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The Great Trades Are Obvious

The great trades don’t require predictions. The Soros trade of going short the pound in 1992 was based on something that had already happened — an ongoing deep recession that made it inevitable that the U.K. would not maintain the high interest rates required by remaining in the E.R.M. Afterward, everyone said, “That was incredibly obvious.”

“Most of the great trades are incredibly obvious. It was the same in late 2007. In my mind, it was clear that the financial system was imploding and that most market participants hadn’t noticed.”

– Colm O’ Shea, Hedge Fund Market Wizards

Do you agree that the great trades are obvious? Why do so many market participants miss what is unfolding right before their eyes?

What are the elements in your process for observing, keeping tabs on, and exploiting major macro trends?