One Trader Finally Loses It

Tyler Durden's picture

Over the weekend, Bloomberg View's quasi-economist wrote his latest laughable article, one which supposedly "explained" how "Everyone Worries Too Much About 'Black Swans'", which in addition to being a rambling, meandering stream of consciousness that as is regularly the case with this particular author, made little sense, sparked a Twitter feud with the Nassim Taleb, the person who made the concept of a Black Swan into a household name.

We were therefore very amused to note that none other than former FX trader and fund manager, Richard Breslow who also writes for Bloomberg, seemingly had an epileptic fit upon reading the abovementioned drivel and wrote his own scathing reaction from the perspective of an actual trader, a rection which not only threw up on every argument of the so-called economist's logic, but on everything else that now is passed off simply as, well, "the new normal."

Here is Richard Breslow:

No One Worries Enough About Black Swans

 

Trading is a hard business. The world is becoming a more complicated place: a number out of China may do more to the price of your U.S. shares in a retailer than, well, U.S. retail sales. Yet creeping, dangerously, into the investment advice dialog is the argument that buying and holding no matter what the event is the winning strategy. 

 

If you ever needed a "past results don’t guarantee..." disclaimer it’s especially true now.

 

It’s not surprising that such shallow reasoning is becoming commonplace. Sure beats staying late at the office doing cash-flow analysis. Bad things happen and the Fed will cut rates. Worked time and again. Presto chango, that financial crisis was a buying event, stupid. It’s gotten much worse post the latest financial crisis, as it’s assumed asset prices are the main (sole) focus of the all powerful central banks.

 

To buy (pun intended) into this you have to presuppose that Black Swan events are easily controllable episodes that last short amounts of time. That the authorities have unlimited firepower to counteract every natural and man-made disaster.

 

Equally scary, academics as well as analysts have taken to arguing that investors are overestimating the probability of crisis events. You don’t need to be a Taleb or Mandelbrot to calculate that we have been having once in a hundred year events on a regular basis for the last thirty years. Did a crisis happen, if you made money?

 

This flawed logic argues not only buy every dip, but why waste money on hedges? It assumes unlimited deep pockets and the nerve of a non-sentient computer. Just go “all in.” Looking more like today’s world all the time. Portfolio theory thrown right out the window. Perhaps Harry Markowitz will have his Nobel revoked.

 

A portfolio built to only withstand stress thanks to central bank intervention is one destined to blow-up spectacularly. The embedded flaw in this new logic is that central banks give investors perfect foresight. And nothing can go wrong. Re-read the Investment Process section of those prospectuses.

* * *

Thanks Richard, and to this we can only add the following: while there is no longer any doubt that it is constant central bank intervention that continues to prop and push up markets both in the US and around the globe, these same central planners must be getting very confused: "why are traders angry if we continue to push markets higher and help everyone make money?" One day they will get it.

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HectorCamachoTrump's picture
HectorCamachoTrump (not verified) Apr 18, 2016 10:46 AM

.

Hitlery_4_Dictator's picture

Fuck traders, they are part of the charade. If they just stopped and walked away it would collapse but the greed is just to great for them so they just go along with the fraud. Sickening. 

Manthong's picture

“There are no markets, only interventions.”

Chris Powell, GATA

 

MillionDollarBonus_'s picture

What has 'hedging' done for investors in the S&P 500 over the last five years? It's only served to reduce profits. If you trust in our Federal Reserve's ability to support economic growth, the jobs numbers keep coming out positive month after month, and our officials have committed to intervening in the event of a crisis, then why fear a black swan event? The 'Yellen put' provides a rare opportunity to buy stocks without the overhead of hedging. In fact, the extra profits that you make by foregoing hedging are a kind of hedge. The more money you make, the more you have to put aside to offset any future losses. It's just common sense.

