just a respectable reaction to a bad situation that allows them to live to fight another day.

Sometimes we know the market has beat us.  We have hit our “uncle” point and taken our maximum allowable loss, and at that point tapping out is the only correct decision.  Why risk inflicting more damage on our P&L by staying in a losing position?  Just like with the fighter, get out, and live to fight another day.

When finished move on

After watching two guys beat the crap out of each other for five rounds I thought for sure that there would be no way that they could “turn it off” once the bell rang, the knock out was scored, or the decision rendered, but like most of my pre-conceived notions about this sport, I was wrong.  Flurries of vicious punches would end the moment the round bell rang, and gloves would be touched before going to their corners and resuming the contest in the next round.  And when the outcome was decided, no smack was talked, just sincere hugs and praise between the two guys that moments before were trying to bash each others heads in.  When it was over, it was time to move on.  What a concept.

Hanging on to the mental baggage attached to a loss, or even a win for that matter, provides no benefit. You can dissect a trade or investment to see what worked or what didn’t, but to gnash your teeth over a loss or laud yourself for a win goes against your best interest, which is clearing your head and approaching your next interaction in the market with a clear vision of what you want to accomplish and how you are going to do it.

The best fight is the one you don’t have

After the Main Event ended, as the crowd moved towards the parking lot, and the television crews wrapped up their equipment, there was one final bout.  It was the underest of undercards, with two up and coming but unknown fighters squaring off against each other, only for the benefit of their family and friends who still remained in the now house lit area.  It was a fight not so much of different skill levels as of different styles, and in fifty-three seconds it was over; with one of the combatants choking the other out without even breaking a sweat.  To say it was a “fight” would be a stretch, but to say it was a “win” was completely accurate.

A savage and bloody twenty-five minute match is what the fans, and the organizers, and the TV networks want to see, but despite the brutal romanticism attached to the winner, the goal of even the most hardcore participant is that fifty-three second win.  The fight without the fight.  One that conserves your energy, that gets you back into the gym first thing Monday morning, that gets you to your next payday quicker, and ultimately leaves you with a prettier face at the after-fight party.

Despite all the fighting metaphors in this post, the utmost goal of every market participant is to make money in the smoothest, easiest, and least confrontational way possible.  Fighting the markets, despite the stories it provides you for social interaction, is the worst possible way to try to make money.  Finding the style that works best with you personality while allowing you to benefit from the market’s moves is the ultimate win.

The Old Guard Doesn’t Get Social Media: A Case Study

Full disclosure; this post is going to be personal.  But then again, all the posts on this blog are personal so forget I said that.  Nevermind…no disclosure, but still, it’s personal.

One of the most frustrating things I experience as a father, friend, and human being in general is watching when someone I care about does something that I feel will cause them harm. Sometimes I’ve even felt that way about entities that I’m emotionally vested in like rock bands or TV shows.   In fact two of the most painful moments in my pre-teen life came when KISS went disco with their evil incarnate album Dynasty, and that unfortunate episode of Happy Days when “The Fonz” (literally) jumped the shark.  Even at that young age I remember thinking to myself,  “why are they doing something that is so blatantly self-destructive?”

The OC Register is my hometown newspaper, one that has been in existence for close to 100 years, and I love it due to the counterbalance it provides to its Big Brother to the north The Los Angeles Times. But like most dailies, it is going through interesting times.  The print media space is a tough place to be right now and some will say that it is a forgone conclusion that eventually it is going to end up taking a dirt nap.  I’ll let those brighter than me continue to debate that topic, but one thing I know for sure is that in a fight like this, when your survival is on the line, you want to make sure you are using best practices and taking advantage of all the tools at your disposal in order to emerge victorious.  And there is the rub.

My beloved paper does not seem to have any clue as to how to use social media, specifically Twitter, and is engaging in one of the most annoying and counter-productive usages of the platform; tweeting paywall links.  By this I mean when using a mobile device, clicking on a link in a tweet from their main Twitter account (@OCRegister) directs you to a page that looks like this;

Screenshot_2013-10-19-16-27-45

The first time I had this happen to me I involuntarily winced at the idea that a content company in this day and age could be so ignorant of how to use the most powerful tool for information dissemination since…..well, ever.  It was maddening to me so I proceeded to send them some “gentle” tweets commenting on their misstep, all of which were ignored (another mistake in the Twittervese, but a topic for a different post).  Eventually one of the staff writers jumped to their defense from his personal Twitter account, informing me that the paper was taking a “different” approach to monetizing their content by using a premium model, aka a paywall.  He seemed like a nice enough guy, but missed the point entirely.  I’m not even going to argue whether the paywall approach is the right strategy or not, but I know for a fact, Tweeting paywall links is a non-starter.

