Monthly Archives: June 2014

Trading and the Psychology of Investing: interviews with Phil Pearlman and Joe Fahmy

Wanted to draw your attention to a couple of insightful radio interviews with StockTwits stars Joe Fahmy and Phil Pearlman on the Your Money Matters program.

You may know Joe from his tweets on the StockTwits stream or from watching his “Next Big Move” program on StockTwits TV. He is one of my favorite stock traders to watch and learn from on the stream, so I was pleased to hear this interview with Joe on his stock trading methods and the insights he shares with all investors and traders.

Check out Joe’s thoughts on diversification and portfolio concentration, and his ideas on risk management and the importance of cutting your losses. No matter what your timeframe and trading/investing style, you’re bound to learn something of value here.

If you’re a fan of Phil Pearlman’s “Market Shrinkology” show, check out this recent discussion on the psychology of successful investing.

I’m listening to this one out now and finding some familiar themes from Phil’s “Shrinkology” shows, spiced up with some new ideas on how investors and traders deal with failure and success. Dealing with confirmation bias, the psychology of markets, assessing your performance, and the importance of discipline and sticking to a plan are all up for discussion here.

You may want to save this link and come back to the interviews after market hours or when you have some time to really listen and soak up the insights shared here. Enjoy the talks, and be sure to check out Joe and Phil’s blogs and tv shows if you haven’t already. Great stuff.

Barron’s ranks top 100 hedge funds

Barron’s is ranking the top 100 hedge funds of 2009, while highlighting funds that were especially adept at navigating the stormy financial seas of 2008 (hmm, I think all those episodes of Yacht Rock that I recently watched are having their effect on me).

Jay at Marketfolly has provided a super overview of the Barron’s rankings; rather than compete with him, let just highlight some of Marketfolly’s post here. Here’s an excerpt from Jay’s post on Barron’s ranking methodology and the stars of this year’s Barron’s 100:

“…Barron’s breaks down their top 100 hedge fund list by 3 year annualized returns. They rank by individual investment partnerships, so a couple of firms actually have multiple hedge funds on the list (like Paulson & Co, Galleon Group, etc). Barron’s list does have a few criteria though, as they require a minimum AUM of $300 million and have excluded funds that invest in a single “sector, country, or region.”

Overall though, the list is definitely a “who’s who” of the hedge fund elite. John Paulson’s Paulson & Co occupies the #1 and #4 slots, with a 62.67% and 46.81% 3 year annualized returns respectively. Of other hedge funds we cover on the blog, Shumway Capital has a fund listed at #11. Fellow Tiger Cub Paul Touradji has one of his funds in the #16 spot”.

Head on over to Marketfolly and Barron’s to see the rest, and check out our related posts for more info on some of the hedge fund industry’s leading lights.

Related articles and posts:

1. John Paulson profile in Bloomberg Markets – Finance Trends.

2. Hedge funds fight to survive shakeout – Finance Trends.

Niall Ferguson on “What Price Liberty?”

One of the best things I read over the Memorial Day weekend was Niall Ferguson’s review in the Financial Times of Ben Wilson’s new book, What Price Liberty?. I’d like to share some of it with you.

Here’s an excerpt from that review:

““The privileges of thinking, saying, and doing what we please, and of growing as rich as we can, without any other restrictions, that by all this we hurt not the public, not one another, are the glorious privileges of liberty.”

These are the words of “Cato” (the nom de plume of John Trenchard and Thomas Gordon), writing in the early 1720s. For the better part of two centuries, that view was widely held in England, and Englishmen were not wrong to believe that it set them apart from continental Europeans and “Orientals”.

Also integral to the English conception of liberty was John Locke’s linkage of freedom and private property. In the landmark Entick v Carrington case (1765), Lord Camden ruled against the government for raiding the home of the radical journalist John Entick. “The great end for which men entered into society was to secure their property,” declared Camden. “By the laws of England, every invasion of private property, be it ever so minute, is a trespass.”

