BP said Saturday that its latest attempt to stop the gushing oil well in the Gulf of Mexico was unsuccessful, and the effort, known as a “top kill,” was being scrapped in favor of yet another maneuver to stem the flow spreading into the waters.
Sometimes, an ounce of prevention is worth a pound of cure.
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BP said Saturday that its latest attempt to stop the gushing oil well in the Gulf of Mexico was unsuccessful, and the effort, known as a “top kill,” was being scrapped in favor of yet another maneuver to stem the flow spreading into the waters.
Sometimes, an ounce of prevention is worth a pound of cure.
The numbers are incredible. Goldman Sachs just revealed in an SEC filing that its traders made money on every single
trading day last quarter, a record for the firm. Net revenue for
trading was $25 million or higher in all of the first quarter’s 63
trading days with 35 of those days bringing in more $100 million.
Even if you had a 95% likelihood of a winning day, you would have
only a 3.9% chance of doing it 63 trading sessions in a row.
Does a Perfect Trading Quarter Score One for the Rigged-Market Theory?
Whatever the cause of the perfect quarter, it comes as part of a
pattern. Goldman Sachs only recorded 11 loss days in the prior 12 months. So while some luck is
involved in stringing together a perfect Quarter, the trend of success does not seem to be a fluke.
It gets more curious, because it wasn't just Goldman. Bank of America, Citigroup, and JPMorgan each also recorded a perfect quarter of trading profits. What are the odds of that happening? Apparently, pretty high under their current operating conditions.
When the government is on a mission, you may not like the policies … but as an investor, you fight it at your peril. More simply put, don't fight the Fed.
It looks like the Banks figured that out.
Goldman figured it out sooner.
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The numbers are incredible. Goldman Sachs just revealed in an SEC filing that its traders made money on every single
trading day last quarter, a record for the firm. Net revenue for
trading was $25 million or higher in all of the first quarter’s 63
trading days with 35 of those days bringing in more $100 million.
Even if you had a 95% likelihood of a winning day, you would have
only a 3.9% chance of doing it 63 trading sessions in a row.
Does a Perfect Trading Quarter Score One for the Rigged-Market Theory?
Whatever the cause of the perfect quarter, it comes as part of a
pattern. Goldman Sachs only recorded 11 loss days in the prior 12 months. So while some luck is
involved in stringing together a perfect Quarter, the trend of success does not seem to be a fluke.
It gets more curious, because it wasn't just Goldman. Bank of America, Citigroup, and JPMorgan each also recorded a perfect quarter of trading profits. What are the odds of that happening? Apparently, pretty high under their current operating conditions.
When the government is on a mission, you may not like the policies … but as an investor, you fight it at your peril. More simply put, don't fight the Fed.
It looks like the Banks figured that out.
Goldman figured it out sooner.
I have been using a software tool you might find useful. It solves a problem that you probably have, even if you don't think about it often.
A Cure for Information Overload.
It In the old days, you could photocopy something and put it in a file. So finding it was relatively straight-forward.
Today, you are faced with a different type of challenge (and chances are your filing system is so "1990s"). Nowadays, you might be looking for a picture, audio snippet, or video … a document (or more likely, just a part
of one) … or a scrap you saved (like a quote, web-link, or blog post).
Moreover, as you use the computer for more things (and a bigger percentage of the work you do), it gets harder to find a random "something" that you might be looking for.
Part of the problem is that we are getting more efficient at creating "stuff", so there is more of it. In addition, that stuff is a lot more varied than it used to be.
Capture
Everything to Your Personal Digital Memory.
Evernote makes it easy to store, organize, and find virtually anything. Even better, it is also good at sharing it with others (award-winning good at it).
Chances are, if you can see it or think of it, Evernote can help you remember it. Type a text note. Clip a web page. Snap a photo. Grab a screen-shot. It will be there when you need it.
Finding it Fast, Wherever You Are.
Everything you capture is automatically processed, indexed, and searchable. That means you can find things quickly and easily.
You can search for items by keywords, titles, and tags. Evernote even makes the printed and handwritten text inside your images searchable, too (for example, the text on a photo of your white-board).
There is an application program. However, you can also access your
information through a Web interface (wherever you are, even if you are away from your computers). In addition, there are versions that work on
various smart phones and Evernote
provides "Capture" buttons that integrate with Microsoft Outlook and whatever browser you
might use. What that means is that it's easy to use, and it's there
when you need to use it.
Here is a video showing you how it works.
One Tool That Takes the Place of Many Others.
I've tried dozens of programs that do similar things. In the old days, they were called "personal information managers".
Many of these tools are specialized, so to handle it all you might use a to-do list (or "Getting Things Done" organizer), Internet bookmark manager, screen-capture utility, document management system, and free-form database.
Evernote does all that, and virtually anything else you throw at it … yet, it doesn't cost you anything until you throw enough stuff into it to pass its generous monthly threshold. For what it is worth, I clipped over 200 items before passing the limit.