ANATOMY OF A TRUMP SUPPORTER

MillionDollarBonus_'s picture

Why would any trader be complaining when there are so many obvious opportunities just sitting there waiting to be taken? Here is but a small sample of my  investment recommendations over the last couple of years, all yielding triple digit returns to date!

Buying Facebook in May 2012 (170% return): 

http://www.zerohedge.com/news/facebook-indicative-open-45

Buying Bank of America in December 2011 (219% return): 

http://www.zerohedge.com/news/bac-breaks-4-handle-drags-entire-market-down

Buying European peripheral bonds in September 2012 (500% return): 

http://www.zerohedge.com/news/2012-09-28/chart-day-misery-spain-has-never-been-higher

Rabbi Chaim Cohen's picture

I have to agree with the Author here and sympathize with Traders who are getting reamed for losing too much client money. How can you do a job that was once based on logic and predictable herd dynamics and is now based on the capricious whims of economic insanity. Can you expect to have a meaningful conversation with mental patient every time you speak to him?

Keep stacking friends...

Tarzan's picture

Maybe I'm still confused by their brilliants, maybe my ignorance of these matters is shinning, but it seems to me, when 80% of volume comes from 2% of the participants we're painted into a corner. 

Without Central banks cornering the "Markets" , providing liquidity, the house of cards comes crashing down.

If Central Banks are not providing the liquidity that keeps the ball rolling, why did the CME have an incentive plan for their participation? 

All non US Central Banks of course, wink wink

 

RE: Modifications to Central Bank Incentive Program CME/CBOT/NYMEX/COMEX Submission No. 14-038

 

CENTRAL BANK INCENTIVE PROGRAM

Program Purpose 

The purpose of this Program is to incentivize Central Banks located outside of the United States to trade  the products listed below on the CME Globex® Platform. The resulting increase in liquidity in the products  listed below benefits all participant segments in the market.

Product Scope

All  CME,  CBOT,  and  NYMEX  futures  and  options  contracts  available  for  trading  on  the  CME  Globex   Platform,   and   all   COMEX   futures   products   available   for   trading   on   the   CME   Globex®   Platform    (“Products”).

Eligible Participants

There  is  no  limit  to  the  number  of  participants  that  may  participate  in  the  Program.  All  non- U.S.  central   banks may apply for participation. 

Program Term 

Start date is July 1, 2013. End date is December 31, 2014.  

Hours

The incentives will apply to all trades made in the Products regardless of the execution time. 

Program Incentives

Once accepted into the Program, participants will be eligible to receive the following incentives:  Fee Discounts . Participants will be eligible to receive discounted transaction fees for the Products traded  on Globex in accordance with the following table:

 

The only smart Trade, wise Hedge, is to not play at all. 

Let the 1% provide all the liquidity without the muppets, and we'll see how much longer they can extend this insanity!

 

Ivanka2032's picture
Ivanka2032 (not verified) Tarzan Apr 18, 2016 2:51 PM

"How can you do a job that was once based on logic and predictable herd dynamics and is now based on the capricious whims of economic insanity."

 

Umm... In hindsight, it was EVER based on logic?

 

I've come to the retrofitted conclusion that it's been a TOTAL SCAM (& went into hyperdrive in 1913).

tc06rtw's picture

 The only  certainty  I have and hold on to to rectify my life during all this turbulent madness is that, eventually, “Common Sense” will  force itself violently  back upon a childish, stupid, irresponsible humanity.  Religious Folk will ascribe this as an  Act of God — that’s not my perception of reality, but the end result will be identical.
   
 The ONLY  hope  I am still able to entertain is that  I and my sanity  might be preserved to witness mankind’s receiving of its “comeuppance”.
   
   
I want to be around to say  “I TOLD you so!”
  

glenlloyd's picture

Well well, the milliondollartoad comes out with some more cut-n-paste drivel.

