Archives of “skepticism” tag
rssFed’s Beige Book: Economy expanded at slight-to-modest pace
Highlights of the Fed’s anecdotal economic summary:
- Businesses see expansion continuing, many have cut outlook
- Business activity varied across the country
- Districts in south and west were more upbeat that midwest and great plains
- Spending was solid on balance, housing market conditions changed little
- Some districts suggested persistent trade tensions and slower global growth weighed on activity; early impact of GM strike was limited
- Most expect economic expansion to continue; however many lowered their outlooks for growth in coming 6-12 months
- A number of manufacturers reduced headcount because orders were soft, some cut hours rather than reduce staff
- Wages rose moderately in most districts, with upwards pressure noted for lower-skill workers
- Employers continued to use bonuses and benefits to attract and retain talent
- Most districts characterized the recent pace of prices increases as modest
- Retailers and manufacturers noted rising input costs
- Shipping rates remained lower than they were earlier in the year because of excess capacity
US President Trump says Congress have reached a deal on debt limit suspension
As if there was ever going to be any doubt the US would once again add to its gargantuan deficit
- debt limit ratcheted higher
- for the coming two years

My Trading Lessons for Traders
Read….When ever you are Free.
Prepare, be confident & be decisive
Follow my trading rules without exception
Plan every trade with profit exit, stop exit and risk/reward ranking
Trade only when you have time AND you have an edge
Formulate and write down a trading/investing plan
Exit a position at my stops and not “hope” it will recover tomorrow
Trade the market I actually see, not the one I think I will see
Focus more on what’s actually happening rather than what I wish would happen
Learn to prevent my skepticism and opinion over the economy from keeping me from making good trades
Have a plan every day to trade the market and to not let my opinions of the market interfere with my trading
Concentrate on rule based trade management and not the outcome of the specific trade
Follow price action as opposed to listening to the fundamental “experts”
Listen to the market signal rather than market noise
Don’t be afraid of making mistakes
To pay more attention to technical signals to determine purchase/sell points rather than emotion & personal reasoning
Have more confidence in my trade ideas and believe in myself more often
Do not have a bias but instead let the charts be the guide
Have the discipline and fortitude to stick to my trade plans
To improve my organization of stock lists and automation of stock alerts
Do not over-leverage
Select only the most favorable setups
Try not to over analyze every potential trade
Lose less when I am wrong
Spend less time reading words and more time reading charts
Stick with winners and sell the losers
Allocate 2-3 hours each day & 5 hours every weekend to finding attractive setups
Increase position size and be in the market more (more…)
Trading Wisdom
Markets are highly random and are very, very close to being efficient.
If you are a new trader, trading is probably harder than you think it can be. If you’ve been trading a while, you know this. Financial markets are one of the most competitive environments in the modern world. New information is quickly processed and incorporated into prices. This means that you cannot outsmart the market consistently. You cannot invest based on what you think makes sense or should happen because you are up against investors with superior access to information, knowledge, experience, capital and other resources. Most of the time, markets move in a more or less random fashion; you can’t make money if market movements are random. (“Efficient”, in this context, is an academic term that basically means that all available information is reflected in prices.)
It is impossible to make money trading without an edge.
There are many ways to create an edge in the markets, but one this is true—it is very, very hard to do so. Most things that people say work in the market do not actually work. Treat claims of success and performance with healthy skepticism. I can tell you, based on my experience of nearly twenty years as a trader, most people who say they are making substantial profits are not. This is a very hard business.
Every edge we have is driven by an imbalance of buying and selling pressure.
The world divides into two large groups of traders and investors: fundamental traders who base decisions off of financial analysis, understanding of the industry and a company’s competitive position, growth rates, assessment of management, etc. Technical traders base decisions off of patterns in prices, volume or related data. From a technical perspective, every edge we have is generated by a disagreement between buyers and sellers. When they are in balance (equilibrium), market movements are random.
Intuition
A hunch can be trusted if it can be explained.
Though intuition is not infallible, it can be a useful speculative tool, if handled with care and skepticism.