If your goal is to get the most eyeballs on your product, either to monetize through ad revenue or conversion to sales or subscriptions, Twitter can be a powerful tool in your arsenal, but only if you can get your tweets in front of enough people.  That is done by having interesting or engaging enough content from your Twitter account (original or curated) that it motivates followers, and ideally key followers, to re-tweet your content, thus perpetuating the distribution.  Where then is the motivation for anyone to re-tweet a paywall link.  You might as well re-tweet a dead link.  The process stops before it ever starts and what you end up doing is limiting your reach on the platform, which the numbers bear out.

Newspaper Daily Circulation Twitter Followers
Newsday 377,744 33,058
Houston Chronicle 360,251 64,835
Orange County Register 356,165 16,543
The Star-Ledger 340,778 34,367
Tampa Bay Times 340,260 30,012

But remember, I love the Register, so I was not just content to throw some virtual stones at them, I wanted to do something to help them.  Following up on a suggestion Josh Brown gave me at last year’s Stocktoberfest, I contacted the business news editor and offered to create content for them; and was summarily rejected.  Now I understand that to her I’m just some random person, with no Pulitzer Prize or journalistic history behind my name, but let me explain the offer I made, and why declining it without any discussion reveals an even larger ignorance of the power of social media.

As the paper has no specific active investing coverage on their website, I offered to provide that for them.  My pitch was based upon my personal experience trading markets as well as my interaction with literally hundreds of market participants each week through my blog, work, and the StockTwits community.  I also told the editor that my social reach and presence in the StockTwits community would help to distribute my content to a larger audience.  And as an example I tweeted this out.

Based on the re-tweets, this got in front of about 400K Twitter followers.  Not monumental, but decent, and an example of how many potential eyes I could bring the Register with my content.  I also offered to do a weekly Q&A with their online subscribers about the markets.  Interactivity, what a concept huh? And the topper was that I offered to do this all for free, at least initially, to see if the relationship between the them and I worked before formalizing it.  The reply I got was, “Thank you but we are not currently looking for new contributors.”  No reach out.  No conversation.  No “tell me more about how you think this might work.”  Just “No thanks!”  Someone with a specific expertise, an online and social media presence, offering content and interactivity for your audience, all for free, and you don’t even pick up the phone to have a chat?

And it makes perfect sense, because since all social media links for the OC Register end at a paywall, I would never tweet them and my followers would never click them anyway once they realized what was going on.  So lack of understanding of the social media model not only limits their distribution, but self-eliminates potential contributors who come from that space to begin with.  Brilliant!

Unfortunately my experience with the Register tells me that the hole is already dug and not only are they already standing in it, they are pulling the dirt onto themselves with both hands as fast as they can.

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.

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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). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

What It Looks Like To Crush It

You may never have heard of Vertical Horizon–supposedly they had some minor hits in the 90’s–but chances are you have heard of Neil Peart.  It is a very rare occurrence to find him recording with anyone outside of his two Canadian co-horts in Rush, but he is laying down the beat on some of VH’s songs off their upcoming album.  Check the video below for “Instamatic” (starting at the 1:55 mark) and tell me if at age 61 “The Professor” has lost even one stroke (…he hasn’t).  This is a crushing performance so make sure to TURN IT UP!

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 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). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Happy Birthday Wishes From Facebook

Recently I celebrated my birthday.  Happy Birthday to me!

I don’t much care for birthdays.  Doesn’t have anything to do with getting older, it’s just that they seem so contrived, unlike other celebrations that are more organic in nature, like Christmas, Thanksgiving, and National Secretaries Day.  Nowhere is this more apparent than on Facebook where people whom I haven’t interacted with since the day I signed up, and sometimes haven’t talked to in over twenty years, suddenly hit me up online to say “Happy B-day!”

This act in itself seems to reinforce how devoid it is of any true meaning.  In fact I would actually appreciate it more if they just wrote the following;

Hey, I know that other than my incessant requests of you to play Farmville with me, we haven’t touched base since high school, but this morning I was reminded by text, email, and pop-up notification that it was your birthday.  In honor of this special occasion I spent 5.7 seconds typing twelve characters (including spaces) on to your timeline before hitting “Post.”  Just so you know, I only do this for you and the other 1,067 “friends” of mine on Facebook.  Make it a great day!