Almost as important was the principle of minding your own business. “The taste for making others submit to a way of life which one thinks more useful for them than they do themselves,” John Stuart Mill explained to the French liberal Alexis de Tocqueville, “is not a common taste in England.”

Do what you like as long as you do no harm. An Englishman’s home is his castle. And mind your own bloody business. When did these three great principles of liberty cease to be sacrosanct in England? Wilson has little doubt that it was the two world wars that began the process…”.

Do check out the full piece, especially if you’re interested to know how an English writer’s discussion of liberty pertains to those of us living in the good ole’ USA.

As Ferguson notes in his review, you can also download Wilson’s book, What Price Liberty?, for any price you wish.

Related articles and posts:

1. Ben Wilson: What Price Liberty? – What Price Liberty? Blog.

2. Niall Ferguson: The Ascent of Money (PBS) – Finance Trends.

Links: hedge funds, deficits, & monetization

Been spending a lot of time on Twitter (see our page) and catching up with some important reading lately. Here are some links that have piqued my interest in recent days:

1. Bernanke warns deficits threathen financial stability – Bloomberg.

2. Geithner says there is “no risk” of Fed monetizing US debt (despite that already occurring); Bernanke should quit propping up the debt market if he’s concerned about deficits – Clusterstock.

3. Profile of hedge fund legend Julian Robertson, plus a look at Robertson’s steepener swap play (short US Treasuries) – Market Folly.

Note: we also mentioned Robertson’s “curve steepener” trade earlier this year in, “Seasoned investors search for values”.

4. Hedge fund industry climbs its ‘slope of enlightenment’ –

5. What you can learn from “old man socks” – Financial Philosopher.

6. Rock n’ rollers: Ardent Music is reissuing Big Star’s studio albums & releasing a new Big Star box set. You can also listen to songs from Chris Bell’s “I Am the Cosmos” at the Ardent site; heard it there for the first time yesterday and I am blown away.

Enjoy the links & join us tomorrow as we take a historical look (w/ help from a noted tour guide) at the state of the global economy.

Ray Dalio: meditation is the secret of my success

Ray Dalio Bridgewater benefits of meditation

Hedge fund manager, Ray Dalio credits meditation as the key to his success. 

Says the Bridgewater Associates founder, “Meditation has given me centeredness and creativity. It’s also given me peace and health…  and it’s given me open-mindedness.” 

“Meditation, more than anything in my life, was the biggest ingredient of whatever success I’ve had”.

I was very interested to hear Dalio’s take on the benefits of meditation, since he’s obviously a very successful individual who assigns a great deal of value to this practice. It’s also a subject I’ve been wanting to learn more about.

While I am not a yoga practitioner and have never tried transcendental meditation, I’ve come to learn that my long walks through the forests may share some benefits associated with mindfulness meditation. For me, it’s about taking time to exercise, relax, and just focus on the natural (or built) world around us.

As Dalio notes, the key for beginners is to challenge themselves to stick with meditation for the first six months. Those who try it must realize that the 20 minutes spent meditating in mornings and evenings is an investment that pays off in numerous ways, enhancing one’s enjoyment of life.

Ray Dalio was also the subject of our most recent post, “Lessons from Hedge Fund Market Wizards: Ray Dalio”. If you’d like to know more about Dalio and his ideas on trading and learning from mistakes, check it out. 

Related articles and posts:

1. Lessons from Hedge Fund Market Wizards: Ray Dalio.

2. Meditation: A Simple, Fast Way to Reduce Stress (Mayo Clinic).

Jim Rogers on CNBC, Tech Ticker

Jim Rogers is in New York, making the rounds on business television. Here’s a great interview with Rogers on CNBC, talking with Maria Bartiromo about the Fed, Geithner, and the state of the US’ finances.

He also shared his investment (and trading) outlook on the US dollar, foreign currencies, and commodities. Rogers agrees that gold has rallied strongly and is ready for a move down, but notes that he is keeping his gold for the long term, and he’s still quite bullish on relatively undervalued silver.

Jim also sat down to talk with Tech Ticker and made some very interesting comments on the bogus economic recovery and the future of America.