Shouldn't you be over tending to your 'accredited' blog instead of posting here?

bobsmith5's picture

My response to that stupid article on your site, "ANATOMY OF A TRUMP SUPPORTER"

People do not think you are for real on Zero Hedge, but you are totally for real and words, like liberal and progressive, are destroyed words your ilk has co-opted to destroy the English language and the meaning of terms. 

You are not liberal or progressive, but you are a communist, authoritarian, irrational, dumb as dirt, anti-life, anti-human, mindless, a socialist, against human freedom and liberty, think you are superior intellectually but ignorant beyond what words can express, completely confused about the meaning and purpose of life, devoid of any spiritual discernment, extremely polluted psychologically, and thoroughly mind control programmed from birth. Your mind is full of so many lies and distortions with respect to reality there is almost no hope of any kind that you will ever recover.

You have not presented any facts of any kind to prove that Trump is any of those things.  What you present is the crap the mainstream media presents to make morons like you think things that simply are not in any way true.  Your values and thoughts can be twisted over time to accept any outrageous idea or action on the part of any elite criminal like Bush or Clinton.  Your understanding of the basic human condition, because you accept contrived mainstream ideas and history, is therefore so shallow that your whole mind is utterly blind to any truths morally, intellectually, and historically in both economics and politics.

bobsmith5's picture

My response to that stupid article on your site, "ANATOMY OF A TRUMP SUPPORTER"

People do not think you are for real on Zero Hedge, but you are totally for real and words, like liberal and progressive, are destroyed words your ilk has co-opted to destroy the English language and the meaning of terms. 

You are not liberal or progressive, but you are a communist, authoritarian, irrational, dumb as dirt, anti-life, anti-human, mindless, a socialist, against human freedom and liberty, think you are superior intellectually but ignorant beyond what words can express, completely confused about the meaning and purpose of life, devoid of any spiritual discernment, extremely polluted psychologically, and thoroughly mind control programmed from birth. Your mind is full of so many lies and distortions with respect to reality there is almost no hope of any kind that you will ever recover.

You have not presented any facts of any kind to prove that Trump is any of those things.  What you present is the crap the mainstream media presents to make morons like you think things that simply are not in any way true.  Your values and thoughts can be twisted over time to accept any outrageous idea or action on the part of any elite criminal like Bush or Clinton.  Your understanding of the basic human condition, because you accept contrived mainstream ideas and history, is therefore so shallow that your whole mind is utterly blind to any truths morally, intellectually, and historically in both economics and politics.

Liberty2012's picture

MDB writes in caricature, or parody, or satire.

Like good art, it requires one to spend a little time, to take a step back, in order to be able to consider the perspective and balance and multiple layers of meaning of the whole piece.

MDB comments are definitely not the typical slapped together ones most of us do. They are thoughtfully and deliberatively reflective of our society.

Enjoy!

Rodders75's picture

MDB, you've already bragged about this on ZH. I wonder: are you compensating for some physical deficiency in your gentleman's area? As we Brits/Poms/Limeys say, do you want a Blue Peter badge? (Too complicated to explain) https://en.wikipedia.org/wiki/Blue_Peter_badge.

Even though you are a smart aleck, I think you're spot on. It's all about monetary policy and basically nothing else, as Stanley Druckenmiller puts it so eloquently here: https://www.thefelderreport.com/2016/01/07/the-greatest-money-manager-al...

So Mr Smarty Pants, what do you like now? 

 

MillionDollarBonus_'s picture

Right now I think shorting oil is a good idea, because you will never go broke betting against peak oilers. Not only is there an enourmous supply glut, but over the next couple of year I expect green energies to serve an increasing proportion of our energy needs. Global leaders realize that we can no longer depend on fossil fuels and are therefore slowly phasing out oil, much to the dismay of peak oilers.

zeropain's picture

you ever consider that the US consumer is just exhausted.  they have eaten and bought all they could at this point.  now the bill is due, and they need to loose weight and excerise. 

bobsmith5's picture

zeropain, you are exactly right.  The primary reason for the oil glut is a slowdown in the global economy and all the shortages of the past were always artificial.  Peak oil always was created by the monopoly oil cartel petro dollar system to jack up prices artificially just like the stock market is artificially  manipulated up with money created out of thin air and injected into it.  Here is where I agree with MDB.  Peak oil always was and is a complete myth.

cheka's picture

fossil fuel :) 

that term should be dead and buried

billions of dinos pumped out daily!

