Bryce - Texas
George K - Nevada
Les N - Oklahoma
Jeff - Wisconsin
Jeremy - New Zealand
Steve S - Utah
Valentin O - Germany
Piotr Karas - Poland
Limited offer – I am giving away 1000 copies of my 4 Golden Rules of Trading and free subscription to my Simon Says newsletter. February 2010 update – A little over 400 places remain.
Limited offer – I am giving away 1000 copies of my 4 Golden Rules of Trading and free subscription to my Simon Says newsletter. Grab yours here whilst it is still free. For full details see the Golden Rules page.
…but don’t overlook their ability to mislead with words!
Finally in Britain we have a government prepared to roll up its sleeves and deal with the horrible financial mess that has been allowed to develop over the last decade. Almost every day on the news we hear about the state of “the deficit”, the 25% public spending cuts and ugly tax rises that are planned to deal with this problem.
The widely accepted figure for the UK’s deficit is £149bn. An astronomical figure we all agree, even those who will be most impacted by the spending cuts accept the country cannot go on living on its credit card forever and action is urgently required.
But what are the facts that lie behind the headlines? When we hear the word “deficit” the picture conjured up is that of an overdraft, a loan, a credit card bill. That analogy is then built upon by the way journalists write their stories. People sitting at home watching the news, sucking on their teeth in disbelief at the horror story of the Nation’s debts try to internalise otherwise incomprehensible numbers by thinking of themselves personally in a similar predicament.
Perhaps £149bn of National debt, may create a picture for the individual of they themselves sitting there with £149k on their mortgage or maybe £14.9k on a credit card bill? They think of their personal deficit if you like, being of such magnitude that an easy way out of the hole eludes them. All they know is that somehow in that position they would have to find a way of dealing with their “deficit”.
Very sadly what normal human beings have been allowed, encouraged and coerced into understanding the word “deficit” to mean, isn’t exactly the same definition as used by our politicians. For them “deficit” doesn’t mean the whole horrible insurmountable mess. They don’t mean the current credit card balance or the mortgage on the house.
Their version of the word “deficit” refers only to the rate at which the hole is continuing to be dug! The £149bn is only the additional debt being added to the pile this single year. It isn’t the credit card balance at all, just the new spending being added to it. The actual debt is miles worse. The last credit card bill stood at £927bn even before this £149bn started to be spent!
So hold on a minute here. The 25% spending cuts and tax rises are intended to address just the £149bn annual increase in the mess and they don’t even deal with all of that, only a bit of it! They don’t get anywhere near addressing the £927bn racked up over the last decade, which also has to be paid back. We don’t hear about that at all when the discussion centres around just this £149bn figure.
I am sure that the majority of the population genuinely believe that if the £149bn could be eliminated, we would be out of the woods completely. But in reality these 25% cuts and tax rises should only be seen as the first round. There will have to much much deeper cuts and tax rises to follow if we are to deal with the actual problem once the incremental annual increase has finally been sorted out.
There are two other sorry aspects to this national problem too. Firstly the public has been led to believe that we are in this mess because of the financial intervention when the banking system collapsed. Politicians do nothing to defuse this misconception as it channels the public’s fury away from themselves. So they are only too happy to have the bankers blamed for the pain. However the truth is rather different from perception, again. Without the financial intervention the true deficit would stand at £816bn. So £9 out of every £10 of the true deficit has nothing to do with the credit crunch but everything to do with reckless and irresponsible government spending. No wonder the politicians are so happy to see the bankers take the blame for this situation.
The second buried fact is perhaps the most worrying of all. In attempting to tackle this tip of the iceberg £149bn annual increase in debt, there is a third key element. Over and above the spending cuts and tax rises there is an assumption of economic growth. This is a big assumption, which is almost certainly flawed. I suspect we don’t hear too much about this as it is probably already known to be flawed, yet the whole £149bn reduction is absolutely dependent upon this. Yet basing your rescue upon growth is about as sensible as relying on a lottery ticket coming good. It just isn’t going to happen. At least you should not be banking on it, more treating it as a welcome surprise were it to materialise.
About 3 years ago a read a new book written by George Soros. Well I say read, it was more like ploughed through with great difficulty as it was probably the most difficult book I have ever tried to read. To the best of my ability I concluded from this a simple message – The world has experienced 60 years of almost uninterrupted economic growth. That period is now at an end and there is no reason to expect any growth at all, on average, over the next decade or two. In fact after such an extended period of growth, there is every reason to expect an extended period of no growth at all (at best!). Traders might like to think of that as a retracement in an uptrend, but on a yearly chart perhaps.