Rogers feels that most of the phantom recovery has been based on more money printing, debt, and wealth transfers from taxpayers to failed banks and their creditors. He also makes some very serious comments about our stepped up involvement in Afghanistan and the long-term consequences for our nation and its economy.

More Tech Ticker segments with Rogers: “Audit the Fed, Then Abolish It”, &, “Why Jim Rogers is Buying Dollars”.

Enjoy the interviews (hat tip to Chris Nelder on Twitter), and let’s hope that some of this serves as a wake up call to those still in thrall with our “leaders”.

Related articles and posts:

1. Jim Rogers interview with – Finance Trends.

2. Marc Faber BNN interview – Finance Trends.

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Sebastian Mallaby interview: future of hedge funds

A few weeks ago on Twitter, we shared this interview with Sebastian Mallaby, who speaks to UC Berkeley about the future of the hedge fund industry for their “Conversations with History” series.

For those who may not know, Mallaby is the author of a recent book on hedge funds and the financial crisis called, More Money Than G-d: Hedge Funds and the Making of a New Elite

One point that really caught my interest early on in the interview is an anecdote Mallaby shares regarding Paul Tudor Jones and the factors he attributed to his own success as a trader and hedge fund manager.

As Mallaby tells it, PTJ’s explanation for his success is not at all the real reason why he is successful, but it is part of a common theme of professionals misattributing causes to explain their colleagues’ and their own successes.

Enjoy the discussion; it should prove especially interesting to those who are in the business or watching the hedge fund space closely.

Related articles and posts:

1. A.W. Jones and hedge fund history – Finance Trends.

2. Interview with Sebastian Mallaby: the history of hedge funds – Martin Kronicle.

10 questions for Mark Cuban – Forbes interview

Thanks to Leroy Gardner and Get Rich Slowly for highlighting this Forbes interview with highly-visible entrepreneur and billionaire, Mark Cuban.

Here are a few lessons on “building and keeping a self-made fortune” from, “10 questions for Mark Cuban”:

“…You have $100,000–where do you put it?

First I pay off all my credit card debt and evaluate paying off any other debt I have. What I have left I put in the bank.

Then I try to create as much transactional value as possible from that cash. I look at my annual budgets for everything and anything, and I look to see where I can save the most money on those items. Saving 30% to 50% buying in bulk–replenishable items from toothpaste to soup, or whatever I use a lot of–is the best guaranteed return on investment you can get anywhere.

Then whatever I have left I keep in the bank and let it earn nothing. Why? Because then its available for when I get a good opportunity.

Every five years or so there is a bubble bursting or amazing deals available because of a change in the economy. Anyone who just kept their cash in the bank rather than in stocks over the past five to 10 years could be buying the home of their dreams for half price in most of the country…”

Pay close attention to Mark’s thoughts on essential reading for entrepreneurs and the difficulties associated with starting a business in the US right now. Some key insights packed into a quick interview.

Photo credit: Mark Cuban via

Pour some sugar on me

Sugar has been creeping higher lately, as seen on the daily futures chart. 

Here’s the weekly view which shows the longer swings going back to 2006. 

Note the larger uptrends and ensuing deep retracements that have happened from the 2007 base, near 10 cents, on. 

Of course, the latest move is more of a slow edge higher off the recent price shelf of 23-24 cents. Sugar will have to clear the 30 cent level and the recent highs near 32 cents before any major move is evident on the weekly charts.

Here’s the daily chart of SGG, the sugar ETN. I’ll be watching for a pullback on lighter volume in the days ahead. Since I’m not active in the futures market, I’ll consider a long position in SGG. 

Cautionary note: volume is very light in many of these single commodity ETNs. That may lead me to consider other, more liquid, trade opportunities instead.  

For those who’d like to read more about sugar from a futures trader’s point of view, please see Peter Brandt’s recent blog posts. He is an experienced trader and knows far more about the long-term price action, as well as building a trade via back month futures contracts.

Disclosure: no position in SB_F or SGG at the time of writing, may initiate long or short positions any time after. Educational post, not a recommendation for readers to buy/sell any security.