Pareto's picture

+100  Sometimes, its really hard to commit to your sarc.  But, when I find I'm snickering - I'm all in!! he he heeee.

bobsmith5's picture

"Sometimes, its really hard to commit to your sarc."

I shall keep reminding you all that MDB is not "sarc"  He is for real.  There are actually people out there dumb enough to think like MDB.

Nobody creates a website expressing with exactly what he says here, but in more detail,  just to be sarcastic here.  MDB really believes the total nonsense he post on this site as he does what he posts on his own site.  It's hard to imagine that with the vast reservoir of knowledge that Zero Hedge alone offers that MDB cannot draw from it and integrate it logically into his thinking.  You would think that the facts and vast truthful information  available here would fundamentally change his thinking, but it doesn't.

MDB just had no reason to post the url to his website for this article, so if you follow him you will find out, as I have, that he is for real.

Liberty2012's picture

Art is both real and surreal.

Art is a bit of everything - an attempt to capture dynamics on a static platform.

Recreating flow in a still form.

BandGap's picture

You've turned some sort of corner here, MDB, in terms of how your thoughts are being considered. And it is unnerving.

It takes a certain intelligence level to recognize satire........

Boris Badenov's picture

How does anyone make 500% in bonds?

Kirk2NCC1701's picture

Who in their right mind or left brain, would not want FREE ENERGY for their household, power tools, car or motorcycle?  

That's the promise of a Hybrid Energy Network at home or community, by tapping into Solar, Wind and Geothermal.  You sell excess Watts to the Grid, and buy them when you need them.  In all cases it lowers the carbon footprint and lowers your utility bills.  In some cases (the sunshine belt), it actually makes you $$$.  It's also perfect for Off-The-Grid living.

What most people don't realize, and I daresay that I'm the first to say it: Developing "Green Energy Solutions" (i.e, its Enabling Technology, products, and systems) DRIVES US INNOVATION, and US JOBS.  Especially if the parts are US-made, rather than imported from China, Nippon or Mehiko.  Japan and Germany are all over this, because they were the first to realize the implication for (a) "More Energy Independence", (b) "Jobs through tech-innovation" and (c) Better Air Quality. Switzerland is already effectively carbon-neutral.

Many "Green Millionaires" will be created.  You will need a real degree in physics or engineering however, not a foo-foo liberal ars degree (unless you go into Sales & Marketing) to drive the technology.

Entrepreneurs are already all over this.  Preppers and Self-reliant types (libertarians/Libertarians) SHOULD be all over it.  Alas, many won't, as is the case in every era and region of human history.

 

p.s. Shutting down US Coal is indeed sad in a way -- but brilliant from the strategic perspective:  You use up the carbon fuels from other nations first, and keep your till last.  Ultimately, unless the human herd is culled (naturally or deliberately) to ~1-2 billion, the planet and the human species is screwed anyway.  And NON-RENEWABLE RESOURCES means just that:  Once we've used them, they're... gone, Gone, GONE! 

bobsmith5's picture

"Global leaders realize that we can no longer depend on fossil fuels and are therefore slowly phasing out oil, much to the dismay of peak oilers."

This is pure nonsense.  As long as the elitist global leaders, who are the oil banking cartel, oil will always be the main energy source upon which the world will be dependent.  The only way that will every change is if there is a totally free market compete ting against oil as there was before J.P Morgan and the Rockefellers.  Tesla was going to offer technology that would have given free energy to every human on this planet, but the oil banking monopoly men shut him down and destroyed his career.

