Category Archives: Psychology

Macro Changes

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The following is the opening segment of this week’s edition of Notes From the Rabbit Hole, NFTRH 381…

A picture is worth 4-plus years and thousands of words, and the picture below has a lot to say. I’ll say some words as well, since I have kept them bottled up for years in an effort to make sure we operate with discipline as opposed to gold bug style emotion.

The bear market and subsequent inflation-fueled credit bubble early last decade was when I first started paying close attention to macro markets (as opposed to stock trading, which I had done for a few years prior) and how they operate. Having seen well paid professionals lose half of my IRA in 2002, I took over all of our finances and never looked back. But I needed to understand how markets worked and that has been a challenging and rewarding endeavor, not to mention an ongoing learning experience.

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What’s In a Name?

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This post is about reputation and its persistence………..especially if it’s a bad reputation. Companies have brands, and so do people. If you don’t think so, stop for a minute and consider the “Bill Cosby” brand. Five years ago, what kind of thoughts came about with that name? Oh, stuff like The Cosby Show, Jello-O Pudding Pops, Fat Albert, comedy, positive family role models, and so forth. How about now? Well, you can figure that out for yourself.

Likewise with the likes of Chipotle, which used to be the absolute darling of Wall Street until a very, very tiny little problem called e. coli showed up.

0203-CMG

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You Ain’t Seen Nothin’ Yet

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the_penguin_and_the_polar_bear_by_lt_general_cao

I seriously doubt that the average market participant realizes the magnitude of the devastation that lays ahead. It is our human nature to project forward based on recent events – a common cognitive bias which can easily lead to painful losses during regular market conditions. But what we are facing over the coming weeks and months will register several standard deviations beyond current worst case scenarios, at least based on activity/pricing I’m currently seeing in the option chains.

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