Trader’s Narrative

The sideshow to the dead cat bounce (more like a rocket ride) was the brewing TV feud between The Daily Show and CNBC. If you missed the final show down, check out the link to watch the complete, unedited version. While Stewart rightfully gutted Cramer like a fish, what I wish Stewart had mentioned explicitly is that if you give a platform for analysts, CEOs, etc. to spout off, then you also have the responsibility to fact check, ask tough questions, research, etc. You know, journalism. It is a sign of our upside down world that a comedian is playing the role of a serious journalist while a former hedge fund manager is playing a clown.

That and more, in this week’s reading list at news.tradersnarrative.com:

• Jon Stewart’s secret Wall St. insider connection
• Suppress the Urge to Call the Bottom
• Parabolic Move in Financial Sector
• One Last Bubble Remains to be Popped
• Bear Market Rally… or Real, Lasting Reversal?
• Stocks That Aren’t Coming Back
• Ignoring the Austrians Got Us in This Mess
• Greenspan Tries to Re-write Monetary History
• How Wall St. Bought the Govt & Cut Regulation at the Knees

And remember to check regularly since there are links added regularly throughout the week.

So the Fed gave $2 Trillion to some banks but won’t name them. Remember that? Bloomberg is suing them to get the information, Congress is asking and being rebuffed. But the WSJ got the scoop!

That and more, in this week’s reading list at news.tradersnarrative.com:

• Fed Using Enron Style Acctg to Bailout Wall St.
• WSJ Names Names: Who Got Secret Fed Money
• (Expected) SEC Fee Increase in April
• Tricks of the VIX
• When Will the Bull Return?
• Credit crunch tent city haunts California
• Investment Banks receive $50 through backdoor
• USO Finds Itself at the Mercy of Traders
• Dispelling Myths About Stocks in the 1930s

And remember to check regularly since there are links added regularly throughout the week.

Since late last year, we’ve been bombarded with news about The Secret, a quasi-new age book and video about the ‘law of attraction’. It outlines that the circumstances and situations that you find yourself in, are brought about by you and your thoughts.

Simple. And at first glance, quiet believable.

Yet, wrong.

If you believe the author, Rhonda Byrne, the prescription for getting whatever you want in life is simple. All you have to do is repeat positive affirmations and force yourself to think positive thoughts. And poof! the universe will give you a shiny new Ferrari, or that fat offshore Swiss bank account you always wanted. If you’re in a bad situation in your life, it claims equally, it is because you’ve concentrated on the negative and ‘attracted’ bad things to your life.

Blame the Victim
First of all, for you to subscribe to this you would then have to agree with the warped notion that an innocent child somehow ‘attracts’ a sexual predator. Or that the victims of tragedies like Darfur, ‘attract’ their own demise. It isn’t the responsability of the persons perpetrating these heinous acts, but rather the very victims who suffer. So in such a philosophy we have the victim suffer twice. Once for the act itself and again for being guilty of bringing it on themselves.

Need I explain further how ludicrous such an assertion is?

Will Power - The Domain of the Conscious Mind
Second, affirmations and forcing yourself to avoid ‘negative thoughts’ is not only an exercise in futility, if it yields anything it will be the opposite. It is quite natural for our thoughts to wander during the day and cover the whole spectrum. But forcing our conscious minds to avoid something, through the use of willpower, always backfires.

I was talking with my (therapist) brother about this and he said: “Willpower is a spontaneous state of mind. It can not be forced. In fact, wanting the absence of something through willpower only intensifies the yearning for it.” No matter how powerful your willpower, you simply can not forget something by forcing yourself to do so. Rather, the more willpower you use, the worse the results. Still have doubts? Spend the next minute using your willpower to not think about a white cat.

So that explains why willpower is futile, and why the ‘law of attraction’ implemented through the conscious mind is useless. But what then is the real law of attraction? Quite simple. The real law of attraction is that our subconscious, determines most, if not all, our values, beliefs and behaviours.

Everything you have achieved is thanks to it and everything you have not achieved can be traced back to your own limiting beliefs.

Imagination - The Playground of the Subconcious Mind
But the subconscious, for all its power, is rather primitive. It obeys. It does not and can not analyze. Neither can it differentiate between real and imagined inputs like the conscious mind can. The subconscious simply assumes all is real. And since the inputs are perceived as real, they create real consequences. Even to the point of affecting physiology! If, for example, you read in vivid detail about a ripe lemon, with its thick and wrinkled yellow skin, its juice trickling down the knife edge as it is being cut and then slowly squeezing the half lemon inside your mouth… don’t be surprised if your mouth starts to water.

Our fears and beliefs use the same mechanism to affect our lives. This is how they hold such sway over us, even when they may be neither real nor logical. And why if you wish lasting and real change in your life, you must change the protocols in your subconscious that relate to it.

So eventhough I do believe that we can ‘attract’ circumstances in our life, I do not believe that it covers everything in our lives. There is certainly room for randomness in life, for tragedy and for serendipity. And most importantly it is not through the mechanism of will power or conscious thought (repeating affirmations). Rather it is through the vastly stronger and hidden subconscious mind that we create our lives.

So as a trader on a path of enlightenment, do yourself a favor and put away the shock pads and the empty affirmations & platitudes. Set yourself instead on the real path to personal development and change.

It may not be new-Agey pseudo-science/pop-psychology but it is real and it is being used by the best therapists in the world to create positive lasting change.

Many spend their whole lives searching for the ‘Holy Grail’ of trading, mistakenly believing that if they work hard, or find the right indicator, or get the right mentor or… (fill in the blank), they will succeed in trading, become a Market Wizard and make gobs of money.

Well, I’m here to tell you the only real secret: Grow a mullet.

Don’t believe me? Take a look at the irreproachable evidence:

Bill Fleckenstein: Many confuse Bill’s bearishness in the past few years as qualities of a permabear. Nothing could be further from the truth. The Fleckmeister knows a long when he sees one. Way back when most people thought of semis as large trailer trucks, he was buying AMAT, INTC, etc. with both hands. He was also bullish on silver at less than $5. Keep up with him on Contrarian Chronicles or on his own site.

Stan Weinstein: is best known for his classic book Secrets for Profiting in Bull and Bear Markets. But he also had a retail advisory service (now discontinued) called the Professional Tape Reader. Now Stan’s advice is exclusive to institutions (or whoever wants to pony up $40,000 a year) and has been renamed the Global Trend Alert. Here’s a sample from last year (large pdf file).

Mike Wekerle: According to Report on Business magazine, “the Wek” is simply the best trader on Bay Street. He is one of the top executives at GMP Capital and specializes in liability trading (helping large institutions get out of positions when there are no other buyers). Mike is also reknown for his ability to recall vast amounts of detailed information regarding trades and deals - both past and in progress.

Know of other financial Samsons out there? Drop a comment and let me know.