He might be right? He might be wrong? If it was a politician making such predictions it would be guaranteed to be wrong. But like him or loath him, this guy is no fool. Our knowledge of market swings and even plain old common sense also support such a view. So I would certainly not want to be relying on growth to fix the bulk of the country’s financial problems, yet wishful thinking seems to be about all we have left.
There may be an acceptance of tough times ahead, but there does seem to be a general consensus that the worst is now behind us. Where this confidence is founded I can’t quite figure out. From what I can see this is far from over. In fact we don’t seem to have even finished the hors d’oeuvres yet.
As traders we are always getting bearish at the end of major bull markets and always getting bullish at the end of major bear markets. In many ways it is our purpose in life to be taking the opposite view to that generally accepted by the public. That is how we outperform the crowd over the long run. Perhaps we are just wired differently? Not to accept what we are told, to be forever suspicious? The minute a room full of people agree with my view on the market, I know I am on the wrong side.
So I like being different, confrontational some might think, holding views that go against the grain. There is supposed to be safety in numbers, but never forget the money is with the minority! When people tell me “you have been way too pessimistic in the last few years” I have to tell them that 30 years ago I was a superbull. You would never have found a bigger optimist at that time – a time where there was nothing to be optimistic about (mass unemployment, 3-day working week, power cuts, rubbish piling up in the streets etc.).
Markets move in cycles, life moves in cycles. That always has been the case and always will be. No I don’t buy into all this tripe about recovery that the masses are happy to swallow. The facts simply point in a very different direction for the moment. Once we really get into the pain of sorting out this mess, once the 25% spending cuts look like small beer, when there is real fear and desperation on the streets, when there is nothing to look forward to…then I’ll be bullish again. I also know we will see the S&P back to 1650 and way beyond in the future. I expect and hope that is in my lifetime, it just isn’t likely to be any time soon.
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Copyright © Simon Townshend Ltd 2010, all rights reserved
…it has probably already passed you by!
Those were the famous wise words of the rather flamboyant financier Sir James Goldsmith. Well this week the wheat market became one of those bandwagons. I know this is not a market that every reader of my articles will be following, but it provides such a good lesson in trader psychology that I want to spend a few minutes today discussing it.
Over the last few weeks this market has been having a spectacular bull run and in the last few days it went parabolic, as you can see in the chart below:
You may recall a similar thing happened in Sugar last year and I discussed that market at the time. Today’s story starts on Wednesday, 2 nights ago, when like many people I watched the evening news and heard all about the terrible fires and devastation in Russia. The loss of 25% of the wheat crop was a considerable chunk of the report. “OK time to take great care in Wheat” was the first thing that went through my mind. “The great unwashed will be going shopping tomorrow stoked up by the media reports” was the second thought that went through my mind.
True to form Thursday saw the wheat market close limit up as everyone scrambled to climb aboard the bandwagon. On Thursday night I mentioned to my closest friends that this market could run a lot higher still, but to be careful as such moves end just as spectacularly as they begin. You never want to consider continuation trades in a parabolic market and nor do you want to start fading them until after they have turned. In fact unless you have a lot of experience with these types of moves you just don’t want to touch them at all.
So today there was another huge run up in wheat as the last of the desperate buyers emptied the last of their available money into this market chasing the dream that it would continue climbing to the moon. What the less informed masses fail to grasp is that the move up is only sustainable for so long as they have money to drive it up themselves.
But the minute the buyers run out of money there is nothing left to drive it any further and inadvertently they then become the architects of their own demise. Sadly I was away today so missed all of this classic saga unfolding. But I found it telling that the market ran up again early today, almost to limit up, but not quite. It then traded sideways for many hours just a few cents below limit up. In other words there was no artificial limit placed on the buying today – the bulls were able to buy everything that they wanted. In fact they were able to buy so much that they finally exhausted their reserves. With no more money available to come into the market it duly turned down, put a top in and closed limit DOWN!
Every single person who bought in the last 2 days (i.e. after the big news report) is now not only holding a losing position, but trapped in a losing position. Once the market was locked limit there was absolutely no way for these people to sell back out. They were late to the party and are now locked in for the weekend, at least.