If you are hit by strong hunch – put it to the test. Trust it only if you can explained it. That is only if you can identify within your mind a stored body of information out of which that hunch must reasonably be supposed to have arisen.
Be wary of any intuition that seems to promise some outcome you want badly.
Never confuse a hunch with a hope.
10 ways to Master the Trade
How do you know you’re making progress on the road to successful trading? There’s one obvious answer: Check your financial results. There is little doubt you’re doing well if you’re booking consistent profits.
But raw capital production may not be the best way to judge your growth as a trader. The road to success has many detours where profitability isn’t the best measure of results. For example, we all go through phases in which introspection and skill development are more urgent than short-term profits. So let’s look at 10 ways to know you’re making solid progress on the road to market mastery:
1. Money management becomes your lifeline, and all your trading strategies start to revolve around its core. Risk control becomes a key aspect of every position you take. You accept that controlling losses has a far-greater impact on your bottom line than chasing gains.
2. You develop your own trading plans and strategies rather than relying on books, gurus or other people’s opinions. You notice how you’re finding more opportunities than you have time to trade while looking through your charts. You look forward to the trading day with a growing sense of confidence and empowerment.
3. You feel more like a student than a master. You learn new things every day and can’t wait to apply them to real-life trading scenarios. You listen closely to everything you hear, trying to pick up hints and concepts that will improve your performance. You expand your studies into everything market-related, including economics, fundamentals and balance sheets.
4. You stop visiting stock boards and chatrooms, because they don’t add anything to your trading goals. You realize that everyone in those places has ulterior motives. You develop a healthy skepticism about companies, market-makers and even other traders. You realize that no one is really interested in your success as a trader, except for you. (more…)
Nine Reasons Why Greece, PIIGS Approaching Irreversible Slide to Default

About the author: Cliff Wachtel
Quick thought on being an extreme contrarian
It makes it hard to make successful, opinion based trades.
You enter a trade on the basis that everyone is wrong, accepting scope for the crowd to get it even more wrong before waking up to reality. When the crowd does eventually realise the error of it’s ways, the price turns in your favour. However, it is extremely difficult to hold on to the trade and enjoy ‘being right’, because the crowd is always wrong, and if it is now moving in your favour, then you are also wrong, an equal fool.
This unhealthy skepticism leads to early culling of winners and ensures that one’s portfolio spend most of it’s time holding on to losing positions.
Lessons From John Templeton
1. “I never ask if the market is going to go up or down, because I don’t know, and besides it doesn’t matter. I search nation after nation for stocks, asking: Where is the one that is lowest priced in relation to what I believe its worth?” Like every other great investor in this series of blog posts John did do not make bets based on macroeconomic predictions. What some talking head may say about markets as a whole going up or down was simply not relevant in his investing. John focused on companies and not macro markets. He was a staunch value investor who once said: “The best book ever written [was Security Analysis by Benjamin Graham].
2. “If you want to have a better performance than the crowd, you must do things differently from the crowd. I’ve found my results for investment clients were far better here [in the Bahamas] than when I had my office in 30 Rockefeller Plaza. When you’re in Manhattan, it’s much more difficult to go opposite the crowd.” The mathematics of investing dictate that investing with the crowd means you will earn zero alpha, because the crowd is the market. You must sometimes be willing to take a position that is different from the crowd and be right about that position, to earn alpha. John put it this way: “If you buy the same securities everyone else is buying, you will have the same results as everyone else.”
3. “The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell. Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. People are always asking me: where is the outlook good, but that’s the wrong question…. The right question is: Where is the outlook the most miserable? For those properly prepared in advance, a bear market in stocks is not a calamity but an opportunity.” To be able to sell when people are most pessimistic requires courage. Being courageous is easier if you are making bets with “house money.” Making bets with the rent money is always unwise. Templeton believed problems create opportunity. For example, it was on the day that Germany invaded Poland that he saw one of his best buying opportunities since prices were so low and values so high. Simply telling his broker that day to buy every stock selling under $1 yielded a 4X return for John. (more…)