Wall Street Traders Bring Home Far More Than Brain Surgeons

Don, sadly the public believes in luck which is the way it should be. "Luck" has no place in markets, just like mysterious talismans and suprernatural lucky charms have no place in someone's pocket to ward off evil. Incidentally, in grad school, I took a logic course for the heck of it and proved that "Luck" if it exists, is a zero sum game. If you think that I have been lucky for the last 33 years I have some oceanfront land in Denver that I'd like you to check out. Successful speculation involves testing, statistics, counting, science, conquering fear, creatying trading systems, studying neural networks, and using game theory espiecially the works of Selten, Harsanyi, Nash, and a good does of Bayesian models, and . If I had to depend on luck, I would have been bankrupt 30 years ago. Luck serves a speculator like luck serves a professional poker player.....hardly.....the best poker players will have an edge over the public and the better speculators will ultimately take money from the lesser speculators.
— January 19, 2011 5:59 a.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Of course there is no free market and 2007 was not about the free market despite what the pundits preached. How can there be a free market when the markets are regulated by a dozen federal agencies. Even the commodity exchanges are regulated by the CFTC, SEC, Commerce, IRS, Fed, NASDAQ, NFA, and a hos tof others. Many regulations are contradictory FWIW, such as allowable position sizes and margin regulations. Sadly, the general public doesn't have a clue what happened in 2007-2010 because they get their information and perceptions through the lens of business reporters, most who don't have a clue about anything. When you base your own ideas on editorial and not fact, you're in trouble, and 75% of business reporting is editorial, probably 15% is made up crap, and only the price reporting are the really true things. And I agree with you 100% about the Fed bailouts, but I have major problems with the Fed, which has allowed the dollar to lose 92% of its value since it was created. That is not by accident which is known by those who really study economics and not the Keynesian crap that's in vogue right now. Statists who want more government regulation of markets have very flawed thinking.....I could go on for about 3 days with the fallacy of more regulations etc.
— January 19, 2011 5:42 a.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

"Frankly, I find those whose only motivation is making money to be quite boring" Then I'm the most boring guy you ever came across. I bet Soros is boring also.
— January 19, 2011 5:30 a.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Traders want ptice movement not action. Action is gambling, price momevent is good. Brokerage houses need volume because commissions have gone down so much. 40 years ago it would cost the general public $80.00 to buy or sell a hundred shares of a hundred dollar shock...now anyone can get that trade down for $0.60 at IB. Costs have gone down. And I agree that GS is evil, with their stacking the deck in the markets and their rotating ex-employees at the treasury and Fed. They are all friends, have personal relationships, their wives hang out, their kids go to the same schools, and they naturally look at serving their friends and ignoring the needs of the public. That being said, there's nothing you can do about it so the best plan is a playing a good strong defense and don't worry about what the other guy (the government) is doing. Unfortunately 95% of people aren't aware of the concept of thrift, money management, self reliance, rational critical thinking, etc. They expect the government to protect them from hazard, while I want the government to stay away. Most people spend more time making a decision on a new suit or dress than how to allocate their investments.
— January 19, 2011 5:26 a.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Of interest to all should be this deeply flawed talk from Robert Shiller of Yale, a leading economics expert who, like Paul Krugman doesn't have a clue about economics. http://tinyurl.com/4k3utjn Incidentally, Krugman's paper on international trade that won him the Nobel Prize was sophomoric at best and showed that the average 20 year old runner at the Merc has a better grasp on trade than Krugman
— January 18, 2011 6:40 p.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Don, do you really believe that the stock exchange is a giant casino where everyone gambles with other people's money? Have you been able to scientifically prove that "everyone" in stocks use OPM? If so, where can I trade exclusively with OPM and not have to put my capital at risk? I think I'd like that gig, but suspect that my clearing firm would not like me using OPM. The markets are much more like a chess game, with the physicality and strategy of a rough squash game. A good defense is necessary, and succesful speculators mostly were atheletes, and were also the best kids on the block playing games of all sorts.
— January 18, 2011 6:10 p.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Investors only benefit from one thing....if they're right and make money. The diminishing returns argument cannot be made with any degree of credibility because no one knows how high a market would have gone if a trader made less money...Perhaps because the lack of the trader's participation would take liquidity out of the market and there would be less money on the table for everyone. Traders do not have a license to print money, although exchange members pay for the privelege to be at ground zero of the trade and get first crack...as it should be.
— January 18, 2011 6:02 p.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Don, I am a liberal in the mold of Locke, Adam Smith is my role model, and the Enlightenment is my guide. I look towards F.A.Hayek for intellectual stimulation and admire people like Ayn Rand, Kant, Newton, Marmontel Henry Hazlitt, Ludwig Von mises, and a host of others. If that makes me a leftie, so be it:) As a younger man, I had a correspondence with Hayek starting when I attended a lecture as an undergrad in '75, which lasted until two years before his death. But my brush with great people taught me to believe in the deflation of ballyhoo and hyperbole, and my mantra became that if something can be observed or hypothesised, it should be scientifically tested. That's the difference between me and the general public.
— January 18, 2011 5:49 p.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Don, why the invective calling traders "jackleg?" Name calling diminishes any hearty debate and is foolish. Shouldn't debates be in the Franklinian spirit of bonhomie?
— January 18, 2011 5:36 p.m.

Wall Street Traders Bring Home Far More Than Brain Surgeons

Don, frankly I don't cafre which way the market goes as long as it moves and I get a crack at it. And I did not buy my seats at the CBOT, KCBOT, CBOE, and MGEX to provide some public good, I bought them to make money for myself and suspect that no exchange members bought their seats to fufull a public need or be charitable. And with the financial sector of 20%, there will someday be a correction of epic proportions, as that number is too high. Something on the level of 1873, which would provide many opportunities for the sagacious investor, wring out all the excess fat, and from the ashes the phoenix would arise stronger than before just like after tha panic of 1812,1873, 1929,1987, et al. For a good discussion and history of US markets, you ought to read Henry Clews book. http://www.archive.org/details/twentyeightyears00… Clews book also has the best system for making money in the market either in the beginning of chapter 2 or 3. You need a good panic to transfer assets from weak hands to strong hands. The markets are telling you what exactly is happening, and offers a degree of predictability and one look at the metals etc is more than enough info. Problem is that most people expect the government to help them out, change the inevitable business cycle and people forget that markets are much bigger than governments as the last 25 years has shown. Another book I heartily recommend is Fergusson's book "When Money Dies." It's a history of the hyperinflation in the Weimar. http://www.wolf1168.us/misc/Articles%20of%20Inter… History may not repeat itself but it rhymes.
— January 18, 2011 5:31 p.m.