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Friday, 18 January 2019

So Easy Until Pros Are Shutting Down?


I call myself a Trader.

That's only to make myself sexier to the babes in pickup lines. 

I don't really believe in labels, but if it helps me to impress the panties off them, call me a man-whore also can!



Notice a psychological quirk that we do after buying into something that were sold to us?

We tend to "jio" others to do the same? (Politicians, marketers, and religion shepherds have taken full advantage of it)

It's as if we were suffering from cognitive dissonance or buyer's remorse... 

So, if we can "inspire", "influence", or "motivate" others to do the same as what we did, it suddenly felt a lot better? 

Often, you do this "sharing" not based on your own user experience or using your own words; you simply "parrot" the same sales spin that were sold to you. 

Don't bluff! You did it!



It's the herding instinct lah!

You didn't mean any harm; it just more comforting to know if die, all die together!



Have you ever read or heard me say because I like to trade, so should you?

The cheerleading you often hear from me is crash got sound!

Don't try how to know?

Whether the shoes fit your feet how would others know?



And I've always given trading its due respect - I treat it as a craft. 

If you say you can't tell the difference between a craft from a hobby or pastime, then you're even more dishonest to yourself than you think! 

What's the point of goal setting and planning if they were based on little lies you've spun for yourself?



Trading is definitely not for anyone and everyone. 

Its in the realm of Earn More. 

If you can Earn More, you wouldn't have the need to seek FIRE to escape, would you?

Talk about the irony!



Something to mull about this weekend:


SocGen Considers Shutting $4.7 Billion Prop-Trading Unit





P.S.  While you are at it, if you consider yourself an "investor", you may want to ask yourself why are you "condemning" trading when you have never tried it before?

Or if you have tried and failed in trading, are you not behaving like that cad whose girlfriend dumped him... Now go telling everyone his former girlfriend was a slut?

Now think for a moment how a skilled shepherd (snake oil) would take advantage of such human tendencies?







66 comments:

  1. About the quirk, it depends.

    Can be do as i say, don't do as i have done.

    Especially to people close to U.

    ReplyDelete
    Replies
    1. temperament,

      Well, you should know! You are the classic - what you say and what you do are opposite!


      You can see most people beginning their financial journey would not hesitate to "advocate" putting their money to work. Don't let cash rot in the bank!

      Look! I'm a believer; you must convert too!

      Only when they themselves have experience the more you invest, the more you can lose; then perhaps they may become more circumspect when advising others what they should do with their money ;)


      That's why the most damage occurs with the best of intentions... Especially to people close to us :(


      Delete
  2. i'm also in process of shutting down(reducing my exposure)! put part of my money in fixed income so as not to drain my capital while living.

    if market continue acting like that, i won't put a single cent in it(for trading)!!!!

    #$&^%&)$R%#*!!!!!

    ReplyDelete
    Replies
    1. i believe many pro traders are sufferring like me or worst, start losing money on regular basis!

      Delete
    2. what volatility? KNN, the market is as flat as a frozen lake, you can skate on it!

      Delete
    3. can't believe "我也有今天"

      Delete
    4. coconut,

      STI is back to where I shorted it during Oct 2018...

      How to make serious money like that for an ikan bilis trend follower like me?

      But it must be great for those super NIMBLE intraday and swing traders? At least theoratically speaking...


      You take care and protect yourself now.

      I too am pretty much on the sidelines. I'm not smart. I'll let the market tell me which direction it wants to go before I attempt to ride the trend again.

      If too bored can jio me and the fisherman out for kopi. First meeting I promise I won't poke!



      Delete
    5. sounds good to me, you make the call, anytime.

      Delete
    6. good opportunity to look for someone to bang my frastration haha!

      Delete
    7. coconut,

      I don't have your contact or email... How to jio?


      Can you go all the way to the bottom of my blog?

      See my tiny photo?

      Click on the "View my complete profile".

      Under "Contact me", click on my email and let me know your number.

      After CNY I'll jio you out with CW.


      If you don't mind sharing your mobile to everyone, then write in the comment lor!

