I am partaking in a thread on the Huffington Post. One reader wrote:

We learned deregulation is a disastrous idea. We learned the unregulated capitalism is Plutocracy and destroys democracy. We learned, again, that greed creates people completely without moral restraint.

I responded:

Blanket statement? All greed is ‘bad’? Are you proposing a solution to greed? Maybe legislate it away?

Someone else responded to me:

Yes indeed, all GREED is BAD; do not conflate greed with reasonable goals of attaining what one needs to survive or even prosper. Greed: excessive or rapacious desire, especially for wealth or possessions. Example: A person who starts a business and does well–even to the point of extreme profits–is NOT greedy by virtue of that fact alone; this person [if honest and not exploitive to customers or employees] has put in the time and effort to legally and ethically earn those profits. On the other hand, a person who connives to gain UNDUE profits at others’ expense, or through nefarious means, is indeed greedy, and despicable as well. There is no such thing as a moral high ground that contains elements of greed; such assertions are childish Randian concepts not worthy of a mature adult’s consideration.

My response to that? My old favorite:

You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content.

16 thoughts on “Greed

  1. The two respondents above have Spoken like good little socialists. they probably voted for obama as well.

  2. Democratic, capitalistic societies always had regulated economies. It is not a question of regulation or no regulation at all. What is the intention of regulations? I think the main intention is to make behaviour predictable. Regulations force market participants to standardize their interactions to some extent. That is good because it is reducing the cost of information. The problem with the deregulation theory is that it assumes that everybody either has the same informations about the world as everybody else or could obtain it for a reasonable price, but that is not the case in an unregulated economy. An efficient market can only develop when information travels. If the information gap between two partners in an economic interaction is too wide than there is no need for the knowing to improve his product.

  3. “Greed” is neither good or bad: it’s just plain bullshit. We all do something for a reason, for a goal. Even when you do charity, you do it because it makes you feel good with the world ,but most important, with YOURSELF. Would you be considered greedy in this case?
    You found a company, and if it profits “extremely” (i don’t know what “extremely” really means), BUT you didn’t expect it, you are greedy? come on, so much bullshit. A founder of a company, a rock band, a football player, whatever you want, always dream of one day making it great, even though it is unlikely. It is all this “greed” that moves people.
    The right word for all this discussion is exploitation, not greedy. And regulation/deregulation per see can be directed to both objectives, it can stop exploitation, if can make people compete honestly, or it can make business and people sitting on their asses instead of improving it, or to try to make more money without improving.
    If you’re speaking of banking deregulation, it wasn’t deregulation that failed, it was the consequences of a unregulated world that people didn’t want. I personally believe that regulation is better, but I do understand a deregulated industry could work: all it takes is to let them FAIL. Would you lend these guys or deposit your money if they weren’t “too big to fail”? Would they become that big if they were “too big to fail”? Make no mistake, this type of regulation created this situation, not the lack of it. To the avoidance of any doubt, I’m not against regulation. I’m against THIS regulation. All we need is for a decent “regulated” banking system is: 1 – let banks fail; 2 – secure only FDIC insured assets, OR separate the custody of our assets from the bankruptcy estate of the failed bank, unless you actually “lend” the bank the money; 3 – Higher and higher FDIC fees the bigger and the more concentrated the banking system is; 4 – Limit LEVERAGE, instead of bogus capital rations. This last measure is a bit redundant if you put into action the other 3.
    Regulation per se can also have the opposite effect. Take for instance mobile operator licences, or utility operating licences. The historical arguments: A company gets too big and so we need to regulate it, because they operate in a natural monopoly market, that is, if nobody did anything the biggest company would take over the whole market, as it would become the lowest cost producer, and charge monopoly prices. Solution: regulator limits their profits, by fixing its tariff, and creates a “licence” for each territory, preventing it from getting too big. The very same tariff fixing not only disincentives people into entering the market, but also eliminates the company business risk. So from that point on the company can sit on their asses and not improve its efficiency, AND the licence implies nobody else would be competing with them. So, are you for regulation or for SMART REGULATION? I’m against THIS regulation. A much better solution could be achieved if: 1 – no monopoly could have ANY anti-takeover, or limiting voting rights, to prevent them from sitting on their asses; 2 – a progressive size fee, the bigger you get (the big here is not important, the important is the more concentrated the market gets), and 3 – abolish licences.
    While you sit and complaint and ask for government to discipline these companies, what the government is really doing is to actually CREATING the monopolies, and then putting bureacrats there, to get your vote, as promote themselves as guardians of the universe.
    So before we complain about regulation/deregulation/greed, you must first think what kind of regulation, and who exactly the current regulation is helping, before we come with preconceived liberal/convervative/socialist ideas or whatever.

  4. Milton Friedman is a towering, historic figure. His books changed my life and helped me to organize my thinking. I wish his selfish interest had including more writing and more speaking as to help further advance my selfish interest.


