The Times I Almost Lost a Finger

I think last night Friday night blog was the most viewed of all time! Thanks to all for stopping in.

The Times I Almost Lost a Finger
Back when I was 20 I had to have all four of my wisdom teeth out. I was always getting sore throats and they got infected, it was nasty. They put me under for the procedure so I don't remember much, but the pain afterwards was terrible. The dentist prescribed the pain killer percocet for me and the day after I was glad to take one. It was great.

I had this piece of crap Hyundai Excel and the oil pan had been leaking. I had a new gasket ready so I figured I would change it. Two days after the dentist and armed with another percocet I went ahead with the job. There were about 12 bolts around the oil pan, it looked just like this one:

Two of the bolts were really stuck. I was giving it my all on the first one when it finally gave way. When it did my right hand smashed into the underside of the car, hard. It didn't really hurt. I saw a bit of blood but I figured if it did not hurt, what's the big deal? I just didn't care really, due to the pills. Just no feeling at all. The second bolt gave way very quickly, it must have known how serious I was. The whole thing took about two hours and I was glad when it was not leaking after I changed the oil.

I went inside to wash up, my hands were a oily mess. As I was washing them I turned my right hand up and looked.

My middle knuckle of my right hand index finger was almost totally exposed.

I sort of had a panic attack. I will not gross you out with all the details, but lets say seeing your knuckle work under the skin is not recommended. I did the best I could to disinfect it and get the flap of skin to go back in place. I went to the doctor but he was not willing to stitch it up due to how much time had passed, and he was concerned about infection. He said to me if it got infected, it would be deep and would be "an issue". I was terrified.

Long story short, it healed up well with no issues except a really bad scar. I also have never taken any pain killers of any sorts since then. Alcohol does not count!

The second time I almost lost a finger was not in the literal sense, but a trading sense. It happened last April.

I had been doing very well since the new year started when I began really trading shorter term again. Gains were good and things were going well. I got caught leaning very long when the Fukushima Disaster happened and that trimmed gains quite a bit. Later March and into April were not good times as my ideas and picks hit a cold streak. I was going on vacation the last week in April and I was in a state of not really caring. I had almost no positions and was re-thinking the whole thing.

All year I had been in and out of the stock KCG (Knight Capital Group). They had earnings coming up on April 20 and I had a gut feeling they were going to have good numbers after all the volatility of the spring. I was going to grab a usual sized spot the Monday before the 20th, but at that point even if my idea panned out (this was not chart based at all) what was the upside? I was in a state of ambivalence. To this day I cannot believe what I did.

I put 60% of my trading account in KCG before earnings.

And again, I was ambivalent. If it worked I would get ahead again. If it did not then I would take a break for a while after losing a finger on a trade. I did not even write about it (I mentioned a gamble way after) because I knew how stupid it was. Yes, your level headed, patient writer had a moment of crazy. It happens.

Long story short, KCG looked like it would collapse into earnings on Tuesday (yikes) but came out with a good report Wednesday and I cashed out for 6% gain. Not huge, but with that position size it was a big winner compared to usual 5%-8% part of account.

I went on vacation and I have been executing all my trades with the utmost discipline since that one trade. Looking at how the summer into fall went, maybe my lapse was a good thing because sticking to sound fundamental trading has saved my behind during the doldrums of credit crisis part 10 or which ever part we are on now.

I had not really thought about this again until I read this post by author BCLund:
Avoiding The Suicide Trade At All Costs
All three rules he went over brought the whole episode back into my mind. I won't do that ever again.

Have a good night.

In the Long Shadows of Zero Responsibility

I am off work until next Monday! Little mini-vacation for me. Always good to get the down time. Blog tonight may be a bit rant-like, so you have been warned.

In the Long Shadows of Zero Responsibility
Over the years I have read, been in touch with, and met all kinds of financial participants. Maybe I have been lucky, but the vast majority are great people. Hardworking people. Scary smart people. A common thread shared by all is that we know and accept that trading and investing is a risky endeavor, anyone telling you otherwise is not credible. It's no surprise some of the best operators have extensive backgrounds in game theory and may have played chess or poker at a high level. Over the past few years a troubling trend keeps bubbling up and I think is hovers like a shadow over the entire structure of the market.

Just what are the rules and who is responsible should they be broken?

And there is no answer.

It's not the point of this post to go over all the past chicanery of the past 3 years. The end analysis is the same. The rules are fluid and no one is responsible when whatever rules exist are broken.

We all like to joke about "Chinese Burrito" stocks that are shown to be total fakes. Sino Forest or Focus Media are the rage now (aside: if you trade this kind of junk you are not the manager a type like me will ever give their money to manage) and yet what is the vetting process for such things? How can they be rated "overweight" and then collapse into oblivion overnight? It's always "who could have known?'.

But what about Green Mountain Coffee (GMCR) or a simple staple company like Diamond Foods (DMND)?

Ok, you may say that those are all specific fails that happen all the time. Maybe.

The Grand Poobah here is MF Global, which took money from clients to try and make it another day. This is so damaging to belief and confidence I don't think it can be known now the damage it will cause.

And it goes on and on.

QE? TARP? ECB funding the IMF to side step an issue over what is legal? CDS ruled invalid? Banning short selling? Flash crash cancelled trades? Bond markets that are a farce?

What are the rules? Are there any? When they are violated who is responsible? Nobody is of course. It's just smoothing out market pressures or what not. Things change overnight that have been sacrosanct and no one is responsible, it's all just the way things are. Or are now, this minute.

I think all would agree there are serious issues facing the markets now at the structural level. Nobody is doing anything about it. It's all a blameless, faceless Dance of the Macabre.

If the rules are bent or done away with it's not a market, it's the wild west. The signs are mounting up. Capital cannot and will not be deployed if it's a shrug shoulder and say "Dunno" kind of market going forward. We need adults to look past the next five minutes but it's all kids running the toy store now.

Have a good night.

A Fine Mess

I have tomorrow off to get a 3-day Birthday weekend going early. Tomorrow is Friday so get requests in for whatever kind of thing floats your boat; music, film, literature, science, etc.

Swing and a Miss
I was stopped out or sold all my stocks yesterday and I was a bit pissed that I had to eat losses on all of them. It did keep me out of today's grinder though. I broke a few trading rules this week but the biggest one was that I really did not like anything when I did screens on Sunday night but I figured I would try a few things just to have something to follow. If you don't like the setups you are putting on, you are a fool to open them. I am that. In a never ending melt up Bernank market miscues and broken rules can be ignored. In a meat grinder they get amplified. I will sharpen it up.

A Fine Mess
I have to be honest, between the awesome pic for Macbeth by a Storm Trooper and the outline why QE 3 will happen in last night's post, it went off with zero notice. Maybe it sucked. I thought it was good. Anyways, here is my run down for tonight.

The news headlines are fast and furious. With so much going on it is little wonder the markets are nervous, though it took about 2 months of bad news to get there. The headline that shook the world? Here it is:
Paris calls for targeted Libyan air strikes
And yes, Paris as in Paris FRANCE! I wonder if the French aircraft carrier Charles de Gaulle is still working? Did you know it was named after a true gold bug? Oh, the dripping irony here.

If you are looking for news during these wild times you can use the regular news feeds but the two I like Drudge Report for breaking stuff and the best cover site on the Web, Instapundit if you want deeper news stories that are not covered everywhere else. Don't bug me with political comments, both Drudge and especially Instapundit get the job done.

I may have more later, but for now that is all.

Have a good night.