Sep

17

 I would suggest from long experience and no contraries at all, when someone offers you a free lunch don't take it. When someone offer you a ride to the pent house, get off at the first floor. Never accept anything that's too good to be true, and that would require the firm or you to break the law or break the bank if they offered it to many other people. And above all, never do anything wrong yourself, as that's the first step to losing everything. When you are in Apache or Aborigine territory beware of an ambush. When you aren't in likely ambush territory, be double beware.

T.K Marks adds: 

The silver pit corollary: Never buy anything offered beneath the bid.

Especially a solid bid.

This took about 1 day's experience to figure out. If's it's 6 bid around the ring and some guy nonetheless starts 'energetically' offering 200 at 4, it doesn't mean he's a numbskull and those contracts are a bargain, it more than likely means he's "strategically" short and has 500 to sell at 2 stop.
 

An anonymous commenter writes in: 

 Such good advice. And nowhere do I find it more relevant than with people who make gifts of their trade recommendations. When portfolio managers have a view they truly believe is great, they are apt to keep it for themselves. No one wants to get other large players in the position only to have them front run one's exit. But if portfolio managers lack genuine conviction, they will try to bolster their confidence by attracting others to their side, sharing their recommendations widely. Often, these recommendations are made in a defensive tone that brooks no dissent, with scant evidence, as in, "Only a fool would be long, with money printing such as this." The purpose is not discussion–or enriching the accounts of others. Rather, it's a desperate search for confirmation–and a worthwhile tell at the market's poker table.

One bear recently provided such a perspective based upon the disastrous policies of central banks and the parlous circumstances of the Middle East. I responded by showing how stocks have behaved when more than 80% of shares within the S&P 500 Index were trading above their 5, 10, 20, 50, 100, and 200-day moving averages. Returns over the subsequent month have been quite bullish, as breadth and momentum have tended to persist. It was as if I had insulted the manager's mother: a huffy response tantamount to "this time is different" delivered in a condescending manner was the reward for my attempt at discussion. That was quite a few S&P points ago. The bear is now generously sharing a variation of his prior offering, in the form of a "bursting bubbles" thesis…more free lunches offering scant nutrition.
 


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