Lessons From A Trading Great: Amos Hostetter

Amos Hostetter cofounded Commodities Corporation (otherwise known as CC) along with Helmut Weymar back in 1969. CC is the trading shop that produced more legendary trading talent than the Yankees have All-Stars. Alumni include: Bruce Kovner, Michael Marcus, Paul Tudor Jones, Ed Seykota and more… Hostetter was considered the wise sage and mentor of the group. He’s credited with imbuing many of these trading greats with the wisdom and knowledge they used to achieve their grand heights. Upon his untimely death in a car accident in 1977, the directors of CC commissioned one of their traders, Morris Markovitz, to gather […]

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Profiting From French Election Volatility

Attempting to predict the outcome of an election is a fool’s errand — we don’t bother with it. But that doesn’t mean we can’t make money off the vote… Over the last few weeks we’ve discussed the reasons for the rise of populism and how it’s impacted the false trend in European equities. We explained how these Soros-style false moves are dependent on narrative “tests” that either strengthen the trend or reverse it. In Europe’s case, its narrative test is arriving in the form of French elections. This year’s elections are pivotal because the French are dangerously close to electing […]

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Donald Trump: The Embodiment Of Trading Greatness

Paul Tudor Jones, Bruce Kovner, Jesse Livermore… forget about em. The only name you need to know when it comes to trading greatness is Donald Trump. He’s everything a trader should aspire to be. When it comes to having “strong opinions, weakly held”, Trump has EXTREMELY strong opinions, EXTREMELY weakly held. At the beginning of his campaign, The Donald was 2000% sure that China was a currency manipulator. But after a single piece of chocolate cake with his new buddy Xi, China was a problem no more. In fact, that piece of cake was SO good that Trump is now […]

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Do Buyers Of Options Benefit From High Volatility?

Search “options and volatility” in Google and you’ll get a dozen websites that say the same thing: option buyers want high volatility and option sellers want low volatility. Oddly enough, this old and relied upon rule of thumb isn’t completely correct. In reality, as an option trade plays out, trend has a far more powerful effect than volatility on final P&L. There are four scenarios that can occur before an option expires: Low Vol, Low Trend Low Vol, High Trend High Vol, Low Trend High Vol, High Trend The charts below illustrate the P&L of a long put in each […]

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James R. Keene — The Man Jesse Livermore Called The Greatest Trader Of Them All

While digging into old articles about James R. Keene for a piece I’m writing I came across this nugget that I have to share — it’s so good. For those of you not familiar with Keene, he is one of the most successful market operators of the late 19th century. Jesse Livermore, when talking about the trading legends of his day, called Keene the “greatest of them all”. The man made and lost fortunes many times over and lived a life full of color. Here’s the article, written by Robertus Love in The Princeton Union on July 11, 1907. Enjoy… […]

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Trading A Le Pen Win In The French Elections

Success in the markets requires thinking in possibilities. A great trader understands the permanent information deficit he’s faced with and why it makes market prediction impossible. All he can do is plan for a range of reasonable outcomes and adjust his strategy as new information presents itself.   In the latest issue of our Macro Intelligence Report (MIR), we discussed the reasons for the rise of populism across the Western world and how it’s currently impacting the Soros-style false trend in European equities. To review, a Soros-style false trend develops when a narrative is founded on untrue assumptions, and yet […]

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Current Target: Populism & Europe’s False Trend

One of my favorite sci-fi series is The Foundation Trilogy by Isaac Asimov. The book was first published in 1951 and is a grand “space opera” that takes place in the distant future. At the heart of the series (and what makes it so interesting) is the fictional philosophy of “psychohistory”. Psychohistory is a blend between mass-crowd psychology and probability theory. It’s founded on the principle that while it’s impossible to predict actions at the singular individual level, you can still successfully apply statistical probability theory at the group level to predict the general flow of future events. Asimov discusses […]

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Traders As Modern Day Hunter-Gatherers

Entering the market is like entering an entirely different world. This world functions nothing like modern society. Modern society has laws and social norms in place to protect you. If you screw up, you have a safety net. People will generally reach out and help. Modern society is cushy. Even people who are disabled, suffering mental illness, or are unable to care for themselves in other ways still get by. (Maybe not as well as we’d always like, but far better than at any other time in the past.) Markets aren’t like modern society. They’re much closer to being like […]

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Markets as a Range of Reasonable Opinions

The following is from The Philosopher in Drobny’s classic The Invisible Hands (emphasis mine): Some people can trade markets using only numbers, prices on a screen but this approach does not work for me. The numbers have to mean something — I have to understand the fundamental drivers behind the numbers. And while fundamentals are important, they are only one of many important inputs to the process. Just as a Value-at-Risk (VaR) model alone cannot tell you what your overall risk is, economic analysis alone cannot tell you where the bond market should be. Let us use an interest rate […]

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Is The Dollar About To Break?

A couple of my favorite quotes from legendary trader Bruce Kovner are: What I am really looking for is a consensus the market is not confirming. I like to know that there are a lot of people who are going to be wrong. As an alternative approach, one of the traders I know does very well in the stock index markets by trying to figure out how the stock market can hurt the most traders. It seems to work for him. If you can figure out how the majority of the market is positioned and where the most consensus trades […]

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