Bottom-Line: Use Evernote to save your ideas, things you see, and things you like. Then find them all on any computer or device you use. For free. It's worth a try, you might like it.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_c.png?x-id=4c43a9e1-fcf9-407e-856d-e6dddf4e9ca6)
I have been using a software tool you might find useful. It solves a problem that you probably have, even if you don't think about it often.
A Cure for Information Overload.
It In the old days, you could photocopy something and put it in a file. So finding it was relatively straight-forward.
Today, you are faced with a different type of challenge (and chances are your filing system is so "1990s"). Nowadays, you might be looking for a picture, audio snippet, or video … a document (or more likely, just a part
of one) … or a scrap you saved (like a quote, web-link, or blog post).
Moreover, as you use the computer for more things (and a bigger percentage of the work you do), it gets harder to find a random "something" that you might be looking for.
Part of the problem is that we are getting more efficient at creating "stuff", so there is more of it. In addition, that stuff is a lot more varied than it used to be.
Capture
Everything to Your Personal Digital Memory.
Evernote makes it easy to store, organize, and find virtually anything. Even better, it is also good at sharing it with others (award-winning good at it).
Chances are, if you can see it or think of it, Evernote can help you remember it. Type a text note. Clip a web page. Snap a photo. Grab a screen-shot. It will be there when you need it.
Finding it Fast, Wherever You Are.
Everything you capture is automatically processed, indexed, and searchable. That means you can find things quickly and easily.
You can search for items by keywords, titles, and tags. Evernote even makes the printed and handwritten text inside your images searchable, too (for example, the text on a photo of your white-board).
There is an application program. However, you can also access your
information through a Web interface (wherever you are, even if you are away from your computers). In addition, there are versions that work on
various smart phones and Evernote
provides "Capture" buttons that integrate with Microsoft Outlook and whatever browser you
might use. What that means is that it's easy to use, and it's there
when you need to use it.
Here is a video showing you how it works.
One Tool That Takes the Place of Many Others.
I've tried dozens of programs that do similar things. In the old days, they were called "personal information managers".
Many of these tools are specialized, so to handle it all you might use a to-do list (or "Getting Things Done" organizer), Internet bookmark manager, screen-capture utility, document management system, and free-form database.
Evernote does all that, and virtually anything else you throw at it … yet, it doesn't cost you anything until you throw enough stuff into it to pass its generous monthly threshold. For what it is worth, I clipped over 200 items before passing the limit.
Bottom-Line: Use Evernote to save your ideas, things you see, and things you like. Then find them all on any computer or device you use. For free. It's worth a try, you might like it.
Have you heard the commentators trying to explain Thursday's massive move down in the markets by blaming computer trading, a trader's error, or the news about what's happening in Greece?
I don't believe that any of those explanations are the "cause" of the melt-down.
There's a difference between things that happen near the same time, and things that cause other things to happen. In statistics this is the difference between a coincident and a causal indicator.
An Unlikely Explanation.
Even if some trader accidentally tried to sell a billion shares of Procter & Gamble rather than 1 million shares … Do you really believe a broker's or exchange's risk-management protections would allow a billion share order (sure, an error … but not that error)? Or, do you really believe that a "fat-fingered" sale in America would cause Asia's market to go down 8%?
Think about how many market participants there are around the world. Free market buying and selling is supposed to take care of mispriced assets. If
something is too high, then people won't buy it. When something's too
low, speculators swoop in to grab the bargain.
A More Likely Scenario.
The real story is that people are scared. And unlike the recent rally, the move down was met with selling rather than buying.
There's an old trading adage that says markets climb a wall-of-worry one step at a time, then fall off the roof. In a normal up-trend, chances are you'll just hold what you own; because you have no real incentive to take action. Consequently, as recent policies and actions pushed the markets higher, many market participants simply smiled and felt good about their good fortune.
However, it doesn't work the same way when markets go down. In order to protect your profits, or avoid losses, it is important to take risk off the table. As more people start doing that, prices start to move faster, which feeds the fire … and finds even more sellers. As a result, there actually is an incentive to take massive action.
But Don't You Have to Blame Someone?
One of the interesting arguments that I've heard recently is that the crash was caused as high-frequency trading firms stopped trading in the market. In other words, the lack of liquidity caused these massive price moves.
To me, it makes sense that high-frequency trading (or other algorithmic trading systems) stopped trading during times of market turmoil. One of the primary lessons from last year's bear market is to recognize that certain systems are designed only for normal market periods.
As price and volatility move outside normal levels, we now tighten our risk and cash management parameters. Once we got past those limits, we stopped trading. Why? Because of the massive pain inflicted by not doing that the last time we saw those types of price moves and volatility.
Likewise, I suspect it's the same for many other systems traders. Each of them went through a process of figuring out what works, and what doesn't work, during different market conditions. It makes sense that they learned to trade less when they don't have an edge.
Consequently, the patterns of price movement and liquidity changed during the big move down.
Let the Investigations Begin.
