Posts filed under “Trading”

Chart of the Week: Risk Appetite

Jonathan Wilmot of CSFB notes that “Risk Appetite, which has been in the euphoria zone, is quickly approaching an 11-year high.” He notes that since 1981 there have been 7 prior euphoria spikes and in six of those episodes, global equity returns posted a new high for the cycle within 3 months.

Risk Appetite: Too Soon To Panic About Euphoria


Source: Jonathan Wilmot, CSFB


Wilmot notes that vigilance is in order, but “it is probably too soon to panic.” Spikes into euphoria territory provide less urgent signals than dips into the panic zone. (hope springs eternal, or perhaps it simply reflects the psychological fact that it is easier to remain complacent for an extended period than to persist in a state of panic for weeks or months at a time).


Random Items:

the Letters Spell S-L-O-W-D-O-W-N

Profiting Prophet of Playa del Rey

on how much Americans pay for essentials

oil. Now the Gulf is exporting money

Why peak oil is
probably about now

Hix Nix
Crix Pix

am filthy rich, in a parallel universe …


Quote of the Day:

“Every truth passes through
three stages before it is recognized: In the first it is ridiculed; in the
second it is opposed; in the third it is regarded as self-evident.” 

-Arthur Schopenhauer (1788-1860)


Category: Investing, Psychology, Trading

Toe in the Water

Category: Trading

New Column up at Real Money (03/03/06)

Category: Trading

Why the Short Term Upside Bias?

Category: Investing, Technical Analysis, Trading

The Backward Business of Short Selling

If you haven’t already, I strongly admonish you to go read Jesse Eisinger’s column today:

It’s a Tough Job, So Why Do They Do It?  The Backward Business of Short Selling

Here’s the money quote:

"The shorting life is nasty and brutish. It’s a wonder anyone does
it at all.

Shorts make a bet that a stock will sink, and nobody else wants
that: Not company executives, employees, investment banks nor most investors.
That’s why most manipulation is on the other side; fewer people object when
share prices are being pumped up. For most on Wall Street, the debate is whether
shorts are anti-American or merely un-American.

Yet in all the paranoia about evil short-sellers badmouthing
companies, what is lost is how agonizingly difficult their business is. They
borrow stock and sell it, hoping to replace the borrowed shares with cheaper
ones bought later so they can pocket the price difference as profit. It’s a
chronologically backward version of the typical long trade: sell high and then
buy low."

Go forth and read . . .



It’s a Tough Job, So Why Do They Do It?
The Backward Business of Short

Jesse Eisinger
WSJ, March 1, 2006; Page C1


UPDATE March 2, 2006 10:32am: 

See below for more text


Read More

Category: Data Analysis, Financial Press, Trading

Get Darwinian on Your Portfolio!

Category: Economy, Investing, Markets, Technical Analysis, Trading

Covering the Gold Short

Category: Commodities, Trading

Top Ticking Real Estate is Different Than Stocks

Category: Investing, Markets, Psychology, Real Estate, Trading

Buy Volatility

Category: Markets, Psychology, Trading

Trading Resolutions for 2006

Category: Trading