Jan

25

The more I learn and the more I experience the vicissitudes of life, (and the more aware of my ignorance I become), I think more and more that the wisdom of musicals, especially those of Hammerstein and Ira Gershwin, is especially poignant and sagacious.

Whenever I give advice, I find myself going back to things that I learned from my favorite musicals. I recently told a damsel in distress (one of my card's imperatives besides creating value, destroying ballyhoo, and fomenting revolutions) to listen to "September Song" by Kurt Weil and "Diamonds are a Girl's Best Friend".

I have to expand this thread to market wisdom but don't have the knack that the collab or my brother has in this regard. I believe because the musical word is so much slower than reading, and the scenes have to be so focused and riveting, and they have to appeal to the common American thread that the successful musicals are forced to get to the common nitty gritty that keeps one's feet on ground.

Alex Castaldo writes:

To be in Chair's trading room in August with the temperature 97 F and the musical Carousel playing for the 100th time is indeed a learning experience. 

George Coyle writes:

 Well put, Doc. I had to walk outside into the cold for a second just reading that.

I wasn't a big fan of musicals until I heard them all several hundred times last summer, then they kinda stuck. I find the interesting thing to be that human psychology never seems to change as the messages inherent in the various musicals of the 40s-70s are the same things you hear today adjusted for the times.

The market takeaways to me are:

1. Patterns exist in musicals and markets, find them and potentially reap the benefits

2. Human psychology hasn't changed as evidenced by many of the themes in musicals still being applicable today. In as much as collective human psychology governs markets, markets probably haven't changed much either.

3. Sometimes a 3 minutes song can outdo a thousand page novel at describing some phenomenon…at times keeping it simple beats a lengthy analysis. 

Ralph Di Fiore writes:

 I totally agree with you Victor. My all time favorite musical is the Fantasticks having watched it in Manhattan. Several of the songs from the Fantasticks have wisdom in them that would have saved immeasurable grief in the lives of some families I know (not my own thankfully) had they heeded the wisdom of this musical. One song from the Fantasticks screams out at me when I think of an older gentleman who botched up his family life and has an estranged son but this individual loves spending time in his garden. The closing line from the song Plant a Radish:

So
Plant a cabbage.
Get a cabbage.
Not a sauerkraut!
That’s why I love vegetables.
You know what you’re about!

Life is merry
If it’s very
Vegetarian.
A man who plants a garden
Is a very happy man!

A vegitari-
Very merry
Vegetarian!

Another family had a daughter that brought home a young man and asked her pa what he thought. He hated him so guess who got married… Here is the line from the song entitled Never Say No. Again from the Fantasticks:

Your daughter brings a young man in,

Says ‘Do you like him, Pa?’
Just say that he’s a fool and then:
You’ve got a son-in-law!
You’ve got a son-in-law!

Keep up the great posts, Victor.


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5 Comments so far

  1. Charalampos From Greece.. on January 25, 2011 7:40 pm

    Hello dear Victor, i was writing you years ago, asking advise because of 100% Drawdown in my account Trading Eurusd (you wrote that it is better to trade stocks, because of more positive drift)… i just feel like i need to write something, at least to say that your books are wery good.. i am still learning to trade, all this time i am still watching the screens and chart,. but i am shure i need more programing and testing..( i realized it after 3 years( my opinion was that even monkey can find patterns in markets, if siting many years and watching graphs(it is wrong opinion):) now i have 3rth acount and the mistakes are less, but still many things to do with discipline:)(over trading with leveredge 1 to 30) how are you? and if the blog is not the best way to write this comments, please give me a sight..

  2. vic on January 26, 2011 11:47 am

    whatever you do, mr. chara, stop the excessive leverage. and reduce the churning and the vig. wait until you would have made a trade, and you would have had a hefty losss . then go in. be humble. vic

  3. Charalampos From Greece.. on January 26, 2011 3:59 pm

    now i think 1:4 can be max leverege!before i was using 1:100,1:50 1:20 and accounts were blown.. the web sites are full of staff, about scalping, and trend following- and i am really no trust to something that is well known(maybe it is wrong). What do think is non profit way of trading, from your experience, i understand that less deals per day, could leave me with less expenses(comision) but from other side, if i scalp for 2 ticks, an do 50-70 round turns it also profitable, and the risk are less,( not taking big losses and holding it for long time there is only yes or not), when i was studying in Russia ,near to my university there was a brokerage company with prop trading- and every body were discussing some comets in INTERNET- that mr Niederhoffer is making many small deals in his house out of the city with classic music plaing, from that time i was trying and some of my friends from russia, to find way to make money out of many deals per day,(scalp) but only now i thought to ask is the story about your scalping are real? or it was mem (as in your book) that we putted in to are brains.. thanks for time..chara

  4. vic on January 26, 2011 6:09 pm

    Scalping is ruinous. One is not equipped to scalp against those whose commissions and implicit vig is 1/10 as much as yours, and whose capital is 1000 times as great , and who if they lose money in one field are bailed out by the government or their cronies at central station. To my credit, I never scalped, however, when I was handling the fixed income trades of a palindrome who handled money for the central station of your former country, I sometimes succumbed to taking a 250. a contract out, because the size was so great that I had to always be premature. That's a very bad habit which is ruinous if not eradicated. vic

  5. Ed on January 28, 2011 2:07 pm

    Vic what does this mean?

    “I sometimes succombed to taking a 250. a contract out, because the size was so great that I had to always be premature. that’s a very bad habit which is ruinous is not eradicated.”

    specifically, the 250. a contract out part?

    What exactly defines scalping in a market like the ES? Going for a few ticks? 2-3 points? 5 points? Anything less than a multi-day swing trade 10-20+ objectives?

    I have found that if I use your technique of buying when i would have been blown out in the past, a very quick profit often exists, many times almost instant.

    At what point does it become ruinous?

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