Category Archives: Psychology

Viva Hate

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At the start of this week, on my Tastytrade show, I said that it felt like something had “snapped” in the market. There was a confluence of little events that took place that convinced me that the few remaining bears had either lost their minds or thrown in the towel. The “Disappointment After Doha” – – that is, the inexplicable rise in the market after the complete collapse of talks in Qatar last Sunday – – – was the straw that broke the camel’s back for many people.

Now, in my line of work, you’d expect me to be the recipient of a regular amount of hate mail. For one thing, my view is an unpopular one. The vast majority of people actually want assets to inflate in perpetuity. A permanent bull market would be just dandy for 99.9% of the public, and not only do I tout exactly the opposite, but I’m rather bombastic about it.

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The Day I Gave Up Forever

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It has been ten weeks since the market bottomed on February 11th. To me, it feels like ten years. It’s been a grueling, awful grind, but it didn’t get really beyond-belief miserable until March 17th, when Yellen went uber-dovish and patterns and trendlines started getting smashed like turkeys being thrown from helicopters.

As I sit here now, the last decent down day we had was back on April 7th, and otherwise the market is just grinding higher and higher, in many cases making highs never seen before in human history. I really thought we were done with all this; that, as I put it, “the wind was at our backs.” Well, the central banks learned their lesson in 2008, and they’re not just going to roll over and let market forces take control. No way, no how.

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Deprogram Yourself

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Robot-48x48The title of this article is not an assumption that you, astute reader, are little more than a robot following the direct and implied commands of other robots when trying to make logical sense of the state of modern financial markets. Personally, I have found that I need to stay on a path of post-deprogramming maintenance in order to stay right with a complex market backdrop.

On an inward-looking basis, we as investors and traders are faulty humans going up against robots (Ref. Rise of the Quantitative Robots) that are much smarter than we are with numbers, with data mining and with extrapolation. What do we have, puny little human brains with all associated biases, ego distortions and other faults? Yes, that is us.

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The Market and Terrorists

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I like to use the Quora.com site, and someone on there just asked me a question about how terrorists affect the stock market. Since I took the time to answer it, I might as well recycle my contribution here:

The general answer is a very unsatisfying one: “It depends.”

What I mean by this is that the market’s reaction will be very contingent upon how the market is feeling about itself in the first place. If the market is weak, and people are scared, then a terrorist attack – – or even the threat or rumor of one – – will send the market reeling (although, usually, briefly).

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