Too Much Of a Blog Thing

Traders and coaches are quick to mention the positives of blogging in relation to trading but few ever mention the negatives. Below are some issues I've encountered.

positives that can turn into negatives

• "Compiling" of Ideas = Endless bellyaching about tiny aspects of trading, resulting in the constant reinvention of the wheel. Just choose a method and leave it alone, once you've built some numbers up you can start faffing around with it.
• "Record" of progress =  Can quickly turn into over-analysis. Yes, record your trade in your spreadsheet, take a screenshot and write a quick comment, even put it on your blog if you want to. But don't think "analysing" each trade for 45 minutes will reveal the holy grail of profitability. Trades should be viewed collectively not individually, your KPIs will tell you what you need to do, your profound thoughts and reasoning will not.
• "Communication" with other traders = Right, this never fucking happens. You may get the occasional comment from some knobhead in Alberta however, you have no idea whether they are genuine or qualified. Stop being cheap and get a coach.
• "Accountability"= More often than not turns into neurosis and can intensify unwanted behaviours you're blind to.

the negatives 

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If you aspire to be a trader you will naturally have a high opinion of yourself; you have to think you are better than 90% of everyone else. Therefore keeping a blog...

• Plays to your already large ego: In trading, you need to learn to be wrong, your blog is a place you can always be right, that's an issue.
• Distracts from the main goal: Trading your plan, recording your trades, building your numbers up and learning your KPIs. You could write a blog about all this but you won't. You'll write a blog about how the markets make you feel and your bottom line doesn't give shit about this.
• Becomes an addictive hobby: Let's be honest, trading is boring, in some ways blogging is far more entertaining and rewarding (hits, shares, likes). But do you want to write a successful blog about unsuccessful trading, or do you want to be a successful trader?
• Distracts from rest: To trade well you need to be able to switch off. If in every waking minute you're not trading, you're agonising about it on your blog you're hardly going to have any perspective when you return to the charts.
• Ruins your trade plan: The need for continuous content requires time and too much thinking which often results in you overcooking your strategy (reinvention of the wheel syndrome). 
• Distracts you from the truth: To trade successfully you really have to understand your personality traits. Keeping a blog about your own little world will not help you discover them (I'm talking from experience). You have to figure these out: Your happiness, not your trading must come first; as without the former, you cannot have the latter. You may not even be cut out for trading.
• Stops you from doing what should be done: Should you write another post about how you feel, or just do the fucking Tharp Trader Test you've been putting off for months? Should you write another post on how you want to "experiment" with your trade plan, or should you spend the time recording your numbers properly (MFEs and MAEs included)?! Your blog is a tertiary addition to your trade routine, it doesn't replace any of it and it's the lowest on the list of priorities!

experience

Annoyingly all of the observations above have comes from personal experience, once I even entertained the thought that if I could get my blog popular enough I wouldn't have to make my trading a success; I could trade unsuccessfully and my followers could enjoy my offerings via a sort of schadenfreude (tbh there's some I follow for this very reason).

From following trading blogs for eight years what I've noticed is those that "make it" post far less often, or give it up entirely. While those that aren't making any money generally post prolifically. Personally, I've found the less I post the more successful my trading is, which makes sense. I focus on my trading when I'm trading and my life when I'm not.

Get The Facts - Make Your Own Opinions

frustration

Frankly, I've found the last 3 months a complete ball ache.

