Sunday, February 8, 2009

The Weekend Trader - A Huge Disgrace

I hadn't planned on doing a piece this morning as we're having a great stay in Boston, but a peek at Barron's today got my blood boiling.

And just when I make a momentary vow in Friday night's video to take a hiatus from advisory and guru bashing, Barron's (the only after-hours market reading I ever do, and even that's limited to two sections so as not to inject a variable which could mess with my head) leads today's edition with "Cramer's Star Outshines His Stock Picks".

The article provides an extensive analysis of Mr. Hype's abysmal performance results, includes the quote, "The only regrettable thing about any of this is that CNBC and Cramer won't meaningfully discuss how his advice pans out", and goes on to reference various staunch defenses of Mr. Hype's actions by CNBC which included severely restricting Barron's access to both the network and the hype machine.

And while I agreed with much of the content, I took significant exception to the following quote: "IT IS RARE THAT ANYONE BEATS (their caps, not mine) the market over time, so there is no disgrace in the underperformance of Mad Money's stocks. Barron's then goes on to admit that even their "picks" were wrong.

No disgrace? No disgrace?? [as my wife wonders why my face just turned beet red]

Here we go again.

Here's my rebuttal.

I remain sick and tired about how "accepting" most in society are of mediocre performance. In schools, we dumb down education to the lowest common denominator such that those with the potential to make a huge difference in this world are encouraged to underperform. We give everyone awards at the end of the year for "participation", so as not to exclude anyone from "feeling good" about themselves, including below-average Johnnie who skips out of school yet whose parents are head of the PTA.

We then take this concept and continue it in the adult world where everyone continues to believe that "average" -- or far worse in this case -- is also acceptable. If we were to believe the continual written and visual financial press, we're to believe that everyone should be making money only if everyone else is. If the market is down, we all should be down ... and you'd better not be up for fear of skewing the curve. Sounds just like 9th grade science.

I could write for days on this, as it attacks one of my strongest-held core beliefs that we should neither listen to the screaming hype-machine masses that are only looking out for their own individual interests and pocketbooks, nor accept the strengthening standard of mediocrity in this world. It's as if we've completely lost the ability to think for ourselves which brings us full circle back to "Johnnie" needing self-interest snake oil "gurus" to tell him what to do when he's an adult -- at least in body.

Here's a novel concept ... how about if we all get off our asses, think for ourselves, roll up our sleeves, and take some responsibility for self-improvement so that the bar eventually gets raised for everyone?? My wife is cheering.

Yes, it is a disgrace.

A disgrace that none of us should accept.

We need far more Bamboos and fewer Bonsais.


Don Miller said...

Note: The following is a post from Rex Vulgaris that was inadvertently deleted:

Your Elephant

Your reviewed stats showed you that the onight boobex and Dax trading was marginal at best. The idea that they were acting as the price of doing business in getting a feel for the days tone is illusary as globex action is european dominated and 80% of the time a clear fade in rth. I think the value of those trades was proving to yourself how commited you were last year.

So you have dropped them.. you are sleeping more, your mind is fresh and lo and behold you aint havin any losing days. Fridays adjustment to being wrong early sounds the result of a clear and fresh mind.

I suggest this shows you have honed your craft well in the last year and your defence is top notch.

So you are now in an enviable but frustrating position. You can grind out good $'s day in day out and let time an math do the work, but traders in particular are never satisfied and always look for improvement.

The way forward simply is to either increase your discretionary size or increase the AVPC [average $ per cak returned] or a combination of both [Im sure you have many ideas as to how you might achieve this.

Then monitor a moving average of your daily returns to see in black and white how these adjustments are affecting your judgemnets in daily trading.


Don Miller said...

Good stuff as always Rex.

I agree with the conclusions as I continue to contemplate whether and when to step things up.



E said...


I agree 100% with today's post,as you will see when I send you my info privately for Boston.

Here's the math:

200% for content
-100% for not staying focused on your wife and your getaway

= 100%

Remember the serentity prayer

..."and the wisdom to know the difference."

"When you work, work; when you play play. Most of all, dont waver."

Your Friend,


Jason S said...

I've suffered my whole family, including my kids, to listen through a reading or two of your weekender post.
Our government schools have little to do with education and everything to do with producing conditioned little sheep who will support the social leviathan.
Amazing how agitated the white sheep get if a black sheep gets ahead of the flock.
In these United States, there still lies the greatest opportunity to achieve whatever a person can dream, despite efforts to herd the black sheep.
That's why I love reading Don's blog so much. It's an inspiration to many a white sheep to break ranks and forge a future that's entirely of their own choosing. If Don can do it, so can I.