    Further, David (above) is completely wrong on regarding “deregulatory theory” whatever that is. Capitalism makes no claims that all information is available to all. It, very simply says that those with information are free to act upon it, as they see fit and suffer or enjoy the consequences.

    Further, an efficient market is not one where every participant has the precise intellectual context as every other participant. That’s nonsense. An efficient market is one where there is minimal friction. Where the spread between the bid and the offer is minimal and stable. Everyone buys and sells for their own selfish reasons.

    I’m long the S + P as I write this yet evey minute thousands of participants are shorting it. If I had access to all their information — an impossible requirement — I wouldn’t change my position and I’m sure the same holds true for every particpant.

    A typical strawman.

  5. William, i agree with you in terms of financial markets. But what about buying food for your children, or medication when you are severly ill? I´m sure you take it for granted that there is a regulator that tries to make sure, that a company can´t sell you something as medicine that is useless.

  6. I like Covel’s response to the reader.

    We can only change ourselves, the rest are just stories.

    Keep shining that light on BS Michael. I do enjoy reading it.

  7. William Walsh, you’re right about the S&P. Ameritrade used to have an index (not sure if they still do) that showed whether their customers were buy/selling vs. what the market was doing. And almost always when the market was moving up the customers were selling, and when the market was moving down they were buying.

  8. dont you love how the neo economic nazis always bring in ayn rand in a disparaging way?

  9. A Gordon Gekko quote,(From Wall Street-1987),:

    “The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind”.
    The New Gordon Gekko quote,(From Money Never Sleeps-2010):
    “This is the new greed, pal. How much do you want? The government is paying!”
    My question: Which of these beliefs are moral? Which of these views on “Greed” are right? Is “greed essential to the human condition?


  10. Most of our economic problems are caused by greed but not greed for money,greed for power. Greed for power is embodied in our regulators. They don’t create anything, they destroy it. Examples: 1)Auto industry, congress mandated mileage & emission standards making cars unprofitable but not trucks. Voila, the SUV was born & profitable. 2)Housing bubble, congress created & regulated fannie & freddie and mandated relaxed standards that created easy credit. Now we are suffering the ravages of a housing bubble. 3)Wall street was killed by mark to market rules that help destroy our financial system by not realizing that there really is no market for many derivatives and also not taking into consideration that asset values are also determined by income streams. 4)The Federal reserve system that controls interest rates kept those rates (under the leadership Mr. Greenspan) artificially low helping to create the biggest problem of all…. a huge credit bubble. Now we are left with Mr. Bernanke’s stimulative packages and Quantitave easing; strategies that all create a bigger, better credit bubble and most probably the most dangerous one of all that could very likely destroy the U.S. as we know it.
    Given the choice between greed for financial success or greed for power, I’ll take greed for money every time!

  11. This is typical. Most of the commenters are actually a lot more articulate and thoughtful about this than the author. Just because you wrote a book about Trend Following, and are capitalizing off of the work of the Turtles, doesn’t make you right.

    Michael, you need to stop being so glib and ideological with your pet theories, and start being more historical and circumspect. Even Friedman has qualified his statements over the years. I find your ideas about what capitalism and free markets actually are to be incomplete and a bit simplistic. I find your attitude and arrogance offputting. If you are so smart, get your butt to Washington and start making a real contribution, instead of aggrandizing yourself by rehashing and repackaging the hard work and accomplishments of others.

  12. Jay now that you have thrown some attacks out there could you be specific about what you actually disagree with me about? You have a put up a “touchy feel good” comment, and you seem to be upset about my trading content and books, but you have said absolutely nothing of substance. For example, I have no idea what this passage from you means:

    Michael, you need to stop being so glib and ideological with your pet theories, and start being more historical and circumspect.

    What is glib to you? Having an ideology is bad? What is the pet theory exactly? What’s not historical? What am I supposed to be circumspect about?

  13. I should add that if anyone thinks “going to Washington” is a noble or worthy goal…well, let’s just say we have drastically different understandings of what D.C. actually is and what can be done there. Politicians are problems, not solutions.

  14. Greedy or ambitious? trying to acquire more profit by taking risk that is higher than the safe zone may lead to failure … young traders lose money because they don’t understand they don’t see reason to maintain consistent drawdown speed (opposed to allowing volatility on the upside).

    The problem here is not the high possibility of losing all your money on one trade, but the problem is losing our long term winning average, this happens because the long term winning average is randomly constructed from short/medium/long term winning and losing positions, and since we can never predict future winners or losers, we would consistently raise risk to above safe levels or occasionally raise risk which is even much worse because then we become gamblers because we allow market volatility to transfer into our system which would give the market price the ability to become deterministic instead of our system being the one that is long term deterministic.

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