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Paul Tudor Jones’ 22 Trading Principles

  
  Education
  1. It is possible to see that a market is dramatically overbought and prepare for, and then capture, huge gains after the sell off.
  2. Risk small amounts to make big profits.
  3. Bet against times when numerous leaders must agree.
  4. Long hours and a strong work ethic are keys to being a successful trader.
  5. While it is good to trade any market that will turn a profit, specializing in a market can lead to great success.
  6. The markets go down faster than they go up.
  7. If the market will not go down during bad news, it will likely go higher.
  8. The stock market moves in patterns and in cycles. Past price patterns repeat themselves due to human emotions.
  9. Many times traders think a big position order size means that a whale knows something, most times they do not. 
  10. It is okay to skip a trade if you can’t get your entry price.
  11. A momentum move does not just stop, it takes time to roll over.
  12. It is possible to trade successfully by gaming the actions of other traders.
  13. Be aggressive at high probability moments.
  14. Always stay in control of your trading and manage risk.
  15. Focus on risk management as the #1 priority in trading.
  16. Having the right mindset during a big loss that it is just temporary, is the key to coming back and being successful.
  17. Letting profits run is sometimes a great plan.
  18. Being long at all time highs in the indexes is a great strategy.
  19. Great money managers trade with passion.
  20. Even Market Wizards have doubts about winning when entering a trade. 
  21. When the top in a market is reached,  there is a lot of money to be  made shorting as panic selling sets in. 
  22. Guys from Tennessee can trade!

Viewers Tuning Out CNBC

  
  Education
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Competition is heating up in the business news segment. The May Nielsen numbers suggest that CNBC’s ratings are being squeezed by the likes of Fox Business Network.

The substantial stock market sell off in May, which was the worst in nearly 50 years, may also have contributed to lower numbers at CNBC. According to Nielsen, CNBC lost 14% of its coveted 25-54 advertising demographic during the business day (5a-7p) versus last year. CNBC’s post-market show Fast Money is down a whopping 17% year over year.

Making the situation more interesting is the fact that CNBC has spent a considerable amount of money bringing in new talent in the wake of Charlie Gasparino’s defection to Fox Business. CNBC also lost Dylan Ratigan to sister network, MSNBC. CNBC has added commentators such as John Carney, Amanda Drury, and Kate Kelly in recent months. Herb Greenberg also just debuted yesterday as CNBC’s Senior Stock Commentator.

CNBC has long been criticized for being too easy on corporate management and for doing too much cheerleading, especially in the go-go years. Now that viewers have a wider selection of business channels to consider, it would appear as if CNBC must step up its game in order to retain its position.

It does not appear as if the network is taking the ratings slump sitting down, however. CNBC has added new shows such as “Strategy Session,” which has yet to debut, and “Options Action.” It will be very interesting to see how this competition between the big three business networks plays out, and how each evolves going forward.

From a viewer’s perspective this seems like a very good development, because it will force Bloomberg, FBN, and CNBC to continually improve and innovate their coverage, whereas in the old days, complacency may have been a tempting alternative.

 

George Soros :Exposed

  
Education, Life, Video

Glenn Beck shared some “scary” “secrets” about George Soros. Though Beck did not do the entire thing with the lights off and a flashlight under his chin, he might as well have. That’s how pants-pissingly scary it was. For instance– did you know Soros is just a stage name? Jorge was really born “George Schwartz.” And that’s not all.

Beck also informs us that Soros started the Quantum fund “to attack currencies across the world,” that “he’s waged a war against capitalism,” and that his next target? “Is us. America.” Beck ends on terrifyingly ominous note: “There’s a lot more meat here I need you to do your homework on.”

7 Things Traders Must Manage -To get Success in Trading

  
  Education
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1. Traders must be great risk managers.7numbers
“At the end of the day, the most important thing is how good are you at risk control.” -Paul Tudor Jones
2. Traders must manage their own stress.
 Trade position sizes that keep your stress level manageable, if you can’t talk calmly to someone while trading you are trading too big.
3. Traders have to be able to manger their emotions, we have to trade our plan not our greed or fear
“There is nothing more important than your emotional balance.” – Jesse Livermore
4. Traders must manage their ego and need to be right.
“As a trader, you have to decide what is more important—being right or making money—because the two are not always compatible or consistent with one another.” -Mark Douglas
5. Traders must manage entries. When the time is right take the entry. Don’t wait until it is too late and chase, and don’t get in prematurely before the actual signal, also don’t get carried away and be to aggressive trade the right size.
6. Traders must manage the exit. Whatever our exit strategy is we have to take it. Sell at your target, exit into an exhaustion gap, or take the trailing stop, whatever the plan is follow it.
7. We have to manage our thoughts. We have to focus on what is happening right now. Mentally time traveling back into the past and reliving our losses has no value, we have to learn from  our lessons and move forward. Mentally time traveling into the future and believing that big profits await if we take a huge position size and go for it, may be the most dangerous mind set of all. We must manage our mind and focus it on following a tested trading plan.

A Traders number 1 JOB is…..

  
  Education
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A trader’s number one job is NOT:

  1. Stock Picking
  2. Chart Reading
  3. Trend Following
  4. Entries
  5. Exits
  6. Understanding the market environment
  7. Managing Emotions
  8. Managing Ego
  9. A Robust Method
  10. Or even Discipline

A traders #1 job is to be a great risk manager. (more…)

The Four Main Parts of James Chanos’ China Argument

  
Analysis, Economy, Education, Video
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Note: The commentary that follows has been taken from Jim Chanos’ speech to a group of investors, on the subject of China’s economy.  The video of this speech can be viewed below.

 

 

 

 

 

 



Hedge fund manager Jim Chanos has generated some controversy over the past few months because he has had the temerity to argue that China is experiencing an asset bubble.  Skeptics argue that he misunderstands the nature of the Chinese economy.

There are four main parts to his argument:

•    GDP drives economic activity.
•    Local party bosses have an incentive to game the system
•    Real estate speculation
•    Overbuilding of industrial and commercial real estate

Let’s take these arguments one by one.

1) GDP drives economic activity

In most industrialized countries, GDP is what Chanos calls a residual: it is the result of economic activity.  But in China, GDP growth is seen as sacrosanct, and Beijing sets a GDP growth target every year.  Local party bosses act to ensure that they meet this target.

2) Local party bosses have an incentive to game the system

Since GDP growth is explicitly stated as a public policy, local political bosses have an incentive to make sure that they contribute to the country’s efforts to meet the GDP target growth rate.  In practice, this means that local municipalities can, for example, meet revenue targets by selling off land to developers.  Party bosses have an incentive to sell as much land as possible, regardless of whether doing so creates too much supply.

3) Real estate speculation

One of the main arguments advanced against Chanos’ China thesis is that real estate speculators in China have to have more equity than do their American counterparts. The implication is that China won’t suffer from a meltdown of real estate.  But this argument, while possibly correct, misses Chanos’ larger point.  Speculators in Beijing buy up multiple apartments, seeing them as a store of value, akin to commodities like gold or palladium.

Implicit in this practice is the notion that there is a greater fool down the line.  Treating real estate as a store of value, rather than an investment that produces real or imputed monthly cash flows in the form of rent defies economic logic. (more…)

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