Smoking Securities

Half Baked High Finance

Bear Hunter

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My indicators show the emergence of a new uptrend, and so I’ve bought IWN, IYR, EEM, DBC and TBT for the ride up.  Since my indicators remain in bearish territory, I’m staying cautious, trading small positions till volatility falls further.  Sadly, I have no chart to post because I haven’t figured out how to make nice pictures on this blog.

While getting a pedicure from one of my dad’s girlfriends, I overheard a woman bitching about the market, clearly emotional about the whole thing.  She was convinced that there was more pain on the way and that the end was neigh.  Soccer moms talking about the unending bear market in a nail salon is no reason to get long, but I like how it coincides with my newly formed bullish bias.

After listening to her laments for a few minutes, I discerned that she read the NY Times and watched CNBC.  She felt powerless, exhibited irrational cynicism, and was clearly irate about her bad fortune.  I tried to explain that there were things she could do to limit the impact this mess was having on her life, but she seemed resigned to taking her lumps with the chumps.

Information asymmetry pervades all corners of the market, and though each participant is convinced that their outlook is correct, there is only one view that matters, the market as a whole.  Media corporations are not in the business of making investors money, they are in the game to sell information.  The news is a lagging indicator, thus trading decisions based on the news cannot have an edge unless other participants are in the dark.

CNBC and The Times are models of information distribution that will disappear as user generated content supplants “expert” commentary.  There will always be room for investment professionals, but the knowledge gap between mom/pop investors and successful risk managers will begin to shrink.  People will become aware of their potential to create the future as singularity approaches.


Written by chucklesamadeus

January 28, 2009 at 8:49 pm

Posted in DBC, EEM, IWN, IYR, TBT

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