On the surface, it seems like a strange idea: We become winners when we learn how to lose. It’s when we can’t accept losing that we hold onto trades long after they’ve gone against us. It’s when we can’t accept losing that we play small ball and never pursue meaningful rewards. It’s when we can’t accept losing that we become frustrated during drawdowns and lose our focus and discipline. It’s when we can accept losing
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Inflation: Making the Complex SimpleThe quarterback signals for the Y receiver in the trips formation to shift left toward the right tackle. At the same time, the running back moves to the quarterback’s right. The slot Z receiver runs a fake jet sweep and doubles back. The left tackle and guard are ready to pull to the right, and the center will counter to the left. A safety creeps toward the line and the Sam
Is hyperinflation a threat? While the discussion ebbed between a broken financial system and capitalism’s failure, the gist was hyperinflation was coming. The measure of money in the system, known as M2, is skyrocketing, which certainly supports his concern. Now, with the Biden administration adding another $1.9 trillion into the economy, those concerns have risen. In a recent Bloomberg interview, Larry Summers stated: “There is a chance that macroeconomic stimulus on a scale closer to
Since the election, and the ongoing roll out of Biden’s nominees for economic and policy teams, the dollar has been on a one-way streak lower… Source: Bloomberg The dollar is unchanged versus its fiat peers since Jan 2015… Source: Bloomberg And it appears the plunge in the dollar is being recognized by gold enthusiasts who bid the barbarous relic back above $1800, erasing last week’s end of month losses… Interestingly, after recent chatter of a
Since the equity market topped a few weeks ago, bears have been going around the room taking turns punching various assets in the face. It started with equities and moved into Bitcoin which was rejected at $12,000 and promptly collapsed into support around $10,500. Then it was oil’s turn, which three weeks ago broke down below $40 Brent Crude for the first time since May. The music finally stopped for copper, gold, silver and the euro. All of them got bushwhacked like
The primary reason why the global financial system is on the verge of daily collapse, and is only held together with monetary superglue and central bank prayers thanks to now constant intervention of central banks, is because of debt. And, as BofA’s Barnaby Martin succinctly puts it, much more debt is coming since “the legacy of the COVID shock is debt, debt and more debt.” In short: use even more debt to “fix” a debt
A fully financialized, totally debt and speculation-dependent economy is terminal once leverage and debt stop expanding exponentially. We all know the movie scene in which the character is wounded but dismisses it as no big deal, and then lurches into the closing sequence where we discover the wound was not inconsequential, it was mortal, and the character expires. That’s a fair depiction of the economy–both the U.S. and the global economy. The rapt audience is assured it’s
Many new to trading have the tendency to liquidate positions that show a small profit, yet they keep those positions that show a loss as are unwilling to take a loss, in hope that prices will rebound. Such a counter-intuitive strategy will result in small wins and large losses, but why do people still do it? The new science of behavioural finance psychology may offer an explanation. 1. Disposition Effect Investors are less willing to recognize
With racial prejudice, protests and riots arising from the murder of George Floyd, and attempts to maintain law and order grabbing headlines, I was asked, and feel a compelling need, to share my thoughts about what’s going on. So I will do that. However, at this time there are too many thoughts running through my mind for me to express adequately, so I beg your indulgence as I share them with you in a stream
Note: To make this an easier and shorter article to read, I tried to convey the most important points in simple language and bolded them, so you can get the gist of the whole thing in just a few minutes by focusing on what’s in bold. Past chapters from the series can be found here: Introduction, Chapter 1 and Chapter 2. Additionally, if you want a simple and entertaining 30-minute explanation of how what a lot of what I’m talking about
Trading principles correlate to everyday life. The odd thing is that 80-90% of traders fail. Trading draws primarily intellectuals (doctors, lawyers, engineers, etc.) who are usually successful in their field of expertise. They think the same set of tools that made them successful in their professional life is all that is needed but, ego dashed to a million pieces, they come, they see, and they fail. Trading principles are easy to understand but difficult to
A recession is an essential part of the business cycle. Among other things it culls the weaker businesses and redistributes capital and labor for better uses. It is painful but necessary and it ends as it began, as a function of a healthy economy. Depressions are not economic events; they are the result of exogenous forces such as wars or disease. Depressions are not a necessary culling but a byproduct of the savage destruction of
How can the Fed launch an “unlimited” monetary stimulus with congress approving a $2 trillion package and the dollar index remain strong? The answer lies in the rising global dollar shortage, and should be a lesson for monetary alchemists around the world. The $2 trillion stimulus package agreed by Congress is around 10% of GDP and, if we include the Fed borrowing facilities for working capital, it means $6 trillion in liquidity for consumers and
Big question while market hitting new highs is it possible to make a clear decision? First of all, let’s answer to the simple question what is ZAR and what affects it as currency? The South African Rand is the currency of South Africa. The most popular trade currency, South Africa Rand exchange rate is the USD to ZAR rate. This pair is one of the most famous in forex exotic segment. Over the past few years,
And there it is: for the first time since the financial crisis, the emini S&P future has hit the limit down band of -5%, something it failed to do even during the May 2010 flash crash. This means that no more trade are allowed below the limit down level until the market opens at 9:30 am ET (assuming it opens of course). Trades higher are still permitted, naturally, however that will probably not be a great comfort to
I will repeat my overarching perspective, which is that I don’t like to take bets on things that I don’t feel I have a big edge on, I don’t like to make any one bet really big, and I’d rather seek how to neutralize myself against big unknowns than how to bet on them. That applies to the coronavirus. Still, there’s no getting around having to figure out what this situation is likely to mean and
The US stock market continued its freefall last Friday. The Dow lost another 357 points to finish off the worst week since 2008. One would expect a save-haven like gold to thrive in the midst of the massive stock selloff, but it had a bad day on Friday as well crashing through the $1,600 mark and plummeting as low as $1,568. Gold rebounded Monday and was trading back above $1,600, but how do we make sense of its
It all seems so systematic, arranged, and orderly. Almost a direct proof of deism. Sixty seconds make a minute, 60 minutes make an hour, 24 hours make a day, and one day equals one complete rotation of the planet earth. Roughly every 30 days the moon orbits the earth – which is one month. Then every 12 months the earth orbits the sun – which is one year. So far so good, right? But here’s
One of my investment principles is: Identify the paradigm you’re in, examine if and how it is unsustainable, and visualize how the paradigm shift will transpire when that which is unsustainable stops. Over my roughly 50 years of being a global macro investor, I have observed there to be relatively long of periods (about 10 years) in which the markets and market relationships operate in a certain way (which I call “paradigms”) that most people
The market is now demanding almost 4 rate-cuts this year – a stunning example of the desperation for monetary policy mavens to save the world through easy money… and maintain the ‘buy the dip’ strategy that a generation of money managers has become conditioned to. Source: Bloomberg As former Dallas Fed’s Fisher noted yesterday: “Does The Fed really want to have a put every time the market gets nervous? …Coming off all-time highs, does it make