<p>Yes - I’m just as dumb as the next fellow. The only advantage I may have over some is that I realize I’m dumb.</p>
<p>Actually…realizing that does put you ahead of the game…</p>
<p>I watch and listen to all these guys mainly to get a sense of what people are thinking. To be honest, I think I can get a good idea of what not to do by talking to maybe 5 investors like myself and doing the opposite. One guy I like is Ken Fisher except when he and his crew try to sell me on investing with him. After he became famous for predicting the s&p bottom in the tech bubble to within 2 or so points, he wrote a book that points out all the investing myths that are out there such as oil or the dollar correlations with equities. In the book, he makes it a point that the next time he’ll probably get it wrong which he did in 2008 but recovered pretty quickly. Another thing he had pointed out was that all you needed to do was one time get the market right and you’re famous - like Roubini, Paulson or Whitney a few years ago. I hear some of these guys today give the most ridiculous reasons for what they think is going to happen. A week ago, I heard some guy on CNBC say that he was shorting aapl because the pattern looked like google in 2007 that subsequently sold off completely ignoring the differences in a number of metrics between the companies plus the investing environment at the time. People in markets and in science for that matter continually look for simple solutions because we cannot really comprehend anything too complex. This also leads us to see patterns in things where they don’t exist. Its really difficult to not do this and also to understand human behavior in general.</p>
<p>“Another thing he had pointed out was that all you needed to do was one time get the market right and you’re famous - like Roubini, Paulson or Whitney a few years ago”</p>
<p>That is totally right. This bugs me too… Too listen to these full of crap people…
And see the media promote these people…and investors follow these people…
Obviously…our education sysyem leaves a lot to be desired. (I have to say that. This is an educational board :)). People don’t understand ramdomness…correlation…causation…luck.</p>
<p>That’s why I really have a hard time watching business networks like
CNBC. The network is a con. </p>
<p>" People in markets and in science for that matter continually look for
simple solutions because we cannot really comprehend anything too
complex. This also leads us to see patterns in things where they don’t
exist. Its really difficult to not do this and also to understand human
behavior in general."</p>
<p>Yes…
I agree for the most part.</p>
<p>There are a few people…a very few…that supposedly are successful
finding patterns. Not like the patterns we read about in financial sites…not astrology either. Not crap like the crap Prechter comes up
with.</p>
<p>I hear that a few firms data mine every tick…and run the info thru
programs…and end up trading low correlated stuff against each
other…for short periods of time and make money.</p>
<p>I know that firms do data mine tick info…What happens after that…I
don’t know.</p>
<p>I do know that if you have the order flow…you are gold.</p>
<p>So firms buy order flow. Or trade their order flow…very likely…your stock order flow… Your stock order flow doct…is sold…</p>
<p>One of the amazing things I have seen in my career…is when I find out
what other top firms do…it so disappointing. 
Like during the flash
crash. One of the major firms just kept buying all the way down. If the crash was real…the firm was going to be toast. It was …what the
heck…we are buried anyway…let’s keep averaging down. </p>
<p>The risk control of these trading firms at times is soooooooo bad. To risk the whole firm on a bet…is insane to me.</p>
<p>I do think risk control is much better now than in 2009. Which isn’t helping trading any. A couple of the major clearing firms are controlling customer risk much better. Just to be nice…I think GS’s risk control is
much better than it used to be. Now it is harder for clients to go crazy
and take on too much risk. But that does mean there is less trading.
