In a 2004 groundbreaking study from The Yale School of Management’s Center for International Finance titled “Facts and Fantasies about Commodity Futures”, Drs. Gary Gorton and Ken Rouwenhorst show that not only are commodity futures negatively correlated to stocks and bonds, but also that commodity returns are greater than bonds and have about the same [...]
As most of my friends know by now I am a fan of Nassim Nicholas Taleb and his books “Fooled by Randomness” and “The Black Swan”. If you are an investor/trader I would highly recommend that you read these. You don’t have to agree with everything, but it certainly pays to be aware of the [...]
I just read a very interesting book. It is called “Sway”: The Irresistible Pull of Irrational Behavior. Max Brazerman is a professor at The Harvard Business School and introduces his new students to a game at the beginning of the semester. He auctions off a $20 bill with only two rules to the game. 1- [...]
I think successful traders realize a few important things that escape the failures. It doesn’t seem to matter if they trade discretionary or with systems, they all seem to know that the market is the boss. They are defensive and have a great deal of respect for risk. They all tend to manage risk and [...]
Successful system trading, in spite of the financial rewards, can be frustrating. A quantified mechanical model will take many decisions off the table. Yet, various issues, particularly the psychological approach to the issues, will always be in play. Ed Seykota in the book, “Market Wizards,” writes, “Systems trading is ultimately discretionary. The manager still has [...]
I would like to launch the blog with a simple yet very powerful concept. I am sure that over time we will elaborate much further on this simple concept but it seems appropriate to start here. It all starts with the 4 possibilities. Once you put on a trade only four things can happen: 1- [...]
