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A Fake Price Is Still A Price

Feedback in from my assistant Michelle:

I was watching survivor last night with my mom and my mind was blown when the person who got kicked out said this:

I was very confident that whether we won or lost [the challenge] things would work out for me. I really don’t know what happened that made my tribe want to vote me out tonight. I don’t think the numbers lied to me, it’s the people that lied to me and when you count fictitious promises you get a fictitious total.

She was saying that she got kicked out because of the people, not the “numbers”, but the people are the numbers. They are who vote. Just like saying you don’t lose money because of what the market does, you lose money because of what other people do to make the market go up and down. Just trying to blame your loses on the “people” rather than “the numbers.” It’s all the same thing. The game is made up of people who make up the numbers.



Paraphrasing Richard Feynman on “Price” Importance

Trend followers trade the “price”. It’s the number that can’t be faked, the real indicator of the past, now and the future. Richard P. Feynman adds:

“You can know the name of a bird in all the languages of the world [think of all those so-called market fundamentals], but when you’re finished, you’ll know absolutely nothing whatever about the bird…So let’s look at the bird and see what it’s doing — that’s what counts.”

What is the market doing right now? That’s what counts. The price.

richard feynman

Right and Wrong

A recent conversation:

Luis: Hi Michael this last podcast is really amazing with Harry Dent. To be honest I live in Portugal and I don´t know what we need more to open our eyes from our Global State of Coma. Keep going with this amazing podcast.

Michael: Why did you like this one so much?

Luis: It is amazing that you keep explaining the manipulation in so many different ways and we just can´t see. And this one is from a more fundamental I hope more people understand now people just love this kind of numbers.

Michael: Some people think it is bad to discuss these issues–trade price alone they say. Sure trade the price for trading, but we as human beings can’t keep ignoring what is the appropriate way to run societies. There is a right and wrong.

You Don’t Have Inside Access, But Some Do; What Will You Do?

Take a read of PDF exhibits from the March 15, 2013 Hearing: JPMorgan Chase Whale Trades (A Case History of Derivatives Risks & Abuses).

Bottom line?

You don’t have access to the power reigns.
You don’t have a hotline to politicians.
You will not be bailed out.
You can’t believe anything you read and all fundamentals can be “cooked”.

What are your options?

Trade the one variable they can’t fix or fake: the price.

That’s the trend following way.

How I Look At The Markets

The markets are a science. Plain and simple. Some like to look at fundamentals and guess what will happen next. I like to look at the numbers. The facts. The only thing you can trust. Billion dollar hedge fund manager David Harding views the markets similarly:

Our approach to markets is a science. It is an unpublished science, but it is a real one. You would have thick leather-bound volumes of papers on it if there were a willingness to “open the kimono,” as the horrible modern expression has it. The process of trading our system is like repeatedly drawing different colored balls from the statistician’s apocryphal bag. As we draw out a ball it becomes part of the track record, and we put it back in the bag, but there is no guarantee that the balls will come out in the same order in the future.

Trend following is speculation in its purest form–find an edge and exploit it consistently over time. That attitude is critical for any entrepreneurial success. Throw the lottery mentality away. Forget the one hit wonder luck the press propagates to the masses of lemmings. Learn the real way to profit that goes against buy and hold (hope).

Learn to be a trend following trader.
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