Breslow: "Traders Have Been Getting Crucified When Trying To Express Long-Term Views"

Tyler Durden's picture

Authored by Richard Breslow, a former FX trader and fund manager who writes for Bloomberg

We’ve all been going through a period of re-evaluation. Not personally focused, to be sure. No evidence of self-doubt from any quarter. And never have people been more convinced that they can size up the next person within a matter of seconds. But there’s been plenty, and rapid, rethinks on what is, and should be, driving markets.

Is the economy running hot or catching a cold? Reflation: yes or no. Just what is the state of global trade? Fiscal policy in or out? Does it matter? And on and on. For big ticket items galore, that are meant to have long-term implications. And given that world views are changing back and forth in quick succession, investing has been infused with an unhealthy dose of manic emotion, at the expense of dispassionate analysis.

And then throw in the fact that even if gifted with perfect knowledge of how supposedly binary events will be decided, no one has been getting the actual market implications right.

All of which means traders have been getting crucified when trying to express long-term views. And undisciplined practitioners carried out on their shields. It’s unpleasant to be serially stopped-out, but this is no environment to have a view without explicit parameters.

So at the risk of getting chopped up further, with all of the revolving zeitgeists and political risks, it pays to try to figure out asset price levels where you think emotions will swing rather than where traditional methods would suggest you are right or wrong. And for better or for worse, in today’s milieu, passion can be quick to come by.

For all of the flying, crashing, rinse repeating, the S&P 500 has essentially done nothing for a couple of months. But I’d be willing to bet that a close below 2320 or above 2380 will get lots of people passionately excited. Depending on your view, they are both close enough for anyone to afford.

The dollar index has shown a propensity, when it ran up and as its come off, of higher highs, higher lows, and the reverse. A close below 98.85 or above 101.30 will probably do the trick here. I could have tightened these up a bit, but it’s been a really messy trade and still cheap.

Treasury levels have been so rehashed, that you should already know them. In any case, take a look at your charts and decide where you think emotions will swing and short- term momentum kick in for a trade.

It’s a twisted world, so your horizons should be close.

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Anasteus's picture

Who cares about traders these days? After all, its just a matrix scam anyway.

Arnold's picture

Electric sheep comes to mind.
Do algos dream??
Their wranglers certainly do.

Kotzbomber747's picture
Breslow: "Traders Have Been Getting Crucified When Trying To Express Long-Term Views"

 

Isn't putting the words "trader" and "long-term views" in the same sentence a contradiction in terms?

Ghost of PartysOver's picture

Yes, I do believe that qualifies as an "oxymoron".  The machines have taken over. 

Nomad Trader's picture

People often use the term trader when they mean to say portfolio manager.

nmewn's picture

Thats what happens when you allow algos to run the show you dumbasses...but you have...lu-quid-it-teee! dontcha? ;-)

buzzsaw99's picture

the only people getting crucified are those selling shit they don't own. that practice should be illegal anyway.

nmewn's picture

I've always found it amazing. Jeff Montanye brought up something down on the meth & math thread...the psychology of it all.

Buying stawks is like the poor guy clutching the lottery ticket to his breast, he just knows, "this time" he's gonna cash it in and all his dreams of silicone breasted blondes, jets, boats & blow will be realized...then...Mr.Algo stops him out or if he's not so savvy enough to know wtf a stop is, he just can't stand the pain and sells...Mr.Algo doesn't give a shit about hopes & dreams, Mr.Algo has been programmed to do just that...churn...then the process reverses.

Then we inject the concept of the GSE...no matter what one thinks as a capitalist of the viability of solar panels & windmills on a mass scale (lol)...none of that really matters, all that matters is the monetary feeder valve of .gov pumping that fiat in and Mr.Algo will dry hump that leg until that valve gets turned off. 

Arnold's picture

No more coffee for you this morning, nmewn.
It's pea planting time.

nmewn's picture

lol

Here we go, Hillary, paranoid lunatic that she is, was spying on her own peeps looking for leakers (GASP!) before it was a "thingy-thing"...

http://nypost.com/2017/04/18/hillary-clinton-spied-on-her-own-campaign-s...

Arnold's picture

Your Carpet Bagger isn't in jail yet?

I'm not keeping up on the cutting edge, if it bleeds it leads, headline news lately.

nmewn's picture

All in good time, she's still weaving her rope...lol...one moar...it seems Antifa came down to Alabama and they thought the cops would behave like they do out in Berkeley, just stand around letting them break shit while wearing masks and ninja costumes...with the predictable results...

http://twitchy.com/brettt-3136/2017/04/18/auburn-takes-berkeley-to-schoo...

...Robert Reich could not be reached for comment on this latest round of rightwing protesters wearing black pajamas ;-)

Last of the Middle Class's picture

Awww, traders wanna hold a puppy in a safe space? Traders are about profit and they'll fuck you and your family over for it without a thought and break any law they think they can get away with in the process.

OCnStiggs's picture

We'll see what happens when the herd gets a full summer of "debt ceiling" news 24/7 and fear about a government default rears its ugly head like it did in 2001 and again in 2007.

Several articles including this one have covered the "skittishness" of the herd hoping to avoid a repeat of the 2007-2008 crash and burn. Be it a hammered dollar, another terrorist attack, crashing derivatives, a Euro fiat crash-and-burn due to debt, watching 20% of corporations go Chapter 11, a paper metals "collapse," the sub-prime meltdown or some military "event" somewhere, the herd is going to charge for the exits. Its not a matter of "if" but rather "when." The world works on "cycles" and this one is merely delayed -and worsened, due to Q.E.

And this time it will likely be worse than last time, thanks to our wonderful friends at the FED.

The question is: Will anyone want to come back knowing the market is rigged against the average investor and may take a decade to recover?

Thebighouse's picture

Why I became a "trader"..........

Tesla.......a perfectly crap company on the books that skyrockets in price.

DDD...........GoPro.... Sketchers...........IBM....Goldman Sachs....Enron....

IF YOU WANT TO KNOW THE VALUE OF A COMPANY....LOOK AT ITS RELATIONSHIP TO A 50 DAY MOVING AVERAGE.

Want longer horizons and fewer trades.....use the 100 or 200.

That is the ONLY thing that tells you how good a company is..............forget the rest...save your analysis money for whipsaws.

Here is the absolute bottom line:

THERE IS NO EXPECTATION FOR PRICE THAT A VERY SIMPLE MOVING AVERAGE WILL NOT DEMONSTRATE AND CONFIRM.

 

 

 

Thebighouse's picture

Why I became a "trader"..........

Tesla.......a perfectly crap company on the books that skyrockets in price.

DDD...........GoPro.... Sketchers...........IBM....Goldman Sachs....Enron....

IF YOU WANT TO KNOW THE VALUE OF A COMPANY....LOOK AT ITS RELATIONSHIP TO A 50 DAY MOVING AVERAGE.

Want longer horizons and fewer trades.....use the 100 or 200.

That is the ONLY thing that tells you how good a company is..............forget the rest...save your analysis money for whipsaws.

Here is the absolute bottom line:

THERE IS NO EXPECTATION FOR PRICE THAT A VERY SIMPLE MOVING AVERAGE WILL NOT DEMONSTRATE AND CONFIRM.

 

 

 

Arnold's picture

Pro Tip:
Keep that double posting phat phinger off your execute key.ald

stewmint's picture

Stop making long-term views and just TRADE.