Do you think they’ll be sleeping well tonight? Do you think maybe there will be a pile of “sell market on open” orders being prepared over the weekend? The market closed at 726 after some poor soul paid as much as 841 just a few hours ago. Now that looks suspiciously like a brokerage statement that will shortly be framed and hung on the wall next to all the dotcom share certificates!
Lots of trapped new players, is often the recipe for a massive squeeze. Do you think they’ll get out at 726 when the market opens on Sunday night? Or does it seem more likely that there will be a huge gap? It’s going to be ugly for them either way, so the debate now is only one of magnitude.
For us it is just another reminder of some very important lessons:
[As a quick aside for those that use my Behind the Chart technique, take a look at the hourly wheat chart today – a picture perfect short just above 800, with no heat and a straight line move to limit down. As I said in the webinar the fade trades are always the best ones, they just aren’t as frequent as we would like.]
Last time we discussed the theory of climbing back out of a dip having avoided the bulk of the drawdown that might have otherwise been experienced. During the recovery the aim is to increase size quickly in order to further capitalise on our change of fortune. This was the simple model we were working from:
This time I want to discuss some of the practical difficulties we have to face when translating this theory into reality.
The main problem we have is that the simple clean curve we see in theory is a very crude approximation for the noisy line that we will actually experience in real life. The second problem is that we need to be able to identify when the bottom of the dip has actually been formed in order for us to be able to move from reducing size to increasing size. If we can find a way to deal with these two factors, we can come surprisingly close to matching our theoretical model.
Let’s deal with identifying the bottom first as this is the first thing that we have to concern ourselves with in practice. In our model you should recall that during our first recovery month we are trading exactly the unit size as dictated by our capital preservation plan in the previous month. In other words we don’t have to worry about whether we have turned the corner or not during the month in which we actually do turn the corner. We simply know when this has happened by virtue of having a profitable month.
Next we have to deal with the noise issue. What if our profitable month was just a blip, just a bit of noise on a continuing downward path? That’s a serious concern in the real world that we have to be prepared to deal with if necessary and here is how to do it.
When you had your first profitable month you were trading with a tiny monthly risk of just 1.05% of capital, having cut back from a starting point of 8% at the previous equity high. The line in the sand is the equity low made at the close of the previous month and this must be defended at all costs.
The rule is simple – as you pull away from this line it becomes increasingly safe to increase trade size. However should you head back down towards it again you have to be prepared to cut size again were you to reach that equity low again. At the equity low, you immediately reset your trade size to whatever you were using during the 1.05% month, and reapply your capital preservation plan from that point going further down below that line. The safety net provided by the capital preservation plan takes precedence over everything else.
OK, so that deals with the worst possible outcome, which in reality is not bad at all. So let’s now consider how we operate once we do pull away from that equity low. Our objective is to double our size each month as we climb back out of the hole, until our original unit size is reached, equating to 8% monthly risk in this example.
So after the first profitable month (the 1.05% month), you could just move straight up to 2.11% which is next step up on the theoretical model. However this is where our practical noise problem has to be considered. In simple terms you have a month’s worth of profit under your belt so far and this is the buffer between where you start the next month and that line in the sand. If you double your unit size in one hit, you effectively halve the size of that buffer.
Is that what you really want to do in practice? Probably not. As you pull further and further away from the line in the sand, in becomes easier and easier to increase size and the additional risk becomes proportionately less. But in these early stages of recovery we need to be more guarded in practice than in theory. So here’s what we can do…
Split the month into 4 or 5 weeks and increase a little bit after each profitable week. This is a tactic that will effectively preserve that buffer you have whilst achieving the goal of increasing size. So for example if your previous size was say 6 contracts, don’t go straight up to 12 on the first day of the month, but maybe go to 8. As long as your first week at 8 contracts ends in profit go up to 10 for week 2. If your first week wasn’t profitable be pleased that you were trading 8 lots and not 12s and stick at 8 for the next week.
If week 1 was positive, go up to 10 in week 2. If week 3 is positive move up to 12 and maintain that for the remainder of the month. At the end of the month you ended at the desired size but avoided risking your buffer unduly. So yes in practice doing this costs you a few more days than in the noise free theoretical model. But so what? You just endured a 6 month drawdown and pulling away from that line in the sand as smoothly as possible is far more valuable than a few extra days in the overall scheme of things.