      Delete
    8. i remember i wrote it before but you deleted for me, for my own good you say, just a number, who's care haha...

      Delete
    9. 1) coconut,

      Oh! I found your number in my mobile! My fault!

      Never call you out before, so out-of-sight, out-of-mind ;)


      I deleted your mobile comment again. Wait you get flooded with calls from gold-diggers how?



      2) CW,

      Yup. He steady.

      Trader mah!




      Delete
    10. oh smol, i know i can trust you!

      actually you can call me anytime you want, i'm not as "bad" as you might think haha...

      Delete
    11. coconut,

      My mental image of you is left Green Dragon, right White Tiger.

      Whole body got "ang kong" one!

      LOL!

      Delete
  3. Most retail investors will do some trading. It is just how big and how frequent.

    ReplyDelete
    Replies
    1. CW,

      Its very rare for a retail individual to come into DIY "investing" without experimenting with some trading ;)

      If you say mutual funds, especially using CPFIS, then its more believable when they say they have never "traded" before.


      If we suck at trading, we can simply tell the facts that we failed and lost money big time with trading.

      And have found and moved on to something else (like investing or saving) that's more suited for your temperament.

      That's putting the focus and onus on ourselves.


      Just like if we suck at sports, we don't "demonise" sports right?



      Delete
  4. Hi SMOL,

    But the pros are shutting down because (I think) they can't sit on a pile of cash and do nothing. How to justify their fees like this? As retail fund managers (like us), we can sit still and do nothing for years while waiting for the right moment to come. I think that's one of the big adv of ownself controlled ownself funds.

    Also, if everyone is shutting down, perhaps it's really time to take a closer look now? hahaha

    ReplyDelete
    Replies
    1. LP,

      You are probably thinking of 2/20 hedge funds...

      Yes, you are right. Quite a few have shutdown although it not because they can't sit on cash... They can.

      But in a competitive industry where if the market rallys while you are in cash...

      Underperformance against your peers is as good as making a loss when it comes to job security :(

      Especially if you underperform passive index funds some more!!!


      The link I've added is for the prop-trading desks at the French banks. They are trading the banks' own money. Which makes it even more painful!


      Ha ha! You want to take on the big boys?

      I differ.

      I focus on the retail bei kambings. I hope I am wise enough to be on the other side of their positions ;)





      Delete
    2. Hi SMOL,

      I see, thanks for enlightening me :) Recently I see my setups suited for my style. Usually it occurs after a big crash or two. I play around first lah, then you trend players come in haha

      Actually on a macro view, I focus on my active income. I am wise enough to know that I'm better at my active job than trading, hence my focus and energy will be on my active earnings. Stock investing/trading is a money making hobby but my work is a money making lifestyle. I know which is more important haha

      Delete
    3. LP,

      That's why you are at peace and in harmony with yourself ;)


      How I see those who come into trading to "escape" is probably how you may see those who come into your tuition realm just for the "easy" money?

      Or worse! They see giving tuition as anyone and everyone can do it just as long got a degree?

      I mean they can fail in all other endeavours, no worries. There's always giving tuition as plan Z! Look ma! No entry barriers!!!

      Its like the voluntary contribution to CPF? How difficult can that be?

      LOL!


      That's odd!

      The butterfly and grasshopper talking about pride in work?

      Shh... We don't tell the ants that work is play to us ;)





      Delete
  5. Hi SMOL,

    I'm one of those who started from UTs, then ETFs. My "trading" is more punting / gambling than anything else LOL. Breakeven is good liao Haha!

    Actually I find trading is like working, and requires quite a bit of effort. Unfortunately me being a lazy ass....

    Prop & derivatives trading is being disrupted. US banks are increasingly using autonomous AI and HFT ... probably more likely to see data / heuristics / computer scientists than traders LOL.

    Even the largest asset mgmt company is retrenching more & more active fund managers. I bet they're really happy they bought over iShares from Barclays 10 yrs ago! The focus is either on passive or fintech/AI or both.

    I remember 30 yrs ago when recruiters from the local banks came down to the Uni to prospect for their prop trading desk. Today the top grads make a beeline for Compliance! LOL!