Oil becoming cheaper is only going to make green energies less popular alternative and a much less economically efficient replacement for fossil fuels.

MDB is right, but for all the wrong reason as usual. It is exceedingly rare that he is right and his thinking is always fundamentally flawed.

horseguards's picture

3-4 year-old recommendations? So what is your overall record?

bobsmith5's picture

My response to that stupid article on your site, "ANATOMY OF A TRUMP SUPPORTER"

People do not think you are for real on Zero Hedge, but you are totally for real and words, like liberal and progressive, are destroyed words your ilk has co-opted to destroy the English language and the meaning of terms. 

You are not liberal or progressive, but you are a communist, authoritarian, irrational, dumb as dirt, anti-life, anti-human, mindless, a socialist, against human freedom and liberty, think you are superior intellectually but ignorant beyond what words can express, completely confused about the meaning and purpose of life, devoid of any spiritual discernment, extremely polluted psychologically, and thoroughly mind control programmed from birth. Your mind is full of so many lies and distortions with respect to reality there is almost no hope of any kind that you will ever recover.

You have not presented any facts of any kind to prove that Trump is any of those things.  What you present is the crap the mainstream media presents to make morons like you think things that simply are not in any way true.  Your values and thoughts can be twisted over time to accept any outrageous idea or action on the part of any elite criminal like Bush or Clinton.  Your understanding of the basic human condition, because you accept contrived mainstream ideas and history, is therefore so shallow that your whole mind is utterly blind to any truths morally, intellectually, and historically in both economics and politics.

bobsmith5's picture

My response to that stupid article on your site, "ANATOMY OF A TRUMP SUPPORTER"

People do not think you are for real on Zero Hedge, but you are totally for real and words, like liberal and progressive, are destroyed words your ilk has co-opted to destroy the English language and the meaning of terms. 

You are not liberal or progressive, but you are a communist, authoritarian, irrational, dumb as dirt, anti-life, anti-human, mindless, a socialist, against human freedom and liberty, think you are superior intellectually but ignorant beyond what words can express, completely confused about the meaning and purpose of life, devoid of any spiritual discernment, extremely polluted psychologically, and thoroughly mind control programmed from birth. Your mind is full of so many lies and distortions with respect to reality there is almost no hope of any kind that you will ever recover.

You have not presented any facts of any kind to prove that Trump is any of those things.  What you present is the crap the mainstream media presents to make morons like you think things that simply are not in any way true.  Your values and thoughts can be twisted over time to accept any outrageous idea or action on the part of any elite criminal like Bush or Clinton.  Your understanding of the basic human condition, because you accept contrived mainstream ideas and history, is therefore so shallow that your whole mind is utterly blind to any truths morally, intellectually, and historically in both economics and politics.

bobsmith5's picture

My response to that stupid article on your site, "ANATOMY OF A TRUMP SUPPORTER"

People do not think you are for real on Zero Hedge, but you are totally for real and words, like liberal and progressive, are destroyed words your ilk has co-opted to destroy the English language and the meaning of terms. 

You are not liberal or progressive, but you are a communist, authoritarian, irrational, dumb as dirt, anti-life, anti-human, mindless, a socialist, against human freedom and liberty, think you are superior intellectually but ignorant beyond what words can express, completely confused about the meaning and purpose of life, devoid of any spiritual discernment, extremely polluted psychologically, and thoroughly mind control programmed from birth. Your mind is full of so many lies and distortions with respect to reality there is almost no hope of any kind that you will ever recover.

You have not presented any facts of any kind to prove that Trump is any of those things.  What you present is the crap the mainstream media presents to make morons like you think things that simply are not in any way true.  Your values and thoughts can be twisted over time to accept any outrageous idea or action on the part of any elite criminal like Bush or Clinton.  Your understanding of the basic human condition, because you accept contrived mainstream ideas and history, is therefore so shallow that your whole mind is utterly blind to any truths morally, intellectually, and historically in both economics and politics.