I'm frustrated and pissed off with every kind of media be it, mainstream, alternative, political, financial or social as almost all are providing very little in the way of quality content. Couple this with the fact that all the market commentators I respect have written three months of "if/but/maybe" articles, I've decided only two things can be happening. 1.no one has a clue. 2. no one's got the balls to say what they believe. And it is my belief that as much as this is not helping me, the reader, it's not helping the writer either.

the unhelpful need to be right

Last week I fell into the same trap as those I am beseeching to change; I wrote an "if/but/maybe" piece of my own. I have since taken it down because it is the antipathy of what I hate: it was safe. I gave myself a get out clauses. You know why it felt awful?  It was because as a trader you don't have the luxury of deciding whether you'll be right or wrong. You own it and manage it and guess what? it doesn't matter! So why do we care whether we write a piece that turns out to be correct or incorrect? 

the same could be said for writing

I guess this behaviour is human but the point I'm trying to make is it's not useful behaviour. Actually, I would go so far as to say it's verging on dangerous. It's behaviour that makes you believe you can fabricate a reality that does exist: you can't be right and wrong at the same time; this kind of behaviour makes you think you can. 

The fact that trading is binary is what makes it beautiful, beautifully painful sometimes. But it is also the best way to learn. If you don't follow-through you're just the guy at the end of the night with clean trousers on, everyone's got clean trousers on (journalists), successful traders aren't everyone; so it stands to reason that some part of being successful is being the guy who shits himself (which I'm going to try and do in the following post).

the importance of doing your own work

My rant above could easily be seen as avoidance, and thinking about it I probably did fall into this trap at points throughout the last few months, however, I still believe in what is written above.

It's vitally important to be consistent in your actions: A trader owns his decision and manages it. If he starts practising alternative behaviour in other areas of his life he lives in danger of bringing that into his trading (this might be why most journalists are not good traders). So this post is as much a pledge to myself to write this blog as a trader, not a journalist. 

This brings me onto one final point. Along time ago I walked past an old Victorian warehouse around the back of Tate Modern in London. Carved on the doorway were the words "Facts not Opinions".

I loved this and took a photo of it (which of course I can't find). I even used it as my screen saver for awhile. I need to get back to this way of thinking, particularly when filtering what news I am choosing to eat. Analysis and opinion are like complex carbohydrates, delicious but cause all kinds of drama. Facts are boring but safe, they make it easier to form your own thoughts.

Too Much Reading, Not Enough Writing

intro

So last week I walked into one of those "what the fuck is going on?" headaches. I felt overwhelmed by information and uncertainty over the true macro/geopolitical driving forces.

issue

I read the FT on the weekend and MoneyWeek / ZeroHedge/ Twitter throughout the week. This may sound like a lot but honestly it's quite manageable. The FTWeekend is consumed on the couch or coffee shop, avec wife.  Money Week is my Monday - Friday 10 minute "commute read" and twitter is light entertainment when I'm taking a dump.

It's not so much the quantity of "news" I'm reading but the "news" itself that is causing the headache.
In the last two weeks I have noticed two things: One, the distinct lack of news and regurgitation of articles. Two, a plethora of opinion pieces. Both of which piss me off because repetition, by definition cannot be "new" and opinion, by definition isn't "fact", so neither are in anyway useful.

However what I believe is the main cause of my befuddlement, is not my reading sub-par articles but the lack of time I've spent writing about what I've been reading over the past few weeks, I haven't been formulating my own ideas. Of course I'm confused.

summary

Like the title says, I'm reading too much and not writing enough. To put it another way I need to make more regular visits to this blog. Admittedly there are less trades to chronicle now that I'm trading off W1 charts but that doesn't mean that there aren't ideas that need to be documented.

(rant and self flagellation over)

Where Is The Value?

Apologies to my regular readers, I have been flat during recent volatility waiting for a position trade (and reading far too much), please indulge me.

Brexit then all time highs in stocks?!