E-Mini Player said...

Completely agree with you Don, and I see this every day in the corporate world, and it annoys me beyond belief. That's one of the main reasons I want to leave the corporate gig and trade full-time. I'm sick of dealing with talentless hacks who continue to be employed due to some HR/labor laws which make it a PITA to fire them. Not only that, the genuinely talented people are held back because the majority is talent-less and the talented few are viewed as a threat. Unbelievable!

Driven! said...

Don, hope you had great weekend...can you comment on this trade

Friday 11:50am
15 min moving averages up
Tick -1,0000
Pullback from the trend..
Looking at 1 min chart - 11:50am

Do you take a buy trade? If yes, what are your thoughts for these levels:
profit target,
stop loss

If you did take a trade, how did you play it?
If you did not take a trade, why?

Don Miller said...

E -

Guilty as charged ... although she was watching a Biography rerun on Scott Baio in the morning when I was typing, and I just sat through 3 hours of the live stage performance of Dirty Dancing.

I think we're even :-).


Don Miller said...

Rangerdoc -

Heck, if I can do it, a chimp probably could ... assuming he's dedicated and doesn't host a show on CNBC.


Don Miller said...

Driven -

Hmmm ... I don't see a -1000 TICK reading until the afternoon, so I'm assuming your 11:50am timestamp is Pacific Time?

The purple circles on Friday's post show the primary pullbacks I traded long, and I believe I was pretty much done after that.

In general, keep in mind I don't often trade Friday afternoons, especially as the day gets later, regardless of setup. [It's a personal preference not to do anything stupid that might ruin my weekend ... nothing more.]


Driven! said...

Don, this trade was during your "blue dot" time - 2:50 ET

It was a pullback on 1 min chart

Just wanted to pick yout brain a little on the technical aspect of this blog.

I took that trade at 863, it gave me 2 points, moved my protective stop immediately to 864, was stopped out with 1 point profit.

I understand that you also react to low hanging tick (-800, -1,000) for buy entries, so perhaps you can share some of the insights on timing of the entries and exits(incl profit and stop loss) in this kind of situation.

Don Miller said...

Driven -

Yea, I see it. Again, I was done for the most part by then, exiting on the prior 2:30pm ET run-up and wasn't too interested in trading after that, regardless of signal.

Which would leave me with a hyptothetical response which I generally avoid as I'd have to assume a certain state of mind in addition to the technical indicators, as well as pretend I didn't know the actual outcome which tends to skew responses.

In general though, I do look consider low tick readings on uptrends potential entry points assuming the rest of the picture is in place, with my strongest preference being 1st pullbacks as I'll often pass on subsequent pullbacks as the probability of the trend holding begins to lessen ... at which point I'll shift my focus to the next larger timeframe.

I also don't use point based stops or targets, preferring instead to use size and scratches/re-entries to manage risk unless the premise for the trade completely busts (very rare for me since I usually begin entering at decent wholesale points, although the A.M. was a good example where the whole world was watching 850).

Essentially, I should be able to tell if a trade is or isn't working without relying on a specific figure which is often meaningless as the market chops around.

One person's style as always.


KN said...

Reminds me of a book I read a long time ago "The Fountainhead" by Ayn Rand. Read it if you haven't done so..



Unknown said...

Hello Don,

I read somewhere that CQG has a new contrarian indicator called the CPP – ‘Cramer Pivot Point”.

They say when back-tested, it has a HIGH degree of accuracy!


cal_trader said...

Careful..'how about if we all get off our asses, think for ourselves, roll up our sleeves, and take some responsibility for self-improvement so that the bar eventually gets raised for everyone??' might raise the ire of the UAW!

YM-Trader said...

Couldn't agree more Don, and I agree with E-Mini Player too. It really infuriates me that my wife, as a supervisor, has to work longer and harder at her corporate job to prop up the underperformers and whiners under her who can't be fired due to stupid rules. No wonder many of the good people give up in frustration and look elsewhere.

Unknown said...

That is too funny. This morning once again I was saying the exact same thing to myself as I listened to CNBC talk once again about the importance of paying the salaries necessary to keep the "talent" on Wall St.

Any monkey in a suit can make money when times are good. True talent is someone that makes money when times are bad or has the vision to see a train wreck coming and mitigates their risks.

This country thinks an MBA automatically means a high level of intellect when the only thing it truly proves is a person's ambition.

As long as we continue to be except mediocrity this country will never move forward.


Anonymous said...


In your response to Driven you mentioned "purple circles in Fridays post". I have not been able to locate what you are referring to. Could you assist me in finding what you have referenced? Great site. True wisdom. Psychology is paramount. Thanks.