    ReplyDelete
    Replies
    1. Spur,

      Ah! I got lucky with unit trusts as I remembered to take profit ;)

      After the 97 Asian Financial Crisis, my insurance agent tried to convince me to buy into global funds to balance out geographic risks... He's right; until we got got synchronised bear markets in 2000 and 2008 :(

      Then banks started peddling BRICs mutual funds. Remember those?

      At one time, India and China funds were super hot!

      ETFs were later introduced and became more popular. Hey! ETFs are great vehicles for trading! And it gave head-in-the-sand retail "investors" the cover to do speculation under the guise of - I'm "investing" ;)


      Its karma.

      White collar shepherds were cheerleading the replacement of blue collar jobs to computers and automation (factories, supermarkets, fast food outlets, etc).

      Productivity is euphemism for profits. Must please the landowners mah!


      Now we begin to see the same "productivity" push into white collar shepherd's jobs.

      You want job/life balance? No problem. We'll let you spend all your time with family by letting you go...




      Delete
  6. I have a lot of respect for both traders and investors as well as losers.

    Trader have a way of seeing pattern, investors have conviction, losers have grit and humility.

    I also accept hybrid.

    Maybe I am the biggest manwhore.

    Those u poke, they know. But some need to do it for their livehood, some need for extra passive income.

    Those sheep, they are also part of the ecosystem, how many can learn from the mistakes of others. Most learn through their own mistakes, and it is good enough le.

    ReplyDelete
    Replies
    1. I repent and now don't ask for more money from the stock market. Don't take away my money is already good.

      Delete
    2. Sillyinvestor,

      Once upon a time, when I was bei kambing, I felt good when I discover other (strangers) also vested in the same stocks as I.

      Similarly, I'll get "defensive" when others talk down the stocks I'm vested in.

      Crash got sound!

      From the expensive school fees, I've learned the hard way that owning the same stocks that others also owned is the last thing from being contrarian...

      Its a crowded trade.

      I'm what the industry derisively called - the momo (momentum) crowd :(

      Ouch!


      Delete
    3. CW,

      That's why I can't help myself from poking you on your CPF "returns" post ;)


      Of course I fully understand!

      Coming down the mountain not the same as when you were climbing up the mountain with 10 baggers ;)

      This time, if we fell asleep at the wheel, we don't have our day job's income to dilute out the losses or repair the hole we have dug ourselves in!


      50 or 60s focus on CPF makes sense. After we have Earned More, its time to make sure we don't Lose More ;)

      But in your 20s or 30s focus on not to Lose More??? My eyes glaze over...

      We are only young once!

      LOL!


      Delete
  7. Good one, Jared. I admire traders who stick with it for more than 10 years. It takes so much discipline and self-awareness of ones strengths, weaknesses, quirks and biases.

    I tried it for 4 years. It did not feel good. I did not feel good doing it. It was maybe not may natural habitat. And then priorities in life have changed. And when things around me change I try to change too.

    Are you at it for more than 10 years yet? If so, feel yourself admired by me.

    ReplyDelete
    Replies
    1. Andy,

      I've only gone "pro" for the last 6 years. Before it was like everyone else doing it on the side since my late 20s - going nowhere.


      6 years is still early days and I'm still enjoying it, although there were days I felt like crashing my head against the wall in frustration...

      LOL!


      I've improved. I've learnt when to walk away stay on the sidelines ;)


      Trading does not require physical exertion; I'm treeating it as mental exercise like playing bridge or mahjong to keep dementia away :)


      Delete
  8. i still say i invest in the market from the beginning till now because when the Economy is up and the market is so bullish, even the shoeshine boy makes money, why not me?

    Not to say i must be smarter.

    "Make Hay When The Sun Shines".

    Can it be much more simpler than that?

    Joking only.

    ReplyDelete
    Replies
    1. And i suppose actually everyone got to time it right, buy or sell.

      Market Timing anyone?

      Delete
    2. Of course, in the first place if U pick the "wrong" stock, then there is nothing to say or time.

      But for short to very short terms traders, it doesn't comes into play or does it?

