1/31/2011

Hope

I have posted many videos and written much about the potential disaster facing my American neighbours if they don't do something about their deficit and debt.

This has caused some of my American neighbours to declare that I don't like the U.S.A.

America is the current empire king. They are the big dog in every way there is to measure, sports, military, arts, economy, and they are for the most part, the best.

The problem is when you have been the best for a very long time you start to believe that you are invincible, you beat your chest and chant your name at every opportunity. Unfortunately this success seems to lead to an arrogance, an arrogance that can make the rest of the world a little angry, or perhaps just envious.

Maybe from a psychological perspective this arrogance is the actual trigger that leads to the downfall of all empires. At some point in any empire's history this belief in themselves leads to a certain blindness. I have heard many, from President Obama to Warren Buffett declare that America will come out of this simply because they are American.

That in itself does not just display the problem, it screams the problem to the rest of us who are not American. Some how, some way, reality is going to hit home and I'm afraid it's going to take some major catastrophe for Americans to finally accept the problem.

Just being American is not going to fix this.

Whatever the case I do not dislike America, I quite enjoy them and all they offer. For my country, Canada, they are the reason for our prosperity. They buy almost everything we have for sale.

So my concern for the possible decline or destruction of the American empire is purely selfish.

If they go, we go.

So with that in mind I offer this little video, a story of one American company. A story that demonstrates what made America great, and more importantly offers hope that they can remain great.

They can remain great but in my view they are going to have to radically change in order to do that. Radically change they way IBM changed. IBM saw the computer business change from a knowledge business to a component business. In a knowledge business you are paid handsomely for your expertise, in a component business you are forced to compete almost solely on price. Those who can assemble components the cheapest win. IBM saw that this wasn't going to be them and they exited that business completely. Focusing solely on their advice business has proven to be very successful and more importantly provides a growth platform for the foreseeable future.

This example demonstrates that America can still prosper in this new world. They can prosper but it's going to have to come with significant change.

Union led component assemblers are not going to save your country.

I truly believe that America is at a key point in their history and until all Americans come to that same conclusion I'm not sure they are going to make the right decisions. At some point someone is going to have to get elected with the campaign promise to cut expenses and raise taxes. You make think that's impossible, but the Brits have already got there. Yes there are some rather noisy complaints but the key is the politicians in power got elected on that platform.

Anyway I've rambled on long enough. There is hope and yes good old American innovation is key to that hope.

That is as long as they figure out that you can't spend more than you take in for ever.

1/28/2011

More Charts

(click on charts to view)

A Chart

(click on chart to view)

Still can't upload charts to Sierra so have tried this instead. Not quite the same first image.

Full stop on the first trade.

1/24/2011

I'd like to post a chart.....

but Sierra won't let me. They say I have too many and need to delete some. So I did, and I still can't post a chart. What they don't tell me is how many I need to delete.

So until I figure that out I will just have to post video declaring the end of the American Empire.

No.

This one actually describes a little country along the lines of Solfestland. (Except for the part where they kill civil servants for any breach of trust)

Who knew this existed and how fast can I move there.

1/19/2011

Beating a Dead Horse

I guess I am, yet I continue to hope it will get up and ride again.


As of February 2007 the US federal debt was 8.7 trillion

Today it is.......

1/11/2011

You Get What You Want



Ed Seykota once said "win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money."

The first time I read that I thought it was just Ed being cute. After trading for a few years I think I get what he means.

It's the same reason people continue to gamble long after they should have realized they will never win it back.

Just being in the game is enough of a high that people won't quit. Tis true for trading as well.

I have also changed my opinion on the loss aversion theory. The accepted concept is that people will hold on to losers forever so they don't have to realize the loss.

In short term trading the loss aversion theory keeps people in the game long after they should have quit. They may not hang onto losers anymore, but they are hanging on to the premise that they can make money in this business. That is why most people don't quit until the money is all gone. As long as they're "in the game" they have not lost it all.

Ariely talks about loss aversion affecting people who have been paid up front and then can lose that money based on their performance. He states that this causes even worse performance than paying people after the fact.

This is another way to think of trading. You have your trading capital and if you do not perform well it shrinks. This causes stress which lowers performance, and so on.

While Ariely is not talking directly about trading, the concepts regarding monetary stress affecting performance probably ring truer for trading than the ones he used in the experiments.

His work adds fuel to the idea that just focusing on the money in trading as the only scorecard you need is dead wrong. Ariely proves that focusing on the money is a sure fire way to lower your performance. He also talks about purely mechanical tasks that do respond well to financial incentives. This follows the Solfest premise that I could hire a 10 year old to trade my plan with financial incentives to take all valid patterns and financial disincentives for any MUTs (made up trades) and that 10 year old would have better results than me.

I came up with the hire a 10 year old theory only after the Solfest electrical shock system of punishing me for MUTs caused a local blackout.

Me and my giant cognitive brain get in the way of performing a very simple task.

Just trade the blue bars stupid.

Or if all else fails head to your local casino.



Or if that fails listen to this song over and over.

1/09/2011

1/07/2011

I Hereby Decree

Today is international hug a trader day.



Jules and Rain really needed that.