Monday, May 02, 2011

Break Out

I caught a few moments of Tom Keene at the Milken Conference yesterday, on Bloomberg TV. I am ever-more amused by the ads run for the concentrated demographic of those who voluntarily watch real-time financial television, and have written about my indignation at the increasingly high-tech ones run by the FX Bucket Shops, a view sympathetically shared by my friends at FT-Alphaville.

Almost as amusing, though slightly less macabre than the coming retail FX train wreck, was Bloomberg's ad touting its own "Launch Pad" kit, a part of its professional service. As a user of Bloomberg since its inception, I have mostly respect for the system and what its management team have built - obliterating all competitors en-route.  Of course, Bloomberg has its flaws which are significant (and which I won't go into here), but the pitch was that you Launch Pad allows you to customize YOUR view of the market, and tailor their data to YOUR desires, in order for YOU to stay informed, so that when the market BREAKS OUT!!!! (yay! whooopeeee!!), you can spot it and TAKE ADVANTAGE of the MOVE. (end of the flashy bits and accompanying thumping escalating rhythmic dramatic music). Whew, now that our blood pressures are south of the near-month price of Cotton, perhaps we might examine what is wrong with this picture.

If I am to understand Bloomberg's ad agency, the world is sitting around passively. Drinking coffee. Making sexist (but not too-politically incorrect) jokes, watching talking heads on BTV tell us what is going to happen, or erroneous attributions about why something just happened. Then, quite randomly perhaps, the market MOVES, and everyone else NOW, AFTER THE MOVE, with the help of their Bloomberg system, takes note of the move, and decides how they are going to react to THE MOVE. And, according to Bloomberg, this is what THEY NEED, because this is the way THEY look at the market, and Bloomberg can help you stay on top.

Think of the absurdity of this. Think of it multiplied across the Bloomberg installed base. Across the number of trading rooms of banks and brokerages across the world. Wait. Watch. See somebody else do something significant, and then try to jump on the train. And then, when IF you manage to successfully get on the train, and the train is, by chance, going in the direction you expect, you then, one would suppose, go back to the water-cooler, and wait for someone else to do something significant in the opposite direction, which  you would, by extension, follow again trying to leap from the train to safety before a larger train wreck. Does that about sum it up?


John Hempton said...

The market does the analysis - don't you know that by now. What are you? Stupid or something?

Seriously can't you see the trend - the AUD goes up until it costs three times as much to eat in Kiama as New York.

Japan Yen appreciates until all Japanese industry is reduced to a wreck.

China grows for ever. At high ROEs despite relentless competition.

Oh, and you have to buy gold.

On leverage.

Because what you really need is more trinkets.

Ben Bernanke has told you.


"Cassandra" said...

Yes, it's always tough for thoughtful types like yourself who DO do analysis in the face of the inexorable flow.

Charles Butler said...

Perfect description of what the information content of web 2.0 degenerated into, btw.

A fun exercise is to try to devise a TV ad campaign for Value Line, e.g. I can't do it with recurring to National Lampoon.

KingNat said...

Two of my favorite bloggers, on one page!

Alas, in my first ever post (on either blog), I must respectfully disagree with your implied conclusion(s) -- that launchpad (type) service is not a value-added service and/or that trend-following doesn't make money.

I trade for a large bank in a market that is quite fundamentals driven, and I can attest to the utility of the launchpad service. Whereas I previously had to remember a large set of bloomberg arcana, now I can construct my own set of things to watch (on my fourth screen, of course). In all seriousness, I don't think it costs extra (vs the normal bloomberg), and it does save me time after all...

Secondly, the biggest thing I've learned while trading reasonably leveraged instruments... don't fight the tape. This is an argument for using trend-following to your advantage, even if you are a counter-trend trader like me and the trend is irrational and likely to end in tears. Consequently, I quite like knowing when big moves happen -- if nothing else, it sometimes reminds me when I want to put on counter-trend trades!

That said, I do agree with the larger point that casual investors shouldn't trade FX, commodities, or anything that isn't a true asset (read: expectation of future wealth creation, which cash and commodities do not). Stores of value do not make good buy and hold investments!

markincorsicana said...

Kind of makes me sad that I have a real job (RN) in the productive economy. So much more exciting and profitable to careen from chaos to catastrophe as the Bankster's poodle.

valeriobrl said...

Nice post. Valeu, cara.

Anonymous said...

Mark: this is your Guardian Devil speaking -

Shouldn't you be buying something?

Break out your credit cards and splurge! Cause you're worth it!

Imobiliare Dambovita said...

i like what anonymous said