      Delete
    3. temperament,

      Everything you say and question above, you already got the answers from your track record ;)


      It just a matter of whether you prefer to do the same thing over and over again while hoping for a different result...

      Or if mountain don't come to you; you go to the mountain lor!

      :)


      Delete

    4. Crash got sound is useless if one cannot adapt, evolve, or change ;)




      Delete
  9. Hi Jared, it's not a normal market environment right now. The past few months have never happened before outside of a recession or a significant market event. I can only pin it down to Fed action for now... But then the Fed has existed going back to the 1930s so unless the Fed has gotten omnipotent now...

    ReplyDelete
    Replies
    1. Macroanalyst,

      I was scratching my head how did one of the worst Decemember declines since the Great Depression morphed into one of the best January starts since 2009?

      Talk about the mother of a short squeeze!

      To those who almost fell asleep in 2017, this is volatility!


      Everyone is fixated (OK, not Singapore stocks only pandas) on what they think the Fed will do next?

      Will good news be good news?

      Or will good news be bad news since the Fed will continue hiking?

      Investing by fortune telling?


      Delete
  10. It investing by "Man proposes, God disposes".

    One good example was "Long-term Investment".

    ReplyDelete
  11. Replies
    1. temperament,

      That's why no matter what we call it - be it gambling, speculation, trading, investing, or any other labels we lie to ourselves - we can only FOCUS on what we can CONTROL.

      Got time leftover maybe on what we can INFLUENCE.


      And for those things we can neither control nor influence, what do most bei kambings do?

      Set goals and plans on them!?



      Non-believer and believer are on the same page when it comes to how to make God laugh ;)




      Delete
    2. LTCM is not a good example. They failed because they took on too much leverage. If they had used a more realistic return expectation and used lower leverage, they would have survived even till this day I believe, but of coz returns would have been eroded over time as more competitors come in.

      Delete
    3. Macroanalyst,

      It really is tough for you guys in the asset management industry.

      Low volatility difficult to achieve alpha.

      Higher volatility is good, better, best; not when you got whiplashed!


      And to rub salt into wound, the "Look ma! No brains needed!" method is beating everyone!?

      Even CPF returns!?

      LOL!



      Delete
    4. "Low volatility difficult to achieve alpha.

      Higher volatility is good, better, best; not when you got whiplashed!"

      These are what journalists who only know how to kick people but ownself never dare to risk own money write.

      It is a very general statement that means nothing in the end. It is like saying formula one drivers suck because easy track crash, challenging track also crash.

      There are still professional asset managers out there doing well during this period. It is inevitable for any strategy to hit a rough patch. The key is to know why. The difference between pros and amateurs is pros know why they are losing :)

      Delete
    5. Macroanalyst,

      Touche!

      Wow! The carnivore blood in you is quite passionate!

      Mental note to self: don't repeat platitudes to you ever! LOL!


      OK, for the sake of balance, must put on record although passive indexing has beaten 80% of hedge funds last year, there are still the 20% that left everyone else in the dust ;)

      Ray Dalio and his Bridgewater Investment have done very well in 2018 - not too shabby for Risk Parity!


      I would like to add pros also know WHY they are outperforming the market ;)

      If its a case of market up I hit my investment goals, market down nothing I can do...

      How the hell can we repeat our success?

      Delete
    6. Slight correction. Ray's Risk Parity fund was actually down in 2018. It was his other fund, the Pure Alpha fund that did well.

      Delete
    7. Macroanalyst,

      Opps. I've always associated Ray Dalio with Risk Parity ;)

      Thanks!


      All Weather underperformed Pure Alpha?

      Interesting...



      Delete
  12. LTCM was a good example exactly because "Ren Suan Bu Ru Tien Suan"

    The only place it seems this platitude doesn't apply is in a Casino.

    Yet Trump or maybe other person had been bankrupted by running a Casino.

    i am not sure by poor business management or by design.

    i would tend toward the latter.

    LOL!

    ReplyDelete
    Replies
    1. temperament,

      Yes, there are many things we can't control, but whether to take on leverage or not, and by how much - that's 100% within our control!