As always supply and demand are ruling the markets but whose cash is buying the "trash" and why? I'm all for Brexit but this is BS. Of course, I'm not going to fight the market however with no growth or inflation and lower earnings, stocks fundamentally shouldn't be where they are.

the twilight zone

When has buying a poorly run company with no growth prospects made you money? As far as I'm aware never, until Bernanke and the Federal Reserve dropped the best part of one trillion dollars into markets in 2009 to keep them up. Call it what you want quantitative easing /buying debt. The truth is they didn't drop it, they pushed $1T into the markets by buying bonds and shares, this created demand-pull inflation in share and bond prices because there weren't enough to buy, so the only thing that could happen was for share and bond prices to be pulled up. It's demand and supply; if there isn't enough of something the price will go up, even if it's manure. Then of course the Bank of England, Bank of Japan and ECB got the "QE" buying bug and we've had nearly eight years of bull (shit) market. GDP down, inflation none existent, wage inflation nope.

note ascending stock prices (green), despite declining growth prospects (red)

note ascending stock prices (green), despite declining earnings (red)

So what just caused the most recent spike in the S&P500 to all time highs? As per usual for the past eight years it was another bout of central bank QE.

Note the rise in Bank of Japan (red) and European Central Bank (blue) asset purchases recently.

feed the rich

The rich have got richer and the poor have got poorer and you can see why; the central banks have only put money into things the 10% and 1% own. I am a capitalist but this is not capitalism and feel I am not overstating it when I say, central bankers have stolen our democracy. There is the perception of having choices but where are they?

The young can't choose to save because there's no interest. Central brothers, sorry "central bankers" take control of private companies because they're "too big to fail", thus management can't choose to go bust or become more efficient. Their only option has been unending stock buy backs (buying shares back off investors) inflating stock prices (to seem healthy). Worse still central bankers have stolen our job choices which has contributed greatly to the recent bout of xenophobia in the US and UK.

Believe it or not an economy based only on national demand and consumer credit (western world since 2009) creates low paid jobs. So we're now battling the migrants for the jobs that we traditionally never wanted; the fact is they're not stealing our jobs, we're stealing theirs.

To me the central banker is a dictator in everything but name. We can't get rid of them, even if we do we'll just get a carbon copy in the next one because they're brainwashed by "quantitative easing" group-think. They take away our freedom of choice and impose their will on the majority. Is there not an Orwellian stench in the air?

brexit

Brexit is good, the EU is a shambles. If you hadn't noticed there's yet another banking crisis (finally) being reported in mainstream media. But don't be fooled by them it's not Italian, it's Italian, French, Portuguese, Spanish and as it turns out German.

Deutsche Bank the biggest bank in Europe has failed two stress tests in as many years, has no capital or revenue and has recommended a €150B bailout for the EU. While Italian banks are weighed down by €360B of bad debt (about a fifth of its GDP). What's more is Italy’s terrible economic performance; it is still 8% smaller than it was pre-crisis. So it's not that surprising that UniCredit, Italy's only systemic bank of importance is in trouble and is being forced to sell its good assets. There is also the serious risk of contagion. French banks are exposed to €250B of Italian debt, German banks hold €83.2B,(Deutsche Bank alone has €11.8B) and Spain €44.6B.

While in the EU: unemployment is sitting at 10% and growing, youth unemployment is at 21% for the region but is hitting far higher levels across the region (as high as 50%) and EU growth is currently 1.7%... However paraphrasing the ECB, with the UK leaving, it will likely lose 0.6% of that (my guess is it will be more) so in reality, EU growth is probably somewhere under 1%.

youth unemployment in the EU

One final point here. Let me just mention how well the EU manages its deficit offending member states when they don't obey the rules. How many debt defaults there have been in the EU since 1999? Take into account the (PIIGS) poorer countries, 20? 50? No, try 165 unpunished deficit breaches. Hardly inspires confidence.

the uk

Well the UK isn't doing that well either? Not an unreasonable statement however every UK bank has passed rigorous stress tests for two years running, unemployment is sitting at 5%, youth unemployment's at 13% and we're growing at 2% a year, all healthier than the EU. Absolutely, our growth rate might flounder in the next twenty four months as we negotiate our exit but as I've been highlighting that will really depend on central bank policy. With Carney (BoE) promising £150B in liquidity to UK banks on the 24th July and with more to come if needed, this is far from certain. However for the same reason, a weak GBP for the foreseeable future is easier to predict; starting the money press will create a glut of supply and thus lower prices/valuations.

