Clear Choices

From the net:

“The cable television program Mad Money with Jim Cramer first aired on CNBC in 2005. According to CNBC’s Web site in an article titled, “Mad Money Manifesto” by Jim Cramer, the show’s mission statement and Cramer’s job: “…is not to tell you what to think, but to teach you how to think about the market like a pro. This show is not about picking stocks. It’s not about giving you tips that will make you money overnight – tips are for waiters. Our mission is educational, to teach you how to analyze stocks and the market through the prism of events.

As you consider that, consider an excerpt from my book The Complete TurtleTrader:

“Richard Dennis’s friend Tom Willis had learned long ago from Dennis why price, the philosophical underpinning of Donchian’s rule, was the only true metric to trust. He said, “Everything known is reflected in the price. I could never hope to compete with Cargill [today the world’s second-largest private corporation, with $70 billion in revenues for 2005], who has soybean agents scouring the globe knowing everything there is to know about soybeans and funneling the information up to their trading headquarters.” Willis added [when talking about trend followers], “They don’t know anything about bonds. They don’t know anything about the currencies. I don’t either, but I’ve made a lot of money trading them. They’re just numbers. Corn is a little different than bonds, but not different enough that I’d have to trade them differently. Some of these guys I read about have a different system for each [market]. That’s absurd. We’re trading mob psychology. We’re not trading corn, soybeans, or S&P’s. We’re trading numbers.”

Clear choices.

9 thoughts on “Clear Choices

  1. Michael

    Surely fundamental analysis also utilizes mob psychology, in that it enables you to say ‘On the balance of evidence, Event A will happen, and experience tells us that the market will respond to Event A by selling like there’s no tomorrow’.

    BTW, would you say that the weight of money distribution between buyers and sellers is an even better indicator than price action, in that it precedes it? For example, if sellers want to sell 100,000 units of an equity at $1.00, but buyers want to buy just 10,000 units at $0.99, then it’s likely that sellers will push down the price.


  2. “would you say that the weight of money distribution between buyers and sellers is an even better indicator than price action, in that it precedes it?”

    Michaels “This is f****ing nonsense.” applies to the above too.

  3. Trader Ken –

    Er, no, not really. I don’t know if that information is available with financial markets, but I know people who make a good living trading using weight of money on a betting exchange.

    BTW, do you not thinking telling someone that their opinion is ‘****ing nonsense’ is a rude, unconstructive and immature approach to discussion?


  4. Well Jeff you need a sense of humor 🙂 It’s nonsense because it would be impossible for the average trader to know the exact weight of money on each side before a trade its made. And if they did somehow know then it would be insider trading, front running, etc which is illegal. It would be like asking, well if a someone had a crystal ball that could perfectly predict the markets then wouldnt that be a better indicator than price? See the nonsense?

  5. Ken –

    Sorry about the tone of my reply – I was in a bad mood this morning. 🙂

    Fair enough – I wasn’t aware of the situation. I thought that traders at banks might be able to see the weight of money.


  6. It’s always easy to see who the experienced traders are, and who are the people who would be more comfortable lecturing about their “ideas” in a classroom (notice I didn’t say “teaching”).

    If you come into a discussion spouting nonsense like it’s some kind of revelation don’t be surprised when someone calls you on it.

  7. Jim-

    I don’t possess, or claim to possess, any specialist expertise.

    I was merely putting forward an idea for discussion…


  8. And then got upset when it was called nonsense, which in my opinion was right on target. Feel free to share ideas all you like, but it’s always good to have a grasp of the subject matter first.

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