What makes someone want to write about markets? Where does the insatiable urge come from that forces oneself to the ritualistic collection, organization, & categorization of the ephemeral data points? What I’m getting at here is, of course, the ultimate question; “What is the point?”
The answer to the question is without a doubt unique for everyone. For me, the definitive answer is that I love the mental gymnastics of “the process”. Now, this “process” has changed as I’ve learned more about markets.
At first, I thought I would write an algorithm that would automate make decisions. it would be full of differential equations; “if” “then” f(x) statements, and just like that, “Viola” 20% YoY returns.
Mr. Muir’s piece, ‘A Better Way to Short the Bond Market‘ comes to mind:
Laughable in two regards; first, I don’t like brown suits. I want to be “on the Exchange Floor” (mentally projecting myself there if need be). I want to be shouting at Chicke ( Louis Miceli, a specialist on the AMEX Exchange), “How are the OCT 65 Mesa calls, Chickie?” He shouts back, cradling a phone underneath each oh his shoulder blades, “Three to a quarter, fifty up!”
The process I call, “WTF are the #’s Doing“, has been the most mentally stimulating and rewarding. And just like Martin ‘Buzzy” Schwartz’s mantra, “Three Bid for Ten, Three Bid for Ten, Three Bid for Ten”, which begins a favorite book of mine ‘Pit Bull: Lessons from Wall Street’s Champion Trader’ ; I like a John Nash psychophant, reciting where the market is constantly to myself, helps the learning process exponentially.
Don’t get me wrong books are great, my first true love but they leave you weighed, measured and found wanting. In the form of blown up accounts. Well, in my case my first “blown up account” is not a full Lehman event, with ZIOP Pharma is still trading at $2.72, even closing higher DoD.
Note to self: Never get a stock tip at a Beacon Hill Octogenarian Party where the theme was, of course, Hellenism and the host oscillates between a forced Brahmin accent and some unidentifiable twang
Because god forbid the recommendation falls out of bed in the proceeding, days, weeks, months, years, & approaching half a decade; the poor guy now feels obligated to give me the P.I.B on ZIOP everytime we pass on Charles Street. Most days passing each other coming to and from the public gardens so I usually can time the perfect amount of sympathetic nods, and ah & umms to duck him on Acron Street. Only to find him later on during the even three-sheets to the wind pitching some poor tourist trying to enjoy the local dive, The Sevens Beacon Hill Ale House.
In any case, Net, Net, Net, I’m counting it as a blown up account because of according to Paul Tudor Jones III,
Right on track. First time in my life I can say that wholeheartedly.
More to the process, “WTF are the #’s doing?” I found Risk Management become more apparent when I’m dialed in on my screens consisting of various dispersion tables, intraday volatility graphs along with there respective underlying’s charts set on scrolling tick range (used to help learn the Demark Indicators), OLHC bars with range std trendlines, Fibs, and Demark Indicators (Sequential & Combo).
Not losing money became much easier, relatively speaking, when I cut out the narrative of why X, Y,& Z should be heading toward their own dart-board price targets and just focused on my own back of the envelope VAR analysis. I really begin to tap into the feel or “pulse of the market” that has been described by market participants throughout the epochs of barter and trade.
If you’ll entertain this thought for a moment; it’s like your Averado de’ Medici sitting on your bench in 15th century Florence, Italy and your sole focus in your state of the art double-entry general ledger. Sitting day after day on your bench, collecting payments on various outstanding loans, and thinking to yourself, ” With the alchemy of compounding interest I will turn this bench into a Bank.”
I just want more; more Light.