Now you have 2 months of buffer profits under your belt and you are well on your way to recovery. Until you make new equity highs always keep that line in the sand in place and be prepared to act accordingly.
The markets appear to have stabilised after a most challenging period. For the first time in quite some while we seem to be seeing a period of more normal volatility. That is not to say that conditions are perfect as clearly they aren’t. However most markets are at least tradable once again. So we are in with a fighting chance of fulfilling our objectives.
I have spoken at length in the past about managing your equity curve when entering a period of drawdown. There is no doubt that recent months will have lead the majority of traders into some sort of drawdown. Now things are starting to look a little brighter, it is time to think about how we manage our way back out of a drawdown.
To some traders, myself included, managing your way into and back out of a drawdown can be one of the most powerful tools in the armoury, so this is a subject worthy of significant personal study. In this first article I want to cover the core principles of this technique and then next time I will expand upon this and discuss how we put the theory into practice.
Let’s start at the beginning, with your capital preservation plan. The purpose of this is to ensure you retain the majority of your capital – however long and however bad a drawdown period you have to endure. Everyone has his or her own version of this, but I am going to use the simple model I gave you in Golden Rule #3. In this we have (a) a maximum allowable loss limit per month and (b) loss levels at which we cut our unit size by 1/3rd each time a drawdown level is reached:
The main point here is that even with a somewhat conservative rate of cutting back the unit size, you still have 80% of your capital at the end of an astonishingly bad period. You would also carry on cutting back if it went on further. If you never recovered at all you would still have ¾ of your capital intact by the time you retired! So don’t underestimate the importance of this.
Once the tide has turned you then start to build your size back up. However if you reinstate size more aggressively you can accelerate the recovery back to equity highs by taking fuller advantage of the upturn.
In the following model I show the effect of the same capital preservation plan which risks a maximum monthly loss of 8% initially and reducing by 1/3rd when going down. When climbing back out this plan doubles the unit size after each successive profitable month, until full size is restored. In this way it takes 6 months of reducing from full size down to a very small unit size, but only 3 months to build back up to full size which is then maintained in the final 3 months. The result is the red line.
In contrast the blue line shows the impact of sticking with a fixed unit size throughout but still using a maximum monthly loss limit – so this line is a simple 8% loss each month on the way down and a fixed 8% monthly gain when going back up.
So after 6 bad months and 6 good months the linear plan gets right back to where it started, after enduring a gut wrenching 48% drawdown and with no certainty that it couldn’t actually continue going down to zero if the second six months also turned out to be losers!
Whereas our planned and managed approach not only recovers fully but even generates a 10% profit on what is a very bad year. But most important of all its drawdown is a much more tolerable 22%, plus the mathematical certainty that it actually cannot fall very much lower than that were the second six months to also be complete losers.
I don’t know about you, but I know exactly which one I prefer! Yes there are several practical difficulties in implementing this, which prevent a simple theory working perfectly in real life. But we can come surprisingly close with the right tactical approach and that is what I will cover next time.
I feel its time again to have another moan about my gas bills. If you were reading my articles a little over a year ago you will probably remember my last rant on this subject. At the time the wholesale price of Natural Gas had been in long term decline and was actually at its lowest price for 7 years, having FALLEN by over 75%. Yet mysteriously we, the consumers, were facing bills escalating wildly out of control over these same years. I wasn’t happy about it.
If you missed that article but these astounding facts interest you, here is the link: http://simon-townshend.com/2009/05/rip-off-britain
I heard on the news a few days ago that the gas prices we consumers have witnessed more recently are due to the weakness of the Pound. So the excuse seems to have evolved rather over the last year – maybe a few people with more influence than me started taking an interest in this market that so few people ever look at?
Needless to say when you compare the price of a Dollar (the currency in which Natural Gas trades) today to its price a year ago you notice something else that’s rather intriguing…A year ago a Pound bought you 1.5 Dollars. Today it buys you errr 1.5 Dollars! In the period in between the Pound has been STRONGER, not weaker, actually maintaining 1.6 to 1.7 for the majority of that time. So that was a pretty feeble excuse then. But maybe it served its purpose and diverted unwelcome attention away from the true wholesale gas price.
What will they think of next? Actually I have a sneaking suspicion that the next excuse will in fact revert back to the “terrible rises in the wholesale gas price”. The fact that these rises , if they do in fact happen, will come from an unbelievably low base will no doubt be overlooked as the con unfolds.
