Archives of “January 2, 2019” day

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HUMAN MISJUDGMENT- 22 Points

  
  Education
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1.  Under-recognition of the power of what psychologists call ‘reinforcement’ and economists call ‘incentives.’

2. Simple psychological denial.

3. Incentive-cause bias, both in one’s own mind and that of ones trusted advisor, where it creates what economists call ‘agency costs.’

4. This is a superpower in error-causing psychological tendency: bias from consistency and commitment tendency, including the tendency to avoid or promptly resolve cognitive dissonance. Includes the self-confirmation tendency of all conclusions, particularly expressed conclusions, and with a special persistence for conclusions that are hard-won.

5. Bias from Pavlovian association, misconstruing past correlation as a reliable basis for decision-making.

6. Bias from reciprocation tendency, including the tendency of one on a roll to act as other persons expect.

7.  Now this is a lollapalooza, and Henry Kaufman wisely talked about this: bias from over-influence by social proof — that is, the conclusions of others, particularly under conditions of natural uncertainty and stress. (more…)

Marty Schwartz- Trading Quotes

  
  Education
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The marketplace is an arena and other traders are the adversaries.

I turned from a loser to a winner when I was able to separate my ego needs from making money. When I was able to accept being wrong. Before that, admitting I was wrong was more upsetting than losing the money.

When I became a winner I went from ‘I figured it out, therefore it can’t be wrong’ to ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.’

By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what!

My attitude is: Never risk your family’s security.

Whenever you get hit, you are very upset emotionally. Most traders try to make it back immediately; they try to play bigger. Whenever you try to get all your losses back at once, you are most often doomed to fail.

After a devastating loss, I always play very small and try to get black ink, black ink. It’s not how much money I make, but just getting my rhythm and confidence back.

Before taking a position always know the amount you are willing to lose.

The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing.

I always take my losses quickly. That is probably the key to my success.

The best advice I can give to the ordinary guy trying to become a better trader is Learn to take losses. The most important thing in making money is not letting your losses get out of hand.

8 Words For Traders

  
  Education
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1. CONFIDENCE: absolutely essential in an environment that feeds on emotional    instability.
2. TRUST: if you cannot trust yourself who can you trust? Trust your rules, trust your edge, trust that you will do the right thing-no matter what!
3. FOCUS: you will never learn all there is to learn about the market.  Push your ego aside and focus on one market and one edge.
4.  ACCEPTANCE:  you have to accept what the market is willing to give or you will give the market what it wants to take.
5.  RESPONSIBILITY: you and you alone are responsible for the money you lose and the money you make.  Take the credit for both.  Either way you deserve it.
6.  PATIENCE:  The market is not the place to learn patience, it is the place to practice it.
7.  RULES:  the market has no rules and no one else will do it for you. Develop rules for entering AND exiting trades before trades are made.
8.  RESPECT:  you have to respect the market for what it is not for what you want it to be.  The market has a logic all its own.  You may not like it but you have to accept it.

Who Owns Greek Debt And When Is It Due?

  
Analysis, Education
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Funding needs and repayment schedules for Greek sovereign debt
Summary:

  • Greece owes EUR 315bn.
  • There are three large blocks of officially held debt still outstanding: (1) the Greek loan facility (EUR 53bn, at EURIBOR+50bp, which matures from 2027 onwards); (2) EFSF / ESM loans (EUR 142bn disbursed, EUR 2bn committed; at EFSF funding plus small administrative fee, maturing in 30 years or after); and (3) IMF loans (EUR 20bn, maturing currently).
  • There is also EUR 66bn of marketable debt outstanding, of which EUR 27bn is held by the ECB as a result of purchases under the Securities Markets Programme (SMP). There are EUR 15bn of outstanding Treasury bills. The remaining obligations are government and government-backed loans.
  • Between 2016 and 2022, total debt servicing costs (both redemptions and interest payments) are small – between EUR 6 and EUR 10 bn.
  • In 2015 financing requirements are more substantial. Core funding needs are about EUR 19bn. We have little information on available cash reserves.
  • Key upcoming maturities are: (a) bonds held by the ECB in July and August (Table 2); (b) IMF loans in February and March of around EUR 3.5bn (Table 3); and (c) Treasury bills (most of which will be rolled by domestic banks, but a small portion of which are held by foreigners with a likely failure to roll resulting in a drain on government cash reserves).
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