Balance

Balance

“In jealousy there is more of self-love than love.” -Francois de la Rochefoucauld

I was going to write about and focus on being jealous in the wake of a mediocre performance in trading yesterday. I call it mediocre because I can compare my performance (based on P/L) to that of my colleagues. The difference was 10 to 1. That hurts. This means, the guys I literally sit next to made up to ten times more money than me. I know. Boo hoo. Bring out the world’s smallest violin. I have to talk about it though because this sort of thing not only happens on a trading desk but everywhere else in life.

Take a look at today’s professional athletes for example. More specific and closer to home, let’s look at pro surfing. There are so many professional surfers out there that do mind blowing things in small to ultra large surf. These guys are super athletes in my book. That is, they are focused, fit and consistent. Andy Irons is one such surfer from Hawaii. He is a three time world champion and fits the bill as a super surfer. It’s hard to imagine that there is a shadow cast over him that goes by the name of Kelly Slater, the nine time world champion. However, there it is, a three fold gap that puts Andy way back in the spot light by comparison alone. This may sound silly and maybe juvenile but I kind of understand what it feels like to be Andy. I mean the comparison the thing. Here’s the catch though. If you had to ask who was doing the most of the comparing in Kelly v. Andy, I would guess, beyond a shadow of a doubt, that it was Andy. That holds the same with me. I am who I am and in light of the situation and where I’m at and whatever is going on my results are based on where I fit in. What I’m trying to convey is that the whole comparison, jealousy thing is all in my head. If it was in the other guy’s head that would just make him an ass and if that was the case, I’m not jealous of an ass.

This is where balance comes in and just letting go in any situation. In retrospect of my performance yesterday I could not have been more tight, or any more conservative. I fear pain and loss so much that there is no way I could achieve the rare layup. My colleagues made more money than me yesterday, not because they are better, but because they took on more risk and were more relaxed at it than I was at being conservative. There’s nothing more to it than that. More risk and more relaxed at doing it.

 I read somewhere when asked if Kelly Slater is going to go for another world title that he wasn’t really focused on it. In other words, he’s competing because he loves to compete and loves the fact that there are other super surfers around him that will challenge him and push him. Either he is going to be the best or he’s not and he’s simply comfortable with that but stoked that he can have the opportunity to be challenged. I’d like to add one more thing though, whether he says it or not, it sure feels good being great doing it. The fact is, I love my business and I love trading. I’ve going on nine years in this business and I love it more than I started. That’s just the way it is and I wish everybody could say that about whatever it is they are doing in this world. I forget that a lot though. Maybe, just maybe, when I’m being all tight and my palms are sweating, I have to remember that it’s those moments that attract me to what I’m doing. It’s like dropping into a a six foot wave over a shallow reef. Nature’s perfect yin yang. There is pain and ecstasy existing in perfect harmony.

Heading Towards Gold?

Mr.Goldfinger

There are still plenty of setups at the trading desk. Certainly, and I’m not fooling myself, the volatility of the last three months has vanished. Therefore, I have to make the absolute most of what the Market is putting on my plate. At the same time, vacation is on my mind but as I said in my previous posts, I just have to pretend that it’s not.

Right now, it’s very hard to see the direction of the Markets. It was so much easier when commodities were in a massive bubble as well as oil and you could look at it and say, “how can you not take your profits off of the table?”. We are super steady right here and right now and equities on average have been blunted all around by roughly fifty percenty. The big question is, has it baked in the worst? That’s it. Simple as that. So, I continue to read the financials and watch that it’s steady as she goes in difficult times. AT & T fires a bunch of workers but then they raise their dividend. As a stock holder I’m not pleased. The dividend was sufficient enough and as a citizen and human being I would have been happier that those people could have kept their jobs.

What I’m trying to say is that I’m wondering if the Markets have priced in the unemployment numbers? Is it smart enough? Obama’s social programs are a right step but when his administration hands out it’s billions in contracts to American(hopefully) corporations, are the workers going to be American workers as well?

It’s hard to see through all of this and find some sort of direction and precedent. I don’t want to be naive but I also don’t want to look at the early 1930s as what to expect. Nobody does. We aren’t even close to being there yet and if we ever do, it won’t be same.

Yesterday, oil and gold and gold related stocks like the miners were the trades du jour. We have a gold bug in our office that swears that gold will be, as if it already hasn’t seen it’s hey day, the biggest thing. He backs it up by buying the physical stuff. It’s beautiful to hold gold coins and silver too if you ever get a chance. I understand his argument for gold but I don’t think it makes sense considering, like the dollar, it represents a value or a perception that we give to it and nothing else. The American dollar exists out of our perception that it has value by the People who stand behind it. Nothing more. I don’t want to imagine a time when that could no longer be the case and gold takes precendence for the sake of being gold.

Finally, once again, I poured over my current long term (5-20 years) positions in the Markets and decided not to add to the biggest losers. I figure that there are four possible macro scenarios in the near term.

1. First, we break the last DJIA lows, capitulate and price in a new Depression in which time I would add to my positions. I’m not the only person who believes it and as of this writing it does not seem like an iminent possiblity and the more we hold steady and possibly climb, the less likely the scenario becomes. I do not want to head in this direction whatsoever. No way. It’s way too scary and if it happens, times will be very, very difficult.
2. We hold steady, maybe just maybe, test or slightly break the lows but not in a capitulation fashion. It could be a slow bleed scenario but we we trade in a range for years. Hopefully, the equities in our portfolio continue to pay dividends and you could reinvest and with extra cash flow add onto them as time goes on. The Markets would see micro bubbles here and there. Micro bubbles are certain theme trades, for instance, the trades we saw in national security stocks after 9/11. They are bubbles that come and go based on a very brief new paradigm. The range, as I mentioned, could last for years like the Markets saw during the Cold War and Vietnam War years in the DJIA. Eventually, we could emerge and go up after we resolve, like those wars, whatever it is we need to resolve as a nation and a world. If not, well then, I would have to write a new list.
3. We could steadily climb up from here. The world and the nation, not unlike the Internet days experience a new sense of hope and we all get excited again about life and about making lots of money. We’d test highs and not lows. It could happen. Nobody, before they happened, could have seen the boom before the Internet bubble nor the Housing/Commodity bubble.
4. I’m totally wrong.

These are my thoughts now. Normally, it’s nice to be able to have just one possibility and not four. The sequence of numbers are in most likely to occur order. My vote is for number three.