I've witnessed my previous market short bias take shape lately, but have no regrets on not participating in the market. That is because things may be rather lucid in hindsight, but who is to say that I would have timed things correctly had I been actively trading? This actually brings me to an interesting observation (to expand upon a previous observation) about clarity of thought (in the context of trading) based on extended time frames and non-participation. As I've kept abreast with market activity while explicitly remaining out of the market as an investor/trader, I've noticed that my internal short-term projections have been rather accurate. However, I seem to be clouded when actively trading and tend to let myopia and market noise infiltrate my decisions.
This could imply that I'm more suited to being a financial adviser rather than a trader, but what I really think this points to is that I am perhaps best suited to making infrequent short-term trades while refraining from active market participation. One way to enforce this disciplined approach might be to do something I've greatly benefited from in the past in the context of executing projects for school and work: working with a partner. It's amazing how simply bouncing off ideas with someone can bring greater insight into something, often times without that person even having to say anything! Or how being accountable to someone else can shape your judgment.
On a side note, what is the damn deal with all this outrage over bank bonuses? The taxpayers funding the glut, often deluded by the media's interpretation of things, should really direct their anger at policies that have ALLOWED these bonuses to be shelled out in the first place. One case in point is the scenario at AIG where big bonuses are being paid to some, supposedly strictly due to contractual obligations. But didn't...TARP also involve contracts with some strings attached? Why didn't the government include compensation caveats when AIG was bailed out? The initial excuse being given by AIG to justify bonuses was that those handling the winding down of derivatives need to be attracted to stay. Now the word is that they're contractually eligible to receive bonuses, so it's more of a legal issue. Obviously, they just want their cake and are making up excuses to get it while times are good.
My take on this is to forget about revenge and outrage, but to instead look at the underlying factors driving the market dynamics and set up rules NOW to account for future possible scenarios. For one, Goldman Sachs, Morgan Stanley, and others should be broken up so that we never have to bail them out again. Second, maybe we the public should wake up and make sure that we do not send all our money into managed funds that make their way into the hands of big banks. I do respect the idea of hedge funds (though they have their share of crooks), which live an die by their successes and failures and never get a chance to enjoy privatized gains and socialized losses. However, it is against the interest of major financial institutions to truly educate the public and have them, say, put their money in smaller regional banks that actually do banking and not exotic structured finance and trading with OPM (other people's money). Don't get me wrong, securitization and derivatives have their place in finance - they just shouldn't be alongside other huge divisions that they could take down with them. It's sort of like buying sports tires for a semi - sure, they've got nice performance, but run the risk of wearing out quickly on those long journeys, with devastating consequences.
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