Out of all the birthdays I have had so far, none strike me as having been very meaningful, but looking back, one does stand out above the rest in my mind.  It was my twenty-third birthday and I received seven phone calls, from seven different women, all before 9:00am, wishing me a happy birthday.  I also remember that all seven of them considered me a “friend,” which in reality made those well wishes as special as the ones I just got from Facebook.  Once again, I would have just preferred the honest approach;

Hi Brian, it’s hot-girl-you-will-never-sleep with.  I just wanted to call you up because I saw in my day planner that it is your birthday.  You are such a super nice guy, with a great personality, and I am so glad you are my friend.  Unfortunately, I have daddy-issues and will spend the next ten years squandering my youth and beauty chasing after emotionally distant and sociopathic men whom I feel need to be rescued.  Sometime in the future, after being tossed aside by one of those men, I will call you up on a Friday night to go out, and in the process get your hopes up about having a chance with me.  However I will spend the whole evening asking you what I did wrong in my relationship with “Clubber” and if you think getting a tattoo of him on my forehead will bring him back.

So normally my birthday is like every other day.  In fact so much so that I can’t remember ever having taken the day off, but this year I thought I might do something different and give it a try.  Turn off my phone.  Sleep in.  Have a quiet breakfast all by myself.  Shower with the door open.  Wear sandals and slippers all day.  Maybe get caught up on some stuff around the house.  Maybe not.  Play the drums, go for a walk, read a book, or watch all five seasons of Get Smart on DVD.  It’s my day after all, right?

I was all set to indulge in my day of narcissistic laziness when my wife called out from the other room.

“Honey, can you take a look at this,” she said, pointing to my youngest child’s eye.

“What am I looking at?” I asked.

“His eye.  Can’t you see it?”

“No, what is it?”

“Look!” she said, pointing so close to his eyeball I thought she might scratch it.

“Cataract?” I said.

“No, he has pinkeye.”

BOOM..!!!

Pinkeye–The holy grail of youthful illnesses.  Kids pray that they will get pinkeye.  It has all the benefits of other sicknesses–not having to go to school–with none of the downside like sore throat, fever, or nausea.  On top of that, they don’t have to take any gross tasting medicine and can eat whatever the hell they want.  It’s so sweet.

Trust me, if adults were able to get out of work and still carry on their normal activities just by getting a little pinkeye, grown men would be rubbing all sorts of crap into their eyes on a regular basis.  You would see them jamming their heads, eyes wide open, into trash cans, medical waste containers, and litter boxes, just so they could take Friday off and catch a quick 18 holes down at the local course.

The math that was facing me was undeniable.  If we pushed things and sent him to school, the teacher might catch it, and send him home, requiring a trip to the doctor and a two-day waiting period before they would take him back.  That equaled having him stay at home for three days, necessitating either my wife or I taking off work during that time.  On the other hand, if I just bit the bullet and took him to the doctor right away, we could probably get a round of drops in his eye before the next morning, and with any luck it would be white enough to pass at school the following day.

And thus that is how I came to spend the first day of my forty-sixth year of life building Angry Bird towers, eating peanut butter sandwiches with milk on the floor, and taking a nap at 11:30am on a Monday.  And as I think back on it I realize that it had more meaning than all the other forty-five birthdays combined.

Divorce Facebook Style (bclund)

Facebook Is The New Dope (bclund)

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.

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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). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

The One 9/11 Documentary You Should Watch Today

Every year since 9/11, on the anniversary of that tragic day, I take a little over an hour and watch the documentary “9/11: The Falling Man.”

This is a non-politicized, non-wacky conspiracy theory movie about the search for the identity of one lone victim of 9/11 who threw himself out of the towers, rather than burn to death, and was photographed as he fell.

You should watch it too.

Watch “9/11: The Falling Man (via You Tube)

It All Ends Badly

A lot of things in life end badly.  They just do.

First trips to Vegas.  Housing bubbles.  Crab and chili omelets (trust me on this one).  And this market.

This market is very forgiving.  What I mean by this is that for the most part timing and stock selection have been irrelevant in the current environment.  Sure, if you want to maximize your return and out perform the indexes you still have to do your homework, but coming to school unprepared will not be punished in the way that it traditionally has been. And this is not how markets are meant to behave.