      That's the "feedback" you have missed ;)



      Delete
  13. No i did not.

    From what I understand about LTCM, at least 2 Nobel Prize winners were in the design of this fund.

    They never thought or asked the question those leverage ratios were risky or not if a Sovereign defaulted on it's debt/bond.

    IIRC.


    ReplyDelete
    Replies
    1. In fact they might have thought their design was full-proof, so the more the leverage the better.

      Delete
    2. In fact if I remember, LTCM WAS quite successful in the beginning years that they increased their leverage not minus.

      This is good reminder for ourself whether we use leverage or not.

      Never let some success in the market lead one to think nothing can go wrong and whack all in.

      Delete
    3. temperament,

      Even without using leverage, the same can be applied as to whether we want to be 100% vested or keep some cash on the side - just in case we were wrong ;)



      Delete
    4. It is not so much the question of whether those leverage ratios were risky or not if a Sovereign defaulted on it's debt/bond. Nobody can predict such an event happening. The problem lies with them refusing to accept that spreads can widen beyond their expected "whatever number" of standard deviation. They were targeting 30-40% annual returns using spread strategy which should already sound a big red flag to them since achieving such high returns invariably means you have to use huge leverage and take a view that spreads always mean revert within a certain deviation and that correlation among the different spreads will always be much smaller than one. Ultimately, all their spread positions were essentially one huge short liquidity play so when there was a liquidity squeeze, all their aggressive assumptions went out the window. The Russian debt default was merely the catalyst for what is an eventual outcome. Add insult to injury, they refused to cut loss and even added to their positions which extended their leverage even more!!!

      Basically their demise was entirely their "Ren Suan" fail and nothing to do with "Tien Suan"...

      Delete
    5. Macroanalyst,

      Our entries and exits are what we can control. Whether we want to is another matter ;)

      That's why the Mental part of investing/trading is so intriguing!



      I've learnt the hard way from letting my Jurong Tech went all the way to ZERO.

      Before reaching zero, it had to go through -10%, -20%, -50%, -90%, etc.

      I could have cut-loss at any point... But NOOOOOOOO... I lied to myself I'm a "long term investor"...


      Well, now I know better!

      LOL!


      Delete
    6. I think they were quite sure at that time they think they couldn't fail as they are Nobel Prize winners and all that.....

      Delete
    7. Not just them but all those who threw money at them...

      Delete
    8. temperament,

      Everyone had a plan; until they got punched in the face.


      Retail "investors" are, in general, even more "male-chicken" sure than the Nobel Prize winners:

      I'm a long term investor!

      I only buy blue-chips!

      I'm super diversified; I owned 100 counters all listed in SGX!

      I only care about dividends; paper losses don't count!


      OK...


      Delete
    9. Paper loss don't count can really works for people who think money in stock is nothing to them.

      I have relatives who buys only and never sell one.

      The only reason-too much money already.

      No need talk about property investments.

      Delete
    10. temperament,

      Yup. If one is not 100% vested in equities, let's say max 25% of networth?

      That meant even if all their stocks went to ZERO, they still got the balance 75% to maintain their lifestyles ;)


      The last thing we want, in our advance age, is to be like that German billionaire you shared who killed himself for still going all in....



      Delete
  14. U tell me!

    When I was real Beikambing, I let about $25000 worth of warrants expired.(Not that I don't know).


    Even liquidate @ 1/2 to 1 cents is still money ma!
    How stupid can i get?

    U read about a reendeer caught in the headlights of a car, right?

    That was like me at that time.

    Boomdazzled!

    Stunted!

    Frozened in time!

    My broker didn't call me because I was only a kachiam puteh
    trader.

    After the fact it happened, she paniced, chasing me for the money.

    Of course I paid up.

    My brokerage account has been kept prestine till this day.

    I can just opened a new account in any Singpore's brokerage.

    ReplyDelete
    Replies
    1. temperament,

      Well, we have done pretty dumb stuffs when we were bei kambings!

      Now that we are grey old muttons, let's not do it again!

      LOL!