Why do I think this? Well over that last few weeks the Natural Gas market has actually bottomed and is now starting a very pretty well behaved new uptrend. How far it will rise is anyone’s guess but when you see just how far it fell over recent years, a very substantial rise is by no means out of the question:
The real question on my mind is if my own gas bills were able to rise during the biggest fall in real gas prices in recent history, what the heck will happen to them now? I fear we already know the answer to that!
On a slightly more positive note – my fund members and SIR subscribers have been long this market for the last few weeks and we plan to not only hold onto the existing position but to add to it at every opportunity if this new uptrend develops as it has the potential to. So “They” may have really shafted us on the way down, but at least we are somewhat hedged against the next round of shenanigans that no doubt will start to become newsworthy over the coming months.
I dont know about you, but I am getting more than a little bored of being treated like a mushroom by the powers that be.
May was a pretty tough month for everyone I know, with so many shocks hitting the market and causing instant reversals on what felt like an almost daily basis. It is difficult for any strategy to perform in such a wild and random environment.
We did not escape either and our swing trading strategy had its first losing month after 14 consecutive profitable months. We knew a losing month had to arrive at some time and it finally chose May! So that was our first losing month and our worst drawdown ever.
But I am pleased to say it still wasn’t a terrible drawdown. I am even more pleased that on checking my figures last night I discovered that in the first 2 weeks of June our relatively few trades (4 winners and 1 loser) have completely recovered that drawdown and taken us right back up to equity highs.
Once again this strategy has proven just how powerful it is and I have decided to make available 4 new places for serious traders who are interested in joining myself and my small group of friends who take these trades with me. Ideally I would like to take on 2 new members this month and 2 in July, as I work closely with each person until they are fully conversant with what we do and how we do it.
Before casting the net wider I would first like to offer these last 4 places to the readers of my newsletters. So if you would be interested in adding something extra to your current trading activities please have a look at the following website and drop me a line to let me know you are interested:
This is a swing trading strategy with typically 6 to 12 trades per month and you need to be able to risk $1,000 – $1,500 on a trade as the majority of our trades have this sort of initial risk. There are some trades with initial risk of just $600 to $800 and also a few in the more volatile markets requiring a larger risk per trade (which I advise members to skip until they have built up a decent profit). Here is the cumulative profit and loss chart for our 152 trades from the day we started (in March 2009), right up to last night:
If you are interested to hear how I came to develop this strategy, or for that matter what you need to do to develop your own, then here is a recording of an interview last year that you may find interesting:
I have the pleasure of having met hundreds of traders, the majority of whom are full time professionals. I have regular dialog with several dozen traders as well. Guess how many have been telling me lately that they are having a great year?
Zero! Not one single person has said to me “hey Simon I am doing well at the moment”. Isn’t that strange out of all of these traders? I have had people say to me:
Several people have asked me what I am doing to survive until things settle down to a higher degree of normality, so here are the three things at the top of my list:
The first and absolute top priority is to protect the bulk of your capital. How this is best achieved may vary from person to person, but whatever you do you must ensure you emerge from the rough times with your capital largely intact. It is pointless waiting for better times when you can be profitable once again if you are effectively blown out of the game or nursing a drawdown that is too big to be quickly recovered from when the time is right.
The second point is that you must keep going. That may sound at odds with the previous point. But if you cut back on the number of trades you take and the size of those trades, you can actually continue indefinitely without doing any significant damage to your capital. If necessary move onto a simulator or just paper trade. But you must keep trading, for several reasons – it keeps you in touch with the market, it keeps you active and alert, it helps you practise and hone your execution skills. Most of all it means you will be there when the silliness subsides.
That doesn’t mean you need to keep up the same long hours or to trade every day of the month. Let’s face it you are not going to make money working 60 hours a week, working half time means you are simply going to not make money half as much – if you see what I mean! There is nothing wrong with taking time off as long as you keep trading sufficiently long each week to still be in the game. After all you wouldn’t want to be taking time off when things improve, so why not make the most of the tough times?
I used to think the solution to tough times was to put more time and effort in. It was a natural way to think for those of us brought up to work harder and harder until we succeed. But I was wrong! If the market isn’t going to pay you it isn’t going to pay you and that’s all there is to know.