Trying to figure-out what caused people to be afraid is silly. Fear
cause people to be afraid. Human nature weighs the fight or flight
instinct … and often chooses flight during dangerous situations.
And if people are trying to sell, but no one is buying, then price
will continue to fall until it's low enough that people feel they're
getting a bargain again.
On a side note, if a trader puts in a limit order to buy an asset if
gets down to a certain price (let's say $0.01 for a share of Accenture)
and there is no other buyer to fill a "market order", then crazy as it
sounds, that is what happens.
Will More Regulation Help Here?
I see both sides. On one hand, I am surprised that the Specialists weren't there to back-stop the market and take more sales at falling (yet, realistic) prices. Perhaps that merits some scrutiny?
On the other hand, in a free market environment, do you really believe that it is in our best interests for the governments and the exchanges to figure-out how to prevent markets from going down?
When the NYSE started to enforce trading curbs and slowdowns, sophisticated investors started off-loading some of their sales to other markets and exchanges around the world. The result is that prices continued to go down.
Again, I don't believe that an error caused prices to go down, though it may have been in error in judgment caused by human nature for masses of the population to feel so scared.
However, remember that fear and greed are the fuel that drives the engine of the markets. I suspect that limiting fear will have unintended consequences.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_c.png?x-id=67a164aa-e5a6-4196-b874-96eb8e8a0c06)
Have you heard the commentators trying to explain Thursday's massive move down in the markets by blaming computer trading, a trader's error, or the news about what's happening in Greece?
I don't believe that any of those explanations are the "cause" of the melt-down.
There's a difference between things that happen near the same time, and things that cause other things to happen. In statistics this is the difference between a coincident and a causal indicator.
An Unlikely Explanation.
Even if some trader accidentally tried to sell a billion shares of Procter & Gamble rather than 1 million shares … Do you really believe a broker's or exchange's risk-management protections would allow a billion share order (sure, an error … but not that error)? Or, do you really believe that a "fat-fingered" sale in America would cause Asia's market to go down 8%?
Think about how many market participants there are around the world. Free market buying and selling is supposed to take care of mispriced assets. If
something is too high, then people won't buy it. When something's too
low, speculators swoop in to grab the bargain.
A More Likely Scenario.
The real story is that people are scared. And unlike the recent rally, the move down was met with selling rather than buying.
There's an old trading adage that says markets climb a wall-of-worry one step at a time, then fall off the roof. In a normal up-trend, chances are you'll just hold what you own; because you have no real incentive to take action. Consequently, as recent policies and actions pushed the markets higher, many market participants simply smiled and felt good about their good fortune.
However, it doesn't work the same way when markets go down. In order to protect your profits, or avoid losses, it is important to take risk off the table. As more people start doing that, prices start to move faster, which feeds the fire … and finds even more sellers. As a result, there actually is an incentive to take massive action.
But Don't You Have to Blame Someone?
One of the interesting arguments that I've heard recently is that the crash was caused as high-frequency trading firms stopped trading in the market. In other words, the lack of liquidity caused these massive price moves.
To me, it makes sense that high-frequency trading (or other algorithmic trading systems) stopped trading during times of market turmoil. One of the primary lessons from last year's bear market is to recognize that certain systems are designed only for normal market periods.
As price and volatility move outside normal levels, we now tighten our risk and cash management parameters. Once we got past those limits, we stopped trading. Why? Because of the massive pain inflicted by not doing that the last time we saw those types of price moves and volatility.
Likewise, I suspect it's the same for many other systems traders. Each of them went through a process of figuring out what works, and what doesn't work, during different market conditions. It makes sense that they learned to trade less when they don't have an edge.
Consequently, the patterns of price movement and liquidity changed during the big move down.
Let the Investigations Begin.
Trying to figure-out what caused people to be afraid is silly. Fear
cause people to be afraid. Human nature weighs the fight or flight
instinct … and often chooses flight during dangerous situations.
And if people are trying to sell, but no one is buying, then price
will continue to fall until it's low enough that people feel they're
getting a bargain again.
On a side note, if a trader puts in a limit order to buy an asset if
gets down to a certain price (let's say $0.01 for a share of Accenture)
and there is no other buyer to fill a "market order", then crazy as it
sounds, that is what happens.
Will More Regulation Help Here?
I see both sides. On one hand, I am surprised that the Specialists weren't there to back-stop the market and take more sales at falling (yet, realistic) prices. Perhaps that merits some scrutiny?
On the other hand, in a free market environment, do you really believe that it is in our best interests for the governments and the exchanges to figure-out how to prevent markets from going down?
When the NYSE started to enforce trading curbs and slowdowns, sophisticated investors started off-loading some of their sales to other markets and exchanges around the world. The result is that prices continued to go down.
Again, I don't believe that an error caused prices to go down, though it may have been in error in judgment caused by human nature for masses of the population to feel so scared.
However, remember that fear and greed are the fuel that drives the engine of the markets. I suspect that limiting fear will have unintended consequences.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_c.png?x-id=1fc612dc-0db1-497c-b596-2e3d088c9a0a)