Margaret Heffernan: The Dangers of Willful Blindness

Ms. Heffernan’s presentation teaches us, traders, one important thing to always remember – don’t be that 85% wilfully blind crowd, ever.

Sometimes, especially when you are trading a macro idea, that your position would not work out in your favour for a long time.

If you lose yourself, if you fail to stay your course, your trade will lose.

That does not mean everyone should indulge themselves into believing in an illusion. It is important you see through what you think and that logically your beliefs are really correct.

Only when what you believe in is actually what the truth is and that the inevitable course expected actually happens would you reap the profit.


Margaret Heffernan: Dare To Disagree

TedTalk by Ms. Heffernan. It is not a talk on trading at all. It is a talk focus around people who have been labelled as whistleblowers and the conflict they face.

The message from the video is equally applicable to traders.

You have to find holes in your own analysis. You have to know when is the time to fold. You have to be able to that if you want to stay consistently profitable.

Unlike the people in the video who often focus on a single issue over many years, being a trader have the extra difficulty of resetting your mind the moment a trade is completed. The lookout for signs to support the closed position is no longer necessary. Your job is to seek for the next trade and conduct your analysis from a clean slate all over again.

It is hard. But that is the way trading is.


David Harvey: The Crises of Capitalism (RSA Animate)

Video from 2010 about the problem of capitalism in its current form.

Notice that as of 2013 August the problem explained in the video is not resolved.

Any moment now, should one large financial institution go under, we will re-live the horror of the financial crisis all over again. Passing the bomb around like the game of music chairs has limitations. As all major economies are now well aware of the tricks necessary to survive in this game, there is no one else to pass the financial problem to. The end is indeed very close.

What the Fed has done so far since 2009 is just delaying the inevitable. Fed effectively acted like a rookie trader by violating all possible trading rules and sound money management principles. Fed has bet everything it has and is running out of pledgeable asset by end of this year. So contrary to popular beliefs, quantitative easing will come to an end one way or the other.

Best that Fed can do is to reduce the current size of QE so that they can stretch the program further out into year 2014. As we all know, QE with lesser amount of money is completely useless as that will not be enough to counter the net outflow of all classes of high quality assets by the top 1%. Even on days when POMO is done, as long as the amount is not significant enough, stock market would sell off. Fed has to really dig deep this time to invent something new to replace QE or significant stock market melt down will become unavoidable.

Being a trader, we have to be extra cautious on what instruments to trade going forward. We also have to be extra careful with our money parked with the brokerages. When the next financial crisis hits us, I suspect many firms will go under. Many small cap stocks and financial markets will simply disappear. ETFs you buy may turn worthless as the organizations managing the funds may go bankrupt and lock up your money.

"Only the paranoid survive" – Andy Groves