      Delete
  15. Brokers and financial trainers who teach trading for a living will try to make trading sound easy. Spend only XX minutes a day on trading while you travel round the world, spend family time etc . When trading is sold like that, the market audience is larger. This post paints the real truth. Trading is so difficult that even the highly-paid, well qualified professionals who spend most of their waking moments thinking about trading are shutting down.

    Trading is not a no-brainer activity that I will "jio" others to do the same. A successful trader may actually cause harm to his friends/relatives when they monkey see, monkey do, thinking that they can replicate the same success as him. I tell my friends and relatives who are interested in investing/trading that this is a difficult and dangerous profession. If you have interest and think you have talent, by all means, take the plunge. Don't try, don't know. If your interest is only in the money, be a passive investor and work hard on your professional job. The worst thing that can happen for normal salary workers is to be jobless with zero cashflow. No big deal compared to negative cashflow or significant chunk of networth lost to the market as a trader.

    Novices think they can start making money from the markets after attending a 3 day $XXXX trading course. Trader job so simple meh? The thought of my children and family members becoming traders without realizing the real dangers and difficulties send shivers down my spine. What they see on the surface is the trader/investor's lifestyle. Looks like he is taking the easy way out of life but they cannot see the sacrifices made to achieve the success.

    If my friends/relatives prefer to listen to financial trainers and brokers with hidden financial agenda because they prefer to believe what they like to hear, I console myself I have done my part. No need to feel guilty anymore if they happen to be on the other side of the occasional profitable trade.

    ReplyDelete
    Replies
    1. hyom,

      I neither encourage nor pour cold water when others want to trade to escape or for a living.

      Crash got sound; talk too much no use.


      Trading is a like selling insurance or properties; a small minority will do extremely well, most don't.



      Delete
  16. Tell the truth as one sees it and paint a realistic picture. Neither encourage nor pour cold water. That's what people with no agenda will do. One reason I follow your blog is your financial blog has no financial agenda unless explicitly stated in the occasional adversatorial post.

    When friends and relatives seem to focus on the rewards and ignorant on the risks, I would rather be biased towards emphasizing the risks even if they don't like to hear it. If they have the interest and are educated on the risks, by all means, take the plunge. Don't try, don't know. Don't know, don't try.

    ReplyDelete
    Replies
    1. hyom,

      You don't follow my blog; no one does.

      This is just a watering hole which you like to drop by from time to time ;)


      My posts are merely "throwing brick to attract jade".

      The main reason why most come here is for the interactions with the weird mix of animals that loiter here - some are several leagues smarter than me; some I think are quite mental!?


      If people treat us too friendly, it meant we are treated as "customer".

      We belong to someone else's sales funnel that can be "monetised" one day ;)


      Here I can poke, "suan", tease, mock, and bicker with the brave commenters; they know I don't treat them as "customer" ;)

      LOL!




      Delete
    2. Hi Jared,

      Happy Chinese New Year. May the new year bring pleasant new developments into your life.

      You're too humble. More accurately, your readers come to your blog because they throw brick comments to attract jade replies from you. I have seen one-liner reader comment attracting multiple paragraphs reply from you. There are some comments that I really don't know how to reply if they were on my blog but you still make the effort to reply.

      I don't pay you money. You don't pay me money. I'm not your customer. You're not my customer. When money is not involved, the relationship is more sincere. Better get sincere unpleasant pokes from someone with no financial agenda than feel-good flattering from gold-digging salesmen.

      Delete
    3. hyom,

      恭喜发财,新年好!

      Paiseh, now I'm remembering the most common repeating feedback in my primary school report book, "Jared is too talkative in class. Must learn to pay more attention in class."


      I'm the current record holder in Singapore for the shortest blog post; I guess I'm gunning for the longest comment record too!


      I'm in sales mah. Overcoming customers' objections is our bread and butter.

      Eh, gold-digging salesmen no fun; gold-digging pretty saleswomen fun!

      If free nothing to do, just flirt, flirt, pretend, pretend.

      Don't worry about saying no. If they discover you never going to sign on the dotted line, they'll drop you quicker than a used tissue!

      LOL!



      Delete

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