Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
Karl Denninger – Slope of Hope Interview – Part 2
Interview With Karl Denninger (by Biff)
Weekend Financial News Shorts (by Biffermas)
NEW
YORK—Goldman Sachs responds to accusations.
The following statement in a recent Huffington Post column has
executives of Goldman outraged.
"In what some on
Wall Street are calling the biggest blockbuster deal in the history of the
financial sector, Goldman Sachs confirmed today that it was in talks to acquire
the U.S. Department of the Treasury."
“This is simply
not true!” responded CEO Lloyd Blankfein, speaking at a news conference. “The talks never progressed past an exchange
of ideas for a merger, not an acquisition!” Blankfein then quickly changed the subject
and stated firmly, “People complain that our average employee, from myself to
the lowest secretary, receives a bonus of $700,000 yearly. Again this is simply not true. This number is an average bonus; the
secretaries receive far less than $700,000.”
OKLAHOMA
CITY—Federal Reserve Chairman Ben Bernanke expressed horror Saturday when he
discovered the half-empty Crossroads shopping mall he purchased for $77 million last April doesn’t include underground mineral rights. “There’s no way the Federal Reserve would
have wasted the keyboard strokes to conjure up $77 million in phantom money to
buy the mall if we’d known that.” A sullen Bernanke exclaimed. The mall is currently being offered at $24
million, but doesn’t include the oil rig pumping in the parking lot.
DENVER— Man on
Message Board Only Speaks Elliott Wave.
Harold Davies, a Colorado day trader trapped on the iBankDimes message
board, struggled to communicate with
fellow posters, none of whom spoke the cryptic language of Elliott Wave. Pasting a Jing link of his chart, Davies
responded to a confused poster named The Zombie: “Figure 1 shows that
since the 2007 peak the daily record of the S&P Composite index has traced
out a series of four discernible pairs of first and second waves, continually
developing into higher and higher waves.
Waves i and ii took three weeks; waves 1 and 2 took two months; waves
(1) and (2) took seven months; and primary waves 1-2 so far have taken two
years. As of this point, the last two
pairs of durations have an identical time ratio, as 2/7 = 7/24 = 0.29! P
The Zombie
replied, “I’m 3 liters deep in local brew
and watching football. Later.”
Anatomy of a Trading Blowout (by Biffermas)
I'll never forget 2002, the year I began trading. Initially I
followed very simple chart patterns based on William O’ Neill and Investor’s
Business Daily (hey, a cup and handle!).
For several months I did pretty well, averaging a 2-5% gain per month
taking short-term position trades on individual stocks. It didn’t seem too difficult
consistently making small gains. At the
time I was reading every book on trading I could locate and rapidly adding an
array of indicators and methods to my plan.
One book I read covered the business cycle, and it seemed that steel
stocks and the economy were ripe for a rebound after the crushing bear market. Another book I read covered options, but I
didn’t read beyond chapter 1: calls and puts.
I watched
American Steel carve out a double bottom with a bullish divergence in
MACD. It’s long, declining trend line
was breached, and like a good trader I waited several days before buying to
avoid a potential false break. My account
at the time was $45,000, and I used it all to buy front month call options that
were out of the money by $2.00. I
initiated this trade near the top click of the range, and within 5 minutes I
was down $2000. I’d never lost more
than $150 on a trade until then, and I became oddly paralyzed, unable to sell
and accept such a hit. A week later my
account was below $20,000, I eventually sold the options when it hit $3000.
The worst
part wasn’t losing the money, it was losing hope that I could actually trade
successfully, something that I absolutely loved doing. I didn’t trade again for two years. As you see, American Steel took off nine
months later, quadrupling in short order, but I was not aboard.
With
every market defeat lessons are learned.
Roughly half of my current trading plan is geared towards avoiding a
repeat of that awful trade. Here are
some of the lessons I learned:
- When
faced with severe losses, it’s nearly impossible to objectively evaluate your
position. - Leverage can be a killer.
- A trading
plan should be simple, not based on the collective opinions of 15 financial
authors. - Never buy
front month out of the money options, they are strictly for crazy
speculators. If you're going to use
these, sell them to crazy speculators against your longer-term positions. - Bullish
and Bearish divergences fail frequently. - If you
want to arrive early to the party, be prepared to wait a long time for the
action to arrive. - Those funny
Greek names, Delta and Theta, actually mean something! - It’s not
acceptable to have multiple blowups like this.
Many great traders have suffered a crushing capital blow early in their
careers, only to return stronger and wiser.
Others, like Jesse Livermore, ended his career (and life) after one too
many detonations.
Thanks
for reading, and trade safe!