Frankie Carbone's picture

It simply amazes me how many bites MDB gets when he throws a hooked doughball into the water. 

Antifaschistische's picture

ZH'ers once again overreacting to people overreacting.

The Online Trading Academy teaches everyone how to get out of the market AUTOMATICALLY when it turns south so no one looses much money and everyone's portfolio is safe.  Now that Houston is in a 6 sigma weather event...I may start my subscription to OTA today so I will never lose money.

Antifaschistische's picture

did I really have to use "sarc" for you guys?

armageddon addahere's picture

Yes you do. These days the markets are fixed and the punters are nutty. Anything is possible and you can find any opinion from A to Z cubed. Put out the nuttiest idea you can think of, you will be taken seriously by someone.

Tall Tom's picture

Put out the nuttiest idea you can think of, you will be taken seriously by someone.

 

...and that is their problem...not yours.

 

Same as it ever was.

 

No "sarcasm"...er...SATIRE tags are needed.

 

I am not here for validation. My principles are strong.

 

Junks just disappear in two weeks time when the post is archieved. A junk does not do anything.

 

A counterargument which is published has longer affect.

 

See? I did not junk you. But I presented a counterpoint.

 

Oh some idiot might. But My counterpoint has much more staying power..

BandGap's picture

Those fuckers advertise 24/7 here in Chicago.

PT Barnum was right.

Kirk2NCC1701's picture

It's the "Mixed Demographics" of ZHers, that explains it.

The IQ, education, or sense of humor varies greatly, as the readership base keeps expanding.

Hitlery_4_Dictator's picture

Basically my statement can be summed up thusly "Don't talk about it, be about it." That goes for everyone that complains about anything in life. Get up off your ass and do something about it, stop being a bitch and be someone. 

BorisTheBlade's picture

And they blame it on portfolio theory, which essentially asummes there are at least some assets negatively correlated and with the Fed directly propping 'the markets' up there are effectively none. I wonder if Markovitz ever thought it was possible to devise a theory with ZIRP or even worse NIRP in place and very market sentiment being decided behind closed doors. No, statistical analysis is useless except to find out how Fed-dependent and guaranteed return addicted current 'markets' are.

BandGap's picture

They'll change the rules back when the time suits them. Have to get ALL the herd moving one way.

silverer's picture

No, I would argue that the system is broken. Traders are just working for a living, and doing their job using broken tools in a crooked system. They're not all bad people, don't set the policies and parameters, because we see they do speak out from time to time. They're told to do a more and more "impossible" job. I wouldn't want to be a trader myself. I'm sure many went into the field and then left after seeing what the trading universe was like.

XAU XAG's picture
One Trader Finally Loses It

 

 

Not suprised if he is using that outdated phone in the picture! LOL

Shizzmoney's picture

It is in the nature of humans, especially in a capitalist system, to be selfish.  Sure, they want to be a part of a village and contribute, but in the end, they are just doing what they can for themselves and their families. Hopefully make enough Federal Reserve Notes to ensure their "security".  Or the illusion of it, anyway.

Organisms gonna organism.

buzzsaw99's picture

that dude is about ready to be fitted for a rubber room methinks.

NoDebt's picture

He can't justify his value any more.  The "buy and holders" of S&P 500 Index Mutual funds are making him look bad.

Thanks, Federal Reserve.  You guys are the best.

buzzsaw99's picture

he probably wasted too much client money on hedges

Ivanka2032's picture
Ivanka2032 (not verified) buzzsaw99 Apr 18, 2016 11:31 AM

<--- Hugh Hendry school

<--- Kyle Bass school

 

Note: It's a 'trick' question

buzzsaw99's picture

hugh hendry song:

old macdonald had a farm

i me i me egO...

Ivanka2032's picture
Ivanka2032 (not verified) buzzsaw99 Apr 18, 2016 2:48 PM

That works for me.

 

Now, try to think of one that rhymes with his support for Killary.