Monday, December 31, 2012

Theatre of Absurd

Theatre (sometimes theater in American English) is a collaborative form of fine art that uses live performers to present the experience of a real or imagined event ...

Can there be any other form of live performance which present an imagined event and stock prices have the best day of the year?

That is the American Fiscal Cliff negotiations.

The best demonstration of the theatre of absurd that money can get you.

So do we have a deal or not? As per the latest headlines from the main stream media, we do not have any final deal yet. Why then the spectacular jump? Not that I mind it or really looking for any reason for it. That was the reason in my last post I said :  Had this (sell) signal come 15 days back, I would have jumped on the short side. But today I would stand aside and let it pass. But at least it gives confirmation to the path that lies ahead.

Even in the answer to the comments I said that I do not expect any major selling yet. (Nah, not yet.)

So where do we go from here? While it would be unfair to the subscribers to spill the bean here, all I can say that cycles are about to bottom soon and I expect a bit of choppiness in the next few trading sessions. Does it mean that the markets will never correct meaningfully because central bankers will continue to pump money for ever? My take is, at some point, the unintended consequences of all the liquidity pumping will manifest in un-curable malignant cancers. When and how that will happen, is a matter of interpretation. At this point, let's just drive the car very carefully and take advantages wherever we can.

We cannot trade or invest this dysfunctional market with TA alone. We need some other quantifiable edge. But whatever is your edge, always have proper risk controls in place and never look for absurd yields. No system is always correct 100% of the time and if I say that my system is the best, I would be bulls**tting. But I try not to front run, I do not chase trades and I tell everybody to be patient. In 2012, I may have given up more trades than taken and looking back I am happy that it has helped in the preservation of capital. When people tell you that " No risk no gain" what they mean is that when you take big risk, chances are that if you are right, you will make big money but if you are wrong, you will also lose big time. And we will be wrong more times than right. That is the fact of life. So you decide what you want to be, an investor with a long term financial goal or a speculator?

It has been great sharing this space with you. While I have shared my trading/investment philosophy  and systems with you, I have also learned so much more from you folks. I am thankful to those of you who have shown the faith and have signed up the subscription. I will work really hard to earn and keep your faith.

Happy New Year everyone