There is no shortage of silly bromides and sayings in the world of trading, but one I particularly detest is “if it’s obvious, it’s obviously wrong.” I’ve mentioned this before, and I’m sure I’ll mention it again, because I think this illogical and baseless faux-truism can be misleading and financially harmful.
One example from my own trading past is the shape of energy stocks from last year. Energy stocks – – and Lord knows I spilled a lot of digital ink here on Slope yammering on about how energy stocks should be shorted – – were jumping-up-and-down short candidates. The patterns seemed too good to be true. Indeed, although I’m rarely shy with my predictions, I refrained from uttering what the measured moves were, because they seemed so ridiculous, even for someone like me.
Anadarko Petroleum is just one of dozens of similar examples of what I’m talking about:
