A world that’s more riot than profession, the trading floors of Chicago are a place where gambling your family’s mortgage is all in a day’s. At a time when markets are unhinged, FLOORED offers a unique window to this lesser-known world of finance. These men may not have degrees, but they’ve got guts, and penchant for excess that solicits simultaneous feelings of revulsion- and a desire to root them on. But like many aspects of our economy, technology is changing the way these traders do business, and these eccentric pit denizens aren’t the type to take kindly to new tricks. Computerized trading may take the emotion out of the job, but it may also take some of these old-timers out- dinosaurs in a young man’s game.
Everything has a cost. There is no free lunch. There is always a trade-off.Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.
One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).
iNcentives work. People respond to incentives.
Open for trade. Trade can make all parties better off.
Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.
Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)
Concentrate on productivity. A country’s standard of living depends on how productive its economy is.
Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.
Nobel Prize winner Joseph Stiglitz sees a significant chance the U.S. economy will contract again in the second half of 2010, and urged the government to prepare a second stimulus package:
“The likelihood of this slowdown is very, very high. There is a significant chance that the number will be in the negative range,” said Stiglitz, a professor at Columbia University.
Regarding the jobs picture in the United States, the economist added, “The U.S. economy must grow at least 3 percent to create enough jobs for new entrants into the labor force.”
“If you don’t prepare now, and the economy turns out to be as weak as I think it’s likely to be, then you’ll be in a very difficult position,” he said.
Dr. Marc Faber shared with the Economic Times his investment themes for 2010. Japanese stocks and shorting US Treasuries are his top picks for 2010:
“I would avoid US government bonds and I think as a contrarian you really want the contrarian play. You should buy Japanese stocks and Japanese banks. This is the absolute contrarian play. Nobody is interested in Japan all the funds have withdrawn money from Japan they have given up on Japan I guarantee you the economy would not do well, forget about the economy the population is shrinking but you can have an economy that does not do well but the companies do well that is a big difference and I think the Japanese banks are very depressed. All the banks in Asia have actually recovered very strongly but not the Japanese banks so as a contrarian play I would look at that.”in Economic Times.
Purely academic, non applicable information. Writing them out helps me organize these assumptions into ideas. Hopefully you find some use for them.
1) Trading is like any other business, but not only in the conventional sense. The market is manipulated. The underlining principle behind this statement is that equities market is the same as any other market in the economy, whether it be technology or tube sock market – those with the biggest market cap control movement and direction.
2)While prices are moving in a current path identified by trend lines, heads of market are processing information and making preparations for the next shift. During the time traders see the trend forming and change their “bias” in accordance with the trend, heads of market have processed new information and are ready to take prices to a new level.
3)Technical analysis is a visual interpretation of how crowds behave in relation to price. It does not influence how prices will or should behave. When prices reach a certain level, the technical indicator at that level does not dictate how prices will react, rather, (more…)
Jim Chanos is bearish on China and I think he has a very good point. China suffers from huge overcapacity in every sector and their statistics are made up.
“Jim Chanos, head of investment firm Kynikos Associates and famous for his call to short Enron in 2001, has found his next big target.
Chanos and other China bears say the country has overcapacity in just about every sector of its economy, and the government’s massive stimulus isn’t working. They think China is simply covering things up with faulty statistics.
For example, they point to the huge reported increases in car sales in contrast to numbers showing little growth in gasoline consumption, which suggests state-run companies are buying huge numbers of cars and putting them in storage.” in The Daily Crux
The China bears tell us that stimulus spending there is largely being wasted. This report from Al Jazeera offers startlingly strong support for that proposition:
China’s economy is continuing to grow despite the global recession, helped by a massive government stimulus package of $585bn.
But doubts remain whether such strong growth can be sustained by public spending alone.
Al Jazeera’s Melissa Chan reports from Inner Mongolia, where a whole town built with government money is standing empty.
Russian prime minister Vladimir Putin appears to have forgotten his recent comments about reducing the state’s role in the economy.
As the The Wall Street Journal reported on Friday:
Russian Prime Minister Vladimir Putin said Friday that Renault SA’s stake in OAO AvtoVAZ could be diluted unless the French company helps bail out the failing Russian auto maker.
Renault’s $1 billion investment for a 25% stake last year was a landmark deal for Russia, representing the largest by a foreign company outside the energy sector. But the French car maker’s efforts to streamline production have stalled, and AvtoVAZ has struggled to pay suppliers and trim its bloated work force. (more…)
Trading provides one of the last great frontiers of opportunity in our economy. It is one of the very few ways in which an individual can start with a relatively small bankroll and actually become a multimillionaire. Of course, only a handful of individuals succeed in turning this feat, but at least the opportunity exists. A rigid stop-loss rule is an essential ingredient to the trading approach of many successful traders. Winning streaks lead to complacency, and complacency leads to sloppy trading.
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Purely academic, non applicable information. Writing them out helps me organize these assumptions into ideas. Hopefully you find some use for them.
Russian prime minister Vladimir Putin appears to have forgotten his recent comments about reducing the state’s role in the economy.
Trading provides one of the last great frontiers of opportunity in our economy. It is one of the very few ways in which an individual can start with a relatively small bankroll and actually become a multimillionaire. Of course, only a handful of individuals succeed in turning this feat, but at least the opportunity exists. A rigid stop-loss rule is an essential ingredient to the trading approach of many successful traders. Winning streaks lead to complacency, and complacency leads to sloppy trading.
