The purpose of this journal will be to 'scalp' people renowned in the fields of business, finance, economics, banking etc, by highlighting calls that they make, which I believe to be erroneous and based on either ignorance, arrogance, complacency, laziness, or hopefully all four - and then attempting to win profits and honour by placing bets on the opposite outcome to what they predict. Classic examples from the past would be things like Nassim Taleb's 'everyone in the world should be short US Treasuries' call from early 2010, just before they skyrocketed during the Greece/Europe crisis; Nouriel Roubini's "gold won't hit $1500' call; Joseph Stiglitz's "Greece isn't going to default" arm-waving, memorably slapped down on live television by Hugh Hendry, and Buffett's "worst trade ever" shorting lots of S&P puts at the peak of the market in 2007. My motivation for doing this is the challenge of analysing people who are intelligent, hard-working, renowned, and expert in their fields - and demonstrating superior ability (or luck) by making them look like complete chumps. Transferring portions of their life savings to my champagne, blow, and sluts (hat tip: Rearden Metal) expense account will be a welcome side benefit, if I manage to get this right. Now this could all go badly wrong and I could look like an arrogant idiotic blowhard. Well, no risk, no reward To make the 'scalps' realistic, and to avoid typical forecaster bullshit, I will also put a stop-loss and/or time-stop on all my scalping attempts. To start with, our favourite politically opinionated economist, Paul Krugman, writing in the New York Times recently "And one should never forget the example of Japan, where bets against government bonds â justified by more or less the same arguments currently made to justify claims of a U.S. bond bubble â ended in grief so often that the whole trade came to be known as the âwidow maker.â At this point, Japanâs debt is well over twice its G.D.P., its budget deficit remains large, and the interest rate on 10-year bonds is 0.6 percent. No, thatâs not a misprint." I'll take the other side of that trade, Mr Krugman. Short JGBs at the current price 142.75. Stop-loss, 143.42. May the best man win.
Did I just hear something about my favorite three major food groups? Cutten has me convinced, I'm short JGB's too. Now all we need is a little panic to set in.
Actually I think I'm going to revise my stop-policy and stick to wide stops that will be hit only if I am almost certainly wrong. It would be painful indeed (not to mention embarrassing after the initial boast) to be totally correct on a big move, and get squeezed out on a 1-2 day wiggle. So, I will put the stop on this trade at the high of the initial big selloff day on Friday i.e. 144.45. If it goes back up there then my trade timing is totally wrong and I will eat my humble pie while shouting "Paul Krugman IS the smartest economist in the world" a the top of my voice. I also sense a potential problem in that the temptation to post here might bias my trading, especially leading to arrogance and reluctance to exit/reverse if the market does opposite to what I expect. I'm trying to avoid this by only selecting the trades I think have really high chances to win. So, we'll see how it goes.
Oh, and I am a bit late to the game here, but I am happy to announce attempted scalp #2 - Mr John Paulson. I am playing it with a Dec 1300-1200 bear put spread, current price is 13.6, and short gold, stop at 1564 (small position obviously, since the stop is so wide). If I am correct gold should at least retest the lows from April, and later on move to new lows as the bear market continues. If I am wrong, I will take a trip to Puerto Rico and sing Mr Paulson's praises in downtown San Juan, surrounded by bikini-clad Latina lovelies.
Agree on para #1. 1-2 years back I used to post some FX trades on daals journal. Surprisingly, I think I had a 90% win rate on the trades I posted there - the reason was I wanted to post my best trades in that journal since it was all about macro themes and I was posting short term trades. So, if you do stick to the best ideas, I think you won't have much problem of performance/adaptability by posting your trades on ET. Good Luck.
not a word on how you plan to exit your positions / except stopped out/.. I understand it's going to happen when the ' experts' admit they were wrong ?