Markets are designed to hurt you; and hurt you bad.  To seek out those that come to the game the least prepared, with the least flexibility, and with the most emotions, and then to beat their asses so bad that not only do they swear off equites for a generation, but that they become anti-proselytes for participation in the markets.  And that’s just not happening right now.

This market, which I have dubbed the “Gift Market,” just keeps giving gifts, no matter what you do.

Buy every dip, get a gift.  Buy without regard to technicals, get a gift.  Buy without any risk based methodology, get a friggin’ gift.  The gift is that everything keeps moving up.

Getting the desired results is too easy right now and it is lulling a lot of people into thinking that they know what they are doing.  It’s like going out on the town to get loose, and drinking lemon drops all night.  They taste great and go down so smooth, which relaxes you and gives you a false sense of being in control.  You feel like you could just drink them all night long. And it’s all good until it isn’t; when you find yourself hugging the porcelain God, as the last thought that goes through your head before passing out on the linoleum floor is “I am going to be so hung over tomorrow.”

There are a lot of market hangovers coming  in the future.  When that future is is anybody’s guess; six months, a year, two years?  Nobody really knows, and the debate as to when it will happen or why it will or won’t happen is just noise.  History has shown us time and time again that it will happen, and the only discussion worth having about it is the one that starts with “am I at risk,” and ends with “how can I eliminate that risk.”

I’m the dick that tells you that you are at risk.  I seem like a dick because that is a downer message, and right now everything is so rosy.  Markets always go up, to the sky in fact.  Fortunes can be made with little effort, retirements will come early, jobs will be quit to ride this wonderous bull market to its zenith.  In fact, this isn’t even a bull market….it’s a magical unicorn market. No, a Pegasus market; that’s the one with wings, right?  Wait, wait, this is a winged unicorn Pegasus market, jetting to nirvana as rainbows shoot out of its ass.

But at some point My Little Pony is going to come crashing down to Earth, breaking it’s back in the process.  And as it lies convulsing in its death throes, with flocks of whatever those flying things in Pitch Black were, waiting to strip it to the bones, you are going to wonder what hit you.  And no Vin Diesel looking mother fucker is going to save you.

But fear not, you still have time to prepare for this inevitability.  Push my dickness aside for just a moment and listen the message I am going to tell you.

You have to use objective criteria to get you into the positions you take, but more importantly, you have to use that same objective criteria to know why and when to get out of positions. Put plainly, make sure you are trading and/or investing with a methodology.

It will be a bit painful at times in this market, using an objective methodology.  It will often take you out positions that will then reverse and move up.  Your friends who are investing by the seat of their pants will laugh at you, flaunting the fact that they are still in their positions and that they are “killing it.”  Pay them no mind, because he who laughs last, laughs loudest bitches.

When this ride ends, and believe me, it will end, and badly, your methodology will take you out of the market, preserving the lion’s share of your gains.  You pals will continue to invest, buying more on the way down, waiting for the market to give them yet another gift.  And when that gift is not forthcoming they will blow their accounts up.

For more on killing it in the market and then losing everything because you don’t have a methodology, read I’m A Lawyer, No, I’m A Trader, Damn, I’m A Lawyer Again and The Importance Of A Trading Method, Or What Not To Do In Vegas After Getting Shitty Drunk.

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 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). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

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.

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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.

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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). 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?

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?”

Twitch…!!!

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.

 

Why We Trade

I have met a lot of traders over the years.  Retail traders, prop traders, institutional traders, discretionary traders, all sorts, both in person and via social media.  And one thing that is consistent among them all is that they are mutants.  Not to get too Bill Murray-esque here but there is something very, very wrong with them.  I, of course, count myself in this retardedly beautiful group.

Just our choice of avocation is a huge red flag that should warn those close to us that we may have some latent personality disorders.  Even most postal workers would look at us and say “Man, those guys have issues!”

And why shouldn’t they, after all we didn’t decide to do something brave like being a fireman or police officer.  We didn’t choose a socially respected profession like that of a doctor or a lawyer.  Nor are our endeavors holy and devout like those of the non-pedophilic contingent of the priesthood.

