Modern day hedge funds are the ultimate weak-handed losers. These people, save a few, are always on the wrong side of markets – at the turning points. They can do well at times during the trending phase (up or down) part of the move, but apparently they, like most people, have no idea what a trading range is. And the trading range is the third trend, and yes, there are actually three trends. Are you aware that markets spend the majority of their time in trading ranges, on all time-frames?
But everyone loves the fun trends (up or down), yet it’s the trading ranges which set everything up, and these ranges are the most important trend to pay attention to, study, and recognize. The other two trends are the “easy” ones. And worse yet, many people are completely oblivious to downtrends also. That’s why there are permabulls. While of course, there are the permabears, who apparently are completely oblivious to uptrends. Amazingly there are people out there, who put their money down in markets, and they aren’t aware there are even any trends, period. Wow. So when someone is only aware of two trends, then how can they possibly do anything in this business. Markets are tough enough to deal with, and when one isn’t even aware of the basics, they’re not going to go anywhere in this business – like most hedge funds who load up in the topping range and sell/sell short in the bottoming range. And they just did one more time:
Hedge Funds Are Losing Faith in Precious Metals
- Money managers most bearish on silver in almost 2 years: CFTC
- Platinum net-short position reached a record as car sales slow
Hedge funds and other large speculators are hitting the exit as they brace for monetary tightening in the U.S. and Western Europe. Money managers are not waiting around for signs that the Federal Reserve may change its rate trajectory, as they turn bearish on precious metals. These charts show the trend in sentiment.
In the week ended July 11, the net-long position in gold fell to the lowest in 17 months, before the metal posted its first weekly gain in six weeks. The changes came just before government data showed consumer prices were little changed, fueling speculation the Fed may take longer to meet its goal, especially after Chair Janet Yellen said earlier in the week she sees uncertainty over inflation.
Silver is also losing its luster in the eyes of hedge funds. The position in gold’s cheaper cousin swung to a net-short from a net-long and is the most bearish since August 2015. Investors concerned by the prospect of higher interest rates exited in droves — just as the metal capped its biggest weekly advance in six months on dovish U.S. economic data.
Money managers pushed their net-short position in platinum — used to curb vehicle emissions — to a record before data showed European car sales slowed in June as Brexit-related concerns weighed on a peaking vehicle market.
The way they seem to pay the game is like playing roulette, which eventually becomes russian..when black swan events occur, in that sense they are trading on high probabilities…. of taking losses.
Good reminder to focus on what actually works… choosing a game (with proven method/approach) with higher probabilities like black jack. (As you’ve mentioned before, and has been reemphasized for me in the book, “new market wizards”)
Professional gamblers play blackjack and poker… not russian roulette
Professional (succesful) traders have an edge ( proven approach that increases probabilities) not pure wild speculation based on news, tips, and Gu-screw hopium.
QE, “debt-ceiling”, SDR, etc. – the savior for the goldbugs has sucked them all in. Who cares about stupid useless “news”? Of course, the news that actually works, like with penny stocks, but it’s “too risky”. However buying silver at $49 was a wise and well-thought out maneuver – no risk there. Most people have zero idea what is actually truly risk in markets. You explained it perfectly, and show a total grasp of risk. Exactly, most people’s view of high probabilities is for the probability of taking losses, not winning.
Yep, New Market Wizards – good book – thanks bro.