Friday, September 25, 2009

Muscling With The Markets

"The market wasn't agreeing with my view. But rather than listening and being patient, I tried to muscle it. It was a classic case of thinking I knew more than the market...I was so badly hurt that all I could do was lick my wounds and get the hell out of there. Not only did I lose a lot of money, I missed a great opportunity."

- Yra Harris, Praxis Trading, from Inside the House of Money, Steven Drobny
I've had some down time recently and have been reading Inside the House of Money, put together by Steven Drobny. It interviews hedge fund managers/traders who have the style of investing known as Global Macro, which is essentially investing in everything, from stocks to bonds to commodities to trees. You get the point, they invest in anything! (Pretty badass, if you ask me)

So I read an interview with Yra Harris, a veteran trader on the Chicago Mercantile Exchange, and came across the quote above, and it got me thinking.

Is it possible that right now, with the stock markets rallying roughly 50-60% from its March '09 lows, that my continued pessimism is like "muscling" with the markets? Is this the classic case of thinking that I knew more than the market? Am I missing something?

After reading a lot today, I find that the most prevalent bullish case in finance media and blogs is nonetheless still that the "global governments are pumping lots of money into the system" and that monetary policy drives the markets. As I argued in my previous two posts, this pumping of money into the system is neither effective due to the reduced risk taking of the financial sector nor will it be healthy for the economy since it increases risks of high inflation. If there are other stronger bullish arguments, somebody tell me please!

After some evaluation, I believe that while my fundamental argument is still intact, my timing is off. I don't think I'm still a bear simply because I'm arrogant or too proud or anything like that. I sure wouldn't mind a happy-go-lucky bullish market.

I'll need to continue honing my entry points into the market as I gain experience in trading.

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