Instead we chose to do something that is so sickly stupid that if it didn’t already exist a team of Hollywood writers couldn’t dream it up.  Something that everybody is fascinated by but nobody really understands.  Something that drives us to curse at our monitors, slam innocent computer mice onto desks, and “Bruce Lee” keyboards over our knees.  Well…..of course not you Mister Shaolin-Monk-Zen-Calm-trader-guy who is reading this and shaking his head in disgust…..but all of the rest of us have.

And the highs and lows associated with trading are epic.  I’ve always wanted to do an experiment where I gathered up a baker’s dozen or so of crack addicts and heroin junkies, brought them onto the trading floor of some large brokerage, and then let them watch for a few hours.  I am totally convinced that if at the end of the day an offer was made to pay for their detox and fund them up with million dollar trading accounts they would say “are you crazy?  I mean I have some highs and lows in my life, but those guys are nuts!  I wouldn’t do that for ten million dollars!  Now give me back my crack pipe and let me return to my relatively normal life.”

In addition, nothing about trading is natural or intuitive.  Our DNA rejects the activity, even when in our purest and most naive state of mind.  I remember my daughter wandering into my office one day during trading hours and innocently inquiring about what I was doing.  It struck me as opportunity to see how someone with a mentally “clean slate,” –free from the biases and preconceived notions that years of watching CNBC, reading 10-Q’s, and listening to analysts brings–would interpret what was happening on the screens.

I showed her the pretty colors of the charts, and the “candles,” and how they moved up and down, changing between red and green as the day went on.

“Which color do we like best daddy?” she said.

“We like green sweetie.  Green is what we want to see.  That’s what will make us money today.”

“Yeah…..!!!  Green…!!!  We like green,” she yelled, exuding the type of joy reserved for those who never have experienced a margin call.

I soon found myself in one of those quintessential daddy-daughter moments, straight out of a Norman Rockwell painting.  Standing there in front of my quad-monitor trading desk we cheered in unison with every tick…

“WE WANT GREEN…!!!  WE WANT GREEN…!!! WE WANT GREEN….!!!”

The trading Gods were kind that day and filled the screens with green.  We celebrated in the style of the ancients by the combining of chocolate with milk.  We danced and sang our pagan victory song, cups help held high in the air, my office chair substituting for the columns of Stonehenge.  And it was good.

The next day she returned to my office, excited and eager to repeat the fun of the previous day.

“Yeah daddy!” she said.  “We have so much green on the screens today.  Yeah….yeah……yeah….!!!”

“No honey,” I replied.  “We don’t want green today, we want red.  Lot’s and lot’s of red.”

“But, but….I thought we liked green?” she said.

“Not today sweetie.  Daddy has a ‘short’ position today.  We make money when we see red, not green.”

With that, a confused and hurt look came across her little face, as if I had told her that Santa Claus, The Tooth Fairy, and The Great Pumpkin were all make believe.  At the tender age of four the market had already scarred her.  She has never traded since.

So with all the market’s anti-social characteristics, why then do we do it?  Why do we trade?

Life is a series of random events and our nature drives us to try to make sense of those events, to attempt to control them, and ultimately to find some sort of meaning in them.  Man has done this in one form or another since first walking upright.   In the markets we watch the randomness and try to find order.  We look for things that we can recognize and understand like patterns, and then try to exploit them to show our mastery and control.  The “meaning” we attempt to extract is money.

On the surface we convince ourselves that we trade for a number of reasons; to gain wealth, for the challenge, or for the freedom it brings, and though all these things may factor in to some extent, there are certainly other activities we could have chosen to pursue that would fit the bill.  But in fact, the real reason we trade is to experience that more concentrated, more intense, micro version of the larger quest for the meaning of life.  Or to put it another way, if everyday living is the coffee of life, then trading is the double espresso.

And as in life, we take a lot of swings, and there are a lot of misses.  There are times when we get flashes of insight and think that we have attained some permanent wisdom, only to find out in an instant that we are not as wise as we thought we were.   We try to learn from our mistakes, to keep moving forward, always remembering that tomorrow is a new day.  That with each opening bell we are washed clean again, with new opportunities to take and new challenges to face.  Ultimately we don’t know how long our journey will last or what the final outcome will be, but as long as there are markets to trade we will continue to strive for the day when we finally “get it right.”  At least until tomorrow.

If you want to learn more about 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.

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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). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

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About Brian Lund

About Brian Lund

Great father. Good friend. Decent writer. Lacking husband. Solid drummer. Sometimes funny. Often A-hole. Terrible poker player. Too smart. Punk rock. Work in an ice cream shop.

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