Why A Clear Understanding of the Markets Will Keep You From Taking Bad Trades
When these giant funds do there analysis they take into account a myriad of variables to make their decision on why something might or might not happen in a particular financial instrument. Far too complicated for me to state here it allows them to stay unbiased. You have to learn to be unbiased too. Not because you don't want to make good decisions but rather because you don't want your own view to cloud what is really going on.
I have long said that central banks control the markets at the moment and it should be no surprise that I have stuck to this now known fact for a long time. The reason why hedge funds have performed so poorly over the past ten years is simply because there is no volatility for them to take their longer term outlook. In other words by the time they have entered into a trade the market is already ready to turn in the opposite direction.
Bernanke is the most significant figure to state quite clearly that volatility is NOT a good thing. So that being said central bank policy is to keep the markets from becoming too volatile. With recent jargon coming out from the St. Louis Fed on how they are going to unwind their huge short in volatility it becomes even more clear of what has been happening.
All this talk of the markets unwinding and crashes occurring along with commodities rising and a huge inflationary shock is nothing but that. Talk.
They work in tandem with their big bank buddies all over the world to keep the markets from doing anything too radical. If you look at the price of corn, wheat, soya beans, sugar and a host of other food staples you see clearly that the CRB index regardless of what it does is not going to spike food staples any time soon. These markets remain mired in very tight sideways motions. Nothing at all would from what I see would allow me any time soon to think that this will not be the norm for a long time.
Of course that has not stopped price increases from happening in the grocery stores and in some other areas where tax revenues can be reaped. If basic income is rising then it works. If basic income is not rising it won't work. Both the Dollar and treasuries should gain a bit of momentum now in the opposite direction with good stats today coming out of NFP. I have been playing them both to the upside for quite some time now. Making good money on golds sell off and the Dollars rise with shorting the EURO and GBP along with preparing longs in treasuries. Treasuries have been off and I have taken a couple of losses but I think they are ready to turn up or down now depending on if you are trading CFD's or futures.
These people that are relying on the past forty years of data to make decisions are going to have to change their thought patterns. You would think they would get it by now but no such luck. This is why ultra smart people generally don't make good traders. They have a very hard time admitting when they are incorrect even when clear data is staring them in the face.
So I will harp on the same topics that I have been harping on for a while. Play sideways markets as they are. There is a bottom range and a top range. They do not move or turn very quickly because of the low volatility and prepare to hold for six months or longer.
Cheers!
I have long said that central banks control the markets at the moment and it should be no surprise that I have stuck to this now known fact for a long time. The reason why hedge funds have performed so poorly over the past ten years is simply because there is no volatility for them to take their longer term outlook. In other words by the time they have entered into a trade the market is already ready to turn in the opposite direction.
Bernanke is the most significant figure to state quite clearly that volatility is NOT a good thing. So that being said central bank policy is to keep the markets from becoming too volatile. With recent jargon coming out from the St. Louis Fed on how they are going to unwind their huge short in volatility it becomes even more clear of what has been happening.
All this talk of the markets unwinding and crashes occurring along with commodities rising and a huge inflationary shock is nothing but that. Talk.
They work in tandem with their big bank buddies all over the world to keep the markets from doing anything too radical. If you look at the price of corn, wheat, soya beans, sugar and a host of other food staples you see clearly that the CRB index regardless of what it does is not going to spike food staples any time soon. These markets remain mired in very tight sideways motions. Nothing at all would from what I see would allow me any time soon to think that this will not be the norm for a long time.
Of course that has not stopped price increases from happening in the grocery stores and in some other areas where tax revenues can be reaped. If basic income is rising then it works. If basic income is not rising it won't work. Both the Dollar and treasuries should gain a bit of momentum now in the opposite direction with good stats today coming out of NFP. I have been playing them both to the upside for quite some time now. Making good money on golds sell off and the Dollars rise with shorting the EURO and GBP along with preparing longs in treasuries. Treasuries have been off and I have taken a couple of losses but I think they are ready to turn up or down now depending on if you are trading CFD's or futures.
These people that are relying on the past forty years of data to make decisions are going to have to change their thought patterns. You would think they would get it by now but no such luck. This is why ultra smart people generally don't make good traders. They have a very hard time admitting when they are incorrect even when clear data is staring them in the face.
So I will harp on the same topics that I have been harping on for a while. Play sideways markets as they are. There is a bottom range and a top range. They do not move or turn very quickly because of the low volatility and prepare to hold for six months or longer.
Cheers!
No comments:
Post a Comment