Market Peaks
Market Peaks. Naturally, we all want to get out at the top of the market peak, but as we know, they don’t ring a bell at the top. Or the bottom for that matter. We discussed Prospect Theory a couple of weeks ago, noting that people become fearful when they are in a winning position […]
Rolling Up
Rolling Up. I had quite a few queries about my remark last week about results and rolling up. All of you started at different times, with different account values, chose different strikes and expiries and different cash levels so it’s not easy to give a definitive answer about how much extra you would have made. […]
Riding the Bull
Riding the Bull. Readers are getting twitchy. ‘Shouldn’t we get out now? We’ve made profits, wouldn’t it be wise to quit when we are ahead?’ I’m getting lots of messages along these lines. ‘Take the money and run’ sounds like wise advice – but is it? Loss Aversion Traders tend to realize gains too […]
Black Swan Trading
Black Swans & Long Tails. Black swan events are unpredictable and high-impact events that disrupt financial markets – like the GFC and Covid. Black swan trading involves preparing for and capitalizing on these events. You may remember the film ‘The Big Short’ where betting against the housing bubble of 2007-8 led to immense profits. Tail […]
Are We There Yet?
Are We There Yet? Identifying the top of the market is very easy in hindsight. It always seems so obvious, and everyone is an expert after the fact. But it’s not quite so obvious when you are hard up against the right hand side of the chart! I thought it would be good to look […]
Financial Advisors
Financial Advisors. OK, maybe I’ve got it in for financial advisors. I am not one myself, and have never been interested in being one. But I am aware of the draconian penalties if you give financial advice without having the qualifications, which is why I have disclaimers everywhere. Conventional ‘wisdom’ I am continually astounded at […]