My third priority is finding something constructive to do in the business that keeps you positive. Work on something that is within your control and not that of a crazy market. It doesn’t really matter what you choose as long as you do something that is of value and something that you can feel a sense of achievement over.
I recently applied myself to taking overhead costs out of the business. Fixed costs are a drag on any business and trading is no exception although mercifully our fixed costs are more limited that most businesses. I was pleased to find savings amounting to 18% of our annual spend that I was able to eliminate. That is quite a few thousand dollars a year. But it is not the money that matters so much, although clearly it is better to have it than not. What really matters is applying yourself to doing something constructive that you can feel proud of achieving at the end of the exercise. It is certainly no replacement for getting your trading back into a profitable groove, but it is something that you have absolute control over and that no crazy market can derail you from.
So that’s my simple formula to weather the storm – protect your capital, keep trading and find something positive to do.
This week marks the anniversary of my second appearance on Friends and Quinto.
From last weeks feedback it sounds like newer subscribers who have not previously heard these interviews want to hear more. So here is the second one, that Jeff refered to in last weeks recording.
In this interview Jeff and I discuss the process to moving from trading your own account to handling other peoples money. I know this is a transition that many traders will eventually make. But it is not without some hidden pitfalls that I discovered the hard way. So hopefully this will help you avoid making the same mistakes.
Just click on the icon above to hear this 11 minute broadcast.
Time certainly flies. I find it incredible that a whole year has past since my first appearance on Friends and Quinto.
If you missed it then, here is another chance to hear Jeff and me discussing the strange volatility extremes we had been witnessing in the markets. This may be a year old, but it is every bit as valid today as it was then – now that is something that we would never have believed possible!
Just click on the icon above to hear this 8 minute broadcast.
I want to start this article my pointing out that I am no economist, just a humble engineer with a half logical but inquiring mind. Not that I place much faith in the predictions I have seen from proper economists over the years!
Anyway having recently been studying the copper market where we missed a very nice short trade, I was suddenly struck by something unusual – a huge divergence between copper and gold has been developing over the last month:
Notice how these markets usually follow a very similar path? Sure the amplitude of each swing varies, but the general direction tends to be the same. Until all of a sudden about a month ago this changed fairly dramatically.
When an established pattern suddenly changes my interest is aroused as it means that “something” is going on and the market is trying to tell us something. Well actually the market is probably trying hard not to reveal its secrets to us mere mortals, but it cannot avoid leaving its footprints behind for those that are looking.
What do we know about these two markets? Well gold is a long established hedge against inflation. For decades it has been the place for people to put money when they fear inflation which is of course a mechanism for devaluing cash. (In practice it turns out that this gold instead of cash strategy doesn’t actually perform anything like as well as we might believe, but that is another story altogether.)
The copper market has become something of a proxy for economic activity over more recent times as our lives have become ever more dominated by consumer and electrical goods, computers, phones etc. Everywhere you look these days, you will find copper. Actually I would argue that it is more a proxy for discretionary spending rather than the purchase of essentials like food. But that is probably a mute point.
So what might this sudden divergence between these markets be hinting at? Gold continues its upward march reminding us of the looming inflation threat that clearly in not abating but becoming an ever closer reality. Indeed UK inflation figures just released showed CPI already at almost double the 2% target figure and RPI at a 20 year high at well over 5%. So here at least the penalty for all this printing money madness is no longer a threat but already becoming a reality.
Of course economists and politicians made a big thing about this recession being so different from the past due to the absence of inflation and how much pain we were spared as a result. So no doubt these oracles will be relieved to be out of recession (apparently!) now that inflation is set to strike?
Well not so fast please, let’s not forget this copper market. If this proxy for economic activity is to be believed (and who knows?) this market seems to be seriously pricing in a fall in economic activity. A 20% decline in copper prices in a month is more than just noise. Most of the traders I speak with (and what the heck do we know!) have been taking a double dip for granted. The debate that rages here seems to be “2 dips or 3?”.
So let’s see then – we have:
Forgive me for being pessimistic but this looks to me like the perfect storm brewing and it is not just the markets hinting at this possible scenario. Uncanny isn’t it that yesterday we had the SEC proposing tightened circuit breakers in the stock market to prevent crashes (like limit moves don’t suddenly become targets for traders!) and today Germany implements a 10 month short selling ban (which they will also try to rollout across the rest of Europe too).
Do you think maybe these guys are trying to get ahead of the game this time? An interesting few months ahead of us I suspect.
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