Wednesday, August 19, 2009

Choppy Waters

It's choppy out here--but the sun is shining, the water is beautiful, and the fish are biting! But before I lose a signal, this thought came to me, as I saw that China was down again today.

In February, of 2000 I needed some mulch, and I threw a couple bags in the front seat of my Porsche on the floor, and took them home. After I tossed the bags out, I noticed the front seat was still full of mulch pieces, and I said to myself, that I needed to go and get another vehicle.

So I stopped at the neighborhood Cadillac dealer, and looked at these giant Hummers, and decided to pick one up to haul mulch around. And then I said to myself "WTF?"

How is a Hummer an impulse buy to haul mulch around? Doesn't that mean money has been made too easy?

I said screw the Hummer, went home, and I sold everything the next day, just too clear my head. Sometimes, for traders, you have to take all the money off of the table, just for the cathartic response that it gives. And don't think a bit of that isn't happening on Wall Street--but it's not a mulch moment, or a Minsky momement either! After all, who is financing speculation now?

Anyway, in the vicious bear market that followed, my mulch moment, I only lost about 3%. After dumping everything I just traded very light. I didn't make any money over the next couple of years, but I didn't get dinged, even though I was still spending like it was the 90s. (Now I didn't talk about the latest bear market, because I got smacked around in that. Why bother bringing that up?)

Now last night, I wrote a recap piece, but don't think that I don't know that bull markets make bulls look like geniuses, just like vicious bear markets make the most strident bears look prophetic. So all you bears that think that will mark some major top in the market, please, just put those thoughts to rest. That only happens to bears. What do you think--that I'm going to have another mulch moment?

You only get one of those! That's why the story is good!

Which is why, on the day it happened, on April Fools, when David Rosenberg turned bullish, by trying to be "tongue in cheek" and dripping in sarcasm, I pointed out the folly of his arrogance.

But the scars of the last bear market, aren't felt by those under-invested. They're just worried about matching their index. They're worried about performance anxiety!

And that's what makes me think that this is just some choppy waters, and not some major top that everyone seems to want to tout.

Traders will move in cash, just to clear their head--but the big money? They can't make that impulse decision, like you and I can--that's made by committee.

Even though some folks just want to sell, just to enjoy their last weeks of summer!


Anonymous said...

Hey I'm curious, what you do for a living? I'm guessing it's trading.

Palmoni said...

That's it!

Palmoni said...

Also an artist..

Anonymous said...

Yeah big money comes from painting, hah :P

I'm wondering did you get started working at a trading firm or did you do things on your own?

I hope you don't mind me asking these questions. I started getting involved in the markets since the crash. I'm still very young and I'm wondering how I can get a job at trading firm? Living in CA will make finding those career opportunities hard to find.

palmoni said...

On my own--but they have plenty of opportunities at trading firms-

You could start small and work up-especially if you're young. I first traded when I was 21..and you are in a perfect environment.

And really, all you need is just a few good stocks that you know really well.

And learn about options. You can leverage yourself with them, w/o worrying about margin calls--your risk is what you put up.

But I'm an old fashioned tape reader and a fundamentalist with a pulse on the psychology of investors. Everyone now it seems think that charts tell the whole story.

I don't buy that. I see too many times where they try and make the charts say something.

You don't need a lot to make money with.

You just need the confidence to pull the trigger, and let the market tell you what is going to happen.

I suppose that's an art in itself.

But my taste in art is probably a little different than most.

My ceiling:

The little girl next to the face of God is my daughter at three.

Anonymous said...

You are really gifted as an artist. How long did that painting take you?

Yeah I just started leveraging myself up through options. Hopefully if the markets don't collapse, I should have a nice head start on life. I truly think this is the best environment for new blood to pick up some cheap shares.

Palmoni said...

Be careful--and be smart and you'll do well