That is the downside for firms that make money when more trading goes on. The firms make less money.</p>
<p>I think the post I am commenting on is one of your best posts ever, Doct. :)</p>
<p>Getting back to OT, i am now of opinion things are getting somewhat better…have called to contractors to install a new entry system, their quotes are fairly high, and not negotiable( so far,lol),… I hoped to save 10% off their quotes,lets see who blinks 1st</p>
<p>Might be hard to tell unless you did some remodeling a few years ago…but…Do you think the quotes are lower now than before the housing bust?</p>
<p>Wow - you’re up early if you’re in CA. I just saw an interesting plot of labor participation rate for men. There’s been a lot of talk about how the participation rate is going down. I assumed that this was only for the last few years. The plot shows its been decreasing since 1950 (the start of the data). The slope is a bit greater the last few years but it has gone from >85% in 1950 to 70% today.</p>
<p>I did a similar system at prior home in 1996, cost was 6600, now around 9k…</p>
<p>Retail money always comes back. It may just take a generation or two. Look at bubbles throughout history, why do they keep coming back? Because people either forget or we get new people that haven’t gone through a bubble that don’t learn from history.</p>
<p>We have a Central Bank that is egging us on with ZIRP too.</p>
<p>A gerneration or 2? That is never for me, as i will be long gone ,lol…</p>
<p>Maybe it’s time to look to other markets for bubbles then.</p>
<p>Well…qdogpa…Kurzweil…says I am going to be alive for a very long time…:)</p>
<p>Qdogpa…that isn’t a high inflation rate…</p>
<p>Yeah Doct…I am up really freaking early…not that good for the brain. Lol</p>
<p>Interesting info on the male labor rate…
I have very little interest in working…
I hope my kids aren’t reading this… I’m just kidding. :)</p>
<p>Who has level 2 quotes? In about 6 minutes…the hft firms are going to pull out of the markets…</p>
<p>Just bring up SPY…or ESM2 and see the markets go bye-bye…until the jobless claims number is out…</p>
<p>Home today for a furnace cleaning so I can watch the market all day. Some of these algorithms seem to have some issues. I’ve noticed that those that apparently mine news articles frequently pick out headlines that are misleading relative to the contents of the article. The trading direction is taken based on the headlines and if you spend 10 seconds or so and read the article, there are times that the article says almost the opposite of what is implied in the headline which represents an opportunity for a trader.</p>
<p>Yes…that is true…</p>
<p>I invested in a hft company and the use of headlines was one of the strategies…</p>
<p>I didn’t like it myself…and we lost…and stopped using that strategy…but…</p>
<p>That strategy must work…or firms wouldn’t use that strategy.</p>
<p>It works most of the time. However, I think there are problems with complex stuff. For example, all the stuff with Europe. There would be headlines about this or that happening with Greece but when you dug deeper the headlines needed significant human interpretation that I don’t think machines quite have yet. Also there is a difference in the time frame that the trading takes place. I can imagine that the trading algorithms that test the market on a microsecond time frame can adjust to how the market is interpreting the article but those that cannot respond as quickly can’t. I’ve definitely seen opportunities in the past when this happens.</p>
<p>Yes…headlines can be very misleading…</p>
<p>I’m a latecomer to this thread but to the OP, I think that the economy is slightly improving but it’s again based on a house of cards. Consumer credit card spending/debt is going back up again after falling for quite a while. I think people are pent up living like misers trying to scrimp/save all the time and are letting it out a little. </p>
<p>As someone who has literally had three jobs in one year - yay me. I can tell you that many of my coworkers along the way who have had to move on too, have not found new jobs paying what historically was paid for the position. There’s been a lot of, “This is what the offer is, there are several people willing to work for that amount.”</p>
<p>Additionally, there are millions of unemployed that are not included in the govt. reports for one reason or another. People who have given up looking. It will be years I believe before the full economy turns and maybe never to what it was. We’ve been told by govt. leaders that we need to be more like Europe which has historically had higher unemployment than the US. This might be the new norm.</p>
<p>Doct…do you have level2 quotes…in a few moments…hft firms are going to leave the market…check out qqq…</p>
<p>Firms don’t trade when the leading indicators and house price index comes out…(10Am est)</p>
<p>there is an article in msn entitled “Are Americans getting lazy” that you might find interesting</p>