We'll lose our trade with the EU and the world? I can't see this happening. Sure banks will need an arm in the EU but only 7% of asset managers are thinking about moving operations out of the UK. 60% of our trade is with non EU countries and the EU sells more to us than we do to them; exports to the EU are only about 13% of the UK's economy. This is precisely why most EU members are already in "informal discussions" with the UK (the power Junck-y is forbidding anything else). Australia has just offered the UK a free trade deal. While it turns out the UK is now at the front of the US queue, with the Obama administration initiating discussions with UK officials about a bilateral trade pact. A pact like this will be more focused to the UK's needs and it's hard to argue a deal within the EU would come close to this. Plus despite all that "EU trade", the average UK individual hasn't exactly got any richer in the past eight years, which is precisely the point of Brexit.

going forward

Davis (Johnson and Fox) want to move the UK into being a more international, export led economy, think China. This kind of economy would have far better potential to create stronger GDP (growth), a growing middle class, better jobs and higher wages. All of which will help fund government services and reduce our national debt. But be prepared, an export based nation prefers a weaker currency; so we might want to get used to and start embracing our weak GBP, it could well be permanent and the new sign of health.

My guess is the EU will fudge its seven month old law, that no country can be bailed out unless shareholders first take an 8% loss, This is because this would mean Italian voters would take an EU enforced loss of around €16B before the Italian referendum in October. While the Bank of Japan will likely break its own laws and buy the US Chinook, (adopt helicopter money) because America (The US Treasury and Bernanke) tells it to, Carney will probably start the sterling printing press in the BoE's August meet and this farce will continue.

UK options as I see them...

1. We reform (some form of Brexit), reinvent our economy, gain stronger growth, real inflation and reduce the roughly two trillion pounds we still owe the central banks. Then attempt to get over this mess.

2. We follow the "do nothing, the central bank will sort it out" approach of the EU and it will all eventually blow up. But only after ruining the future of several more generations of youth whose governments will no longer be able to function due to the crippling debt (think tens of trillions of pounds) they owe the central banks. All the things we love today (NHS, housing, benefits) will, if we're lucky, survive just long enough to see us out or already be privatised. While the youth won't be able to afford any of them because we will have remained a national, consumer credit driven economy with low paying jobs, tied to a "union" of countries with an atrocious history of fiscal and monetary policy.

To me it comes down to "moralism" or realism. It's easy to say what's right or wrong but it's much harder to deliver it; this is the crux of why I am a blue.

Morality is expensive to deliver and it is my unwavering belief that we'll have a better chance of doing good and delivering morality long-term, if we focus on correct fiscal & monetary policy and capitalism (even if this brings around a temporary decline). No they're not perfect but they have a far better history than the alternatives.

our money?

Believe it or not I would like to see a crash. As I've tried to explain, what has happened for the past eight years is not sustainable or real; the UK (and world) needs a crash for long-term sustainable growth. Stock, bond and property prices would return and represent true value. Companies would be forced to innovate and a low GBP would make it easier for our exporters. With Brexit deals already in the pipeline we will have the opportunity to trade with nations experiencing far faster growth than the EU (which itself is near crash levels) and this will boost our GDP, jobs and inflation. Meaning higher interest rates which is good for savers but more importantly banks who have struggled to make money for the past eight years. This would mean a more stable financial system and better paid jobs.  All of which would mean greater tax revenues for the government to spend on services and reducing our national debt.

However my fear is: you can't fight somebody on a "monetary crusade" with an unlimited supply of cash. So for the time being we should probably be good party members and do what the central banks do, we might even make a little money.

I don't know about you, I think I might buy some tulips.

sources

ft.com

moneyweek.com

zerohedge.com

tradingeconomics.com

bloomberg.com

statista.com

conservativehome.com