Well when you start talking about putting 100%+ of your account into a single trade or idea, the need for precision and the typical level of noise/volatility markets experience in the course of playing through a given macro theme dictates that you're really trading technicals rather than macro per se. In my current conception of how it fits into my overall business/wealth management strategy, macro is a place for me to store gains skimmed from the high-leverage stuff, preserve them first off, ideally grow at 10-20% a year or so with the lowest possible risk. I would actually love to be able to go 100% long stocks in this account, ride a secular bull and not think about it again for a decade.
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Global Macro Trading Journal
- Thread starter Daal
- Start date
Well when you start talking about putting 100%+ of your account into a single trade or idea, the need for precision and the typical level of noise/volatility markets experience in the course of playing through a given macro theme dictates that you're really trading technicals rather than macro per se. In my current conception of how it fits into my overall business/wealth management strategy, macro is a place for me to store gains skimmed from the high-leverage stuff, preserve them first off, ideally grow at 10-20% a year or so with the lowest possible risk. I would actually love to be able to go 100% long stocks in this account, ride a secular bull and not think about it again for a decade.
Quote from Specterx:
Well when you start talking about putting 100%+ of your account into a single trade or idea, the need for precision and the typical level of noise/volatility markets experience in the course of playing through a given macro theme dictates that you're really trading technicals rather than macro per se.
Not when your methodology integrates both as such to turn a high precision entry into a long-term trend holding.
(Not to say that a single position would ever take up 100% of account equity; futures, forex and options have far too much embedded leverage to require that, and no single stock position would be that large).
We have no problem holding a strong position for weeks or months given constructive price action