Mark Hulbert pens some of the best mindless drivel seen in a while:
“Fortunately, a disappointing first half does not automatically doom the second half of the year. A clue to this comes from just anecdotal evidence. Take 2009, for example, when the market lost ground for the first six months. Yet the second half of the year witnessed one of the strongest rallies in recent memory. To be sure, poor first halves have not always been followed by such pleasing reversals. There have been plenty of other years in which poor first halves were followed by poor second halves as well. But the historical record shows there is a largely random relationship between the market’s performance in the first and second halves of each year.”
Got those marching orders? Now move out men and women…there is money to lose!
Ken at Top Breakout Stocks recently made a comment here about this WSJ article. What did he say?
“Replace the word ‘strikeout’ with ‘taking a loss’ and ‘runs’ with ‘profits’ and it’s a perfect analogy for trading.”
So I decided to try it. Here is the article:
There is no easier way to get booed in baseball than to end an inning with a swing and a miss taking a loss. For as long as the game has been played, hitters have been taught to make contact and put the ball in play, but a new generation of sluggers is finding success swinging from its heels on every pitch. The negative stigma surrounding the strikeout taking a loss has been destroyed. No player exemplifies this change more than Arizona’s Mark Reynolds. Last season, he became the first player in baseball history to whiff take a loss 200 times in a single season, and now he’s on pace to do it again. Arizona has been willing to live with long walks to the dugout because of what he is able to do when he does make contact—he’s hitting .440 with 40 home runs profits when the bat meets the ball. Other notable players with this all-or-nothing approach include Philadelphia’s Ryan Howard, the Nationals’ Adam Dunn, the Rays’ Carlos Pena, Oakland’s Jack Cust and Seattle’s Russell Branyan. Each of these five has racked up 140 strikeouts losses or more this season, a feat nearly unheard of 30 years ago. Bobby Bonds’s record of 189 strikeouts losses in a season held up from 1970 to 2004, but since then, it has been passed six times, and Mr. Reynolds is just about to do it again. Run scoring Profits have also increased as the strikeout taking a loss has become more acceptable. Statistical analysis has shown the strikeout taking a loss is no worse than any other kind of out, and the trade-off for extra home runs profits is more than worth it. Dan Plesac, a two-time All Star and current MLB Network analyst, says today’s players are “more rewarded if you hit .270 and get 30 home runs profits than if you hit .310 but hit 20.”
“Defining the Link Between Risk and Leverage” (PDF).
“Performance, Risk, and Correlation Characteristics” (PDF).
“Top 100 Hedge Funds” (PDF).
Some key questions asked by Brett N. Steenbarger, Ph.D. in his ‘A Trader’s Self-Evaluation Checklist’?
Are trading losses often followed by further trading losses? Do you end up losing money in ‘revenge trading’ just to regain money lost? Do you finish trading prematurely when you’re up money, failing to exploit a good day?
Do you cut winning trades short because, deep inside, you don’t think you’ll be able to make large profits? Do you become stubborn in positions, turning small losers into large ones?
Is trading making you happy, proud, fulfilled, and content, or does it more often leave you feeling unhappy, guilty, frustrated, and dissatisfied? Are you having fun trading even when it’s hard work?
Are you making trades because the market is giving you opportunity, or are you placing trades to fulfill needs — for excitement, self-esteem, recognition, etc. — that are not being met in the rest of your life?
A comment from here:
“They have been unable to increase lending. Our fiscal operations have been largely targeted on the same markets – the lending markets. Unfortunately, the crux of this problem does not reside at the banking level, but rather the consumer level.”
True, and while I prefer tax cuts and small business targeting (if the government has to have a hand), I am afraid no one or no group can force this economy to spark for some basic reasons:
1. Too much capacity across all aspects of real estate. Not changing any time soon. We overbuilt for a gold rush that was only here as long as some bubble (any bubble) stayed in place. Pop.
2. Since 1995 two bubbles (dot con and real estate) gave everyone the belief that they could get rich overnight. That motivation was huge! It’s gone. What could possibly get the animal spirits of millions gearing up again to get rich? What new bubble? Time travel? Life extension? It sure as h*** is not alternative energy.
3. Our greatest invention, the internet, is arbitraging away typical ‘jobs’ at breathtaking speed. Can’t stop it. Genie is out of the bottle.
Now what? No central planning from whatever group can fix what ails us and if you are waiting for a fix — you are going to lose many years off your life. In terms of getting ahead, it’s every man for himself — whether we admit it or not.