Litmus Test

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Perhaps the greatest psychological debate that persists on Slope is whether or not there is such thing as a truly neutral, balanced, opportunistic trader. I have taken up the controversial and unpopular position that people tend to lean strongly bearish or bullish, whereas others have – – while pointing feverishly at themselves – – extolled the virtues of being blind to bias, and they simply extract money out of the market, irrespective of direction.

Let me state early on I actually do believe there are a very small number of people like this (like Attila) but, on the whole, we’re all either bulls or bears. And I’m not stating these in absolute terms. After all, I am a self-described and self-admitted permabear, but as I sit here now, my only positions are a sprinkling of bullish ones. But the permabear in me is ready to throw me off skyscraper if the market simply keeps plummeting.

So you have the opportunity for a bit of self-examination here. No reason to ‘fess up. Just ask yourself something.

If you are part of the crowd that persistently touts yourself as even-handed and unbiased – – and, for good measure, shakes their head at poor old Tim, wondering why anyone would choose a “side” – – did you make a lot of money this week? I can only assume you did. Indeed, the market has been screeching downward, and I can only suppose a truly unbiased person would have taken advantage of the outrageous sentiment extremes from last week and, thus, be making a fortune in this plunging market.

If, on the other hand, you didn’t……………..if, instead, you lost money, because the market is going down……………..I would suggest a bit of self-examination (or at least seriously consider getting off my back). You’re a permabull, just as much as I am a permabear. The only difference is that with an endlessly accommodating Fed, you have been successful for most of the past eleven years, and thus conclude you are a trading wizard. Thus, you can embrace your laudatory self-definition as received wisdom.

In fairness, though, if those who have done well on the long side have, in fact, been making profits this week, what can I say? I salute you! I bow to you! I kneel to you! As with some of the great primates, I expose my posterior to you for close examination! You are indeed opportunistic and unbiased, and you are deserving of the profits. Congratulations!

Otherwise, you may have simply just been born at the right time and aren’t neutral in the least.

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