Monday, September 5, 2011

Trypophobia - Fear of Holes Making Trading Difficult

I hope everyone had a good weekend. Fall is on the way and the mornings here are hinting at the cooler weather to come. Readers know how much I LOVE the colder weather.

Trypophobia - Fear of Holes Making Trading Difficult
trypophobia
n. An unusually strong fear of, or aversion to, holes, particularly tiny holes that appear clustered together.

All the news over the weekend was bad. More and more rumblings out of Germany make an Italian debt calzone explosion all the more likely. When the sovereign debt was thrown at a banking collapse it was the last line of defense. Unless you think there is another buyer out there?

With that in mind markets are looking set for a terrible open tomorrow in the US. European markets took big hits today and many banks had their stocks halted. In short, things are a dangerous mess.

Early last week I wrote that there was the best environment for long positions in weeks starting after Monday's big rally. It held a few days but my line in the sand number of S&P 500 at 1180 was violated on Friday. No reason to try and be aggressive here at all, there are holes everywhere. As a really loss averse type trader I have trypophobia, I fear holes. I fear waking up and being unhappily surprised in the morning. This makes me quite boring, but it also means I don't get blown up. I am very comfortable with how my long term account is set up, even in this market. My trading account has been cash for weeks, and I don't know when that may change. Maybe after a huge wash out that never seems to happen.

Why not go short? Shorting is dangerous, even in a downtrend. Two great write ups on this can be seen here:
Shorting is a Blood Sport via The Reformed Broker

Why Shorting is Difficult: A Lesson From 2008 via Robert Sinn

Big money will be back in the game this week. The FED meets in a few weeks. I imagine the rumor mill will be running full time between now and then. Only the very nimble daytraders can carve this market up right now, for the rest it's a hard spot.

Last time I am going to mention this but mutual fund REDEMPTIONS are going to be a major issue going forward. More and more money is leaving the markets and I cannot blame it for walking. The FED still has yet to grip that many have been cleaned out 2-4 times in a decade. Give them 0.01% return in a checking account or money market and they see that as solid. Interest rate games are for books and fairy tales, not this world at this point.

Added:
Twitter front page tonight:
Howard Lindzon flanked by Dalai Lama and the US State Department! That's some company!

Have a good night.

10 comments:

GawainsGhost said...

Trypophobia, that's a good one. Here's another. Cyanophobia, fear of the color green. Wouldn't that make people averse to dollars?

I talked to my friend Stan the other day. He just got married, again. He said he and his wife were making porn movies just to break even (jokingly, of course). I asked him if that was in between day trades. He said, no. He stopped doing day trades in 09, after he lost $40,000 in the stock market. Ouch.

Same with our accountant. This guy set up four computers in his office for day trading, and lost everything he had. He got foreclosed on everything, even his mineral rights. Now we need to find a new accountant.

Don't these people know that 70% of the stock market is flash traders with super computers? The average investor can't compete with them. Front running, insider trading (which is legal for members of Congress), it all makes one wonder.

You're right about interest rates. Mortgage interest rates are the lowest they've been in decades, 3-4%. But people aren't taking out loans, banks aren't lending, the housing market has collapsed, foreclosures are mounting, repos are flooding the market. This is insane.

When I first got into this business, I thought I knew what's what. I mean, my grandfather was a realtor. My mother is a realtor. I've been in several thousand homes since I was 8. So I said to myself, no problem.

Yeah, right. One month in, and I was saying to myself, these people are either terminally stupid or criminally corrupt.

There's too much fraud and asset overvaluation in the system. And until it's all cleaned out, there won't be any meaningful recovery. But I don't expect that to happen for at least a decade or two. We're all doomed.

getyourselfconnected said...

Well I dont think we are all doomed, nor will it take decades. It's gonna suck and hurt, but the longer it's put off the worse it gets. STill think we would have been well on a way to a real recovery in everything had we gone Swedish on the banks in 2009.

GawainsGhost said...

I really don't think we're all doomed either. That was a joke. But what needs to be done is going to hurt, a lot.

Yeah, the Swedes had the right idea, but then they have a secret banking system. What we should do is go S&L on these guys. I'm talking about prosecutions and prison sentences.

Look. This is a solvency problem. You can't cure it with more liquidity. If a bank or business interest is insolvent, pouring more liquidity into it won't make it solvent; it will only make it more insolvent. Simple chemistry, really.

Oh, and I've begun writing my review of Creep. For the second edition, I would suggest a change of title to, Freak!

Ms. Hillier is one twisted girl. But at least she has a sense of humor and can write well. I'm going to send this book to my friend Kathi in West Virginia. It's been a reading summer for her, so I thought I might freak her out.

getyourselfconnected said...

Gawains, right on the S&L angle. Come on, that book was awesome you must have liked it!

The Sovereign Bohemian said...

Another good post G-man. it increased my vocabulary, too!

Jennifer Hillier said...

This is ME! I have an aversion to clustered holes. I had no idea that it was an actual phobia.

Just thinking about clustered holes gives me the creeps. Like honeycombs. Ewwww.

Oh and btw, FREAK is being tossed around as a potential title for book two... :)

getyourselfconnected said...

SB, thanks!

JH, Freak too funny.

Had late evening errands to attend to so no post tonight.

GawainsGhost said...

Check this out.

http://www.newscientist.com/article/dn20863-single-molecule-is-tiniest-electric-motor-ever.html

A one molecule electric motor? Now that's nanotechnology.

getyourselfconnected said...

Great find! I will post it on Twitter.

GawainsGhost said...

You know, GYC, I'd think that would terrify you more than anything. Nanotechnology is basically very tiny robotics.

Complex systems organize themselves. This is why I favor Leibniz's monads over Newton's atoms--Leibniz's theory allows for matter to have intelligence, to self-organize, and maintains the continuum; Newton's theory only allows for inaminate particles, like marbles, floating randomly in void, interacting by chance. What with the complexity in nature, the latter doesn't make any sense.

You really should read that book I recommended, Thinking in Complexity, by Klaus Mainzer. It really will change the way you think.

A robot cannot organize or build or program itself. And it can only do what it is designed to do, by a human. Not like a complex system, such as a biological species or an ecosystem or an economy, which organizes itself.

And now we have humans manufacturing molecular robots? To what purpose, I might ask.