Category: Theory And Training
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The Psychology Behind Managing A 20 Bagger…
What do you do with a massively profitable trade that has grown to become a large percentage of your total portfolio value? This question has been circulating in the Macro Ops Collective chat room the last few weeks because one of our deep out of the money (DOTM) calls took off in a big way.…
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How To Implement Cheap Black Swan Protection
The following is a guest post from Kim Klaiman, full time options trader and founder of steadyoptions.com. Introduction The earnings season provides a lot of opportunities for active options traders. Some traders like to play earnings with directional bets, buying straight calls or puts. This is a very tough strategy. You have too many factors…
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The Human Trader’s Secret Weapon
Choosing individual stocks without any idea of what you’re looking for is like running through a dynamite factory with a burning match. You may live, but you’re still an idiot. ~ Joel Greenblatt Investing is hard. It’s a game of relative comparisons. We have limited capital and nearly unlimited opportunities to deploy it. Our job…
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The Principle of Bubble Rotation
In the book Business cycles: history, theory and investment reality, the author Lars Tvede talks briefly about a cycle phenomenon he calls The Principle of Bubble Rotation. He writes: There is one further common aspect of all these asset classes. We have seen that business cycles from time to time create monetary environments that are…
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Probabilities Not Predictions
Markets are context dependent, their behavior is a function of the particular circumstances that exist and how those circumstances are expected to or do change. The trick is not to predict an unknowable future, but to try to understand the present and the probabilities of the various paths that may evolve from it. ~ Bill…
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Yield Curve Inversion!? Flattening Yield Curve Explained
The Yield Curve Inversion Secrets! Understanding the Flattening Yield Curve is crucial for any trader or investor!Today we’re going to talk about the yield curve. Recently the financial media has been raving about the yield curve getting closer and closer to inverting and how it’s a signal that a recession is right around the corner.…
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High Quality Trading Is Episodic, Not Continuous
There’s two types of market returns. Alpha and beta. Beta is what you get for diversifying and passively holding the market. Alpha is the opposite. It requires an edge, of which there are three: informational, analytical, and behavioral. And as Ray Dalio says, “Alpha is zero sum. In order to earn more than the market…
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Totis Porcis: The Art of Cashing in on Fat Tail Investments
The following is an excerpt from Barton Bigg’s book, Hedgehogging, where he relates a conversation with “Tim”, a successful macro investor. Tim works out of a quiet, spacious office filled with antique furniture, exquisite oriental rugs, and porcelain in a leafy suburb of London with only a secretary. My guess is he runs more than…
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The Management Principles of George Soros
In this third article, we will cover the management principles of this legendary firm. (I) Be Part Of A Global ‘Intelligence Network’ One advantage that the Palindrome had was his ‘intelligence network’. His rise from obscurity in the early 1960s to commercial stardom on Wall Street brought him the powerful perks of wealth and fame.…
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Another Lesson In Position Sizing From The Volpocalypse of 2018
Most famous fund failures have leverage at their core. That’s the true culprit for disaster — not the actual trade ideas. Bad position sizing kills. Long Term Capital Management’s strategy involved scanning the world for bond spreads that diverged from historical values — something known as convergence trading. When spreads diverged from their means, LTCM…