Friday, September 16, 2011

Excellent, EXCELLENT article on one of the LEGENDS of trading, Bruce Kovner, if you are typical, like ME, you never heard of the guy, hahahahaha, although I do remember reading about him in the book "Market Wizards", the article is because he just retired after 30 years, and some of his insights are the typical priceless stuff, especially about position sizing, the importance of combining BOTH fundamental AND technical analysis, blah blah blah blah, etc etc etc:

Since I brought him up, I'll make some PERSONAL comments on that article, NUMERO UNO, is his comment about NOVICE trader's trading probably FIVE times the position size they SHOULD, hahahahaha, every one wants to make their millions in ONE FELL SWOOP, sigh, I would add that in the CURRENT market environment, AFTER reducing their size to an appropriate level, it should be REDUCED another FIVE times, wooooo weeeeee, there is a time for loading the boat and a time for sitting on the Beach.
Another one I like is his CORRELATION thoughts, the MAIN one being, that if you take EIGHT positions in say, STOCKS, which are typically HIGHLY correlated to the OVER ALL STOCK MARKETS, you are ACTUALLY taking on EIGHT TIMES your typical RISK POSITION! So, in THEORY, each position should be 1/8th of what a NORMAL single position would be. You spread out RISK by trading in NON-CORRELLATED ASSETS, NOT by taking the advice of that, eeeerrrrrr, individual, who tells people if they are DIVERSIFIED or NOT, because they SHOULD be in X amount of Big cap, small cap, or in different SECTORS, ALL OF WHICH ARE IN ONE ASSET CLASS, STOCKS!!!! You can over come this, that is if you feel you HAVE to be invested in just ONE class, by doing PAIR's trades, IE, long one stock and short another one in the same sector or industry, but my personal opinion is that this is a bunch of crap, as you are just as likely to be WRONG about which one is going to go higher while the other one is going to go lower, as you would be in just taking a SINGLE position in a directional bet with your normal position sizing and stop.

8:00AM: WAAAA LAAAA! ASK AND YE SHALL RECEIVE, hahahaha! Also, it's a speaking of the devil himself type thing, Bloomberg came out this morning talking about the RECORD CORRELATION among stocks in the S and P 500, correlation-bets-climbing-to-record-as-europe-overwhelms-earnings-options.html.
The, KEY, sentence, in that little ditty, IMPO, is "Traders are speculating correlation among equities, already the highest since the crash of 1987"......................

Free stock pick for 09/16/2011

Ivica at

Charts Say It's Time to Sell
It would be prudent for traders to close all long positions this morning. Get Sam Collins' take on the markets.
Sell Into the Long-in-the-Tooth Rally
Some upside potential remains, but the longer-term trend is down. Get Serge Berger's take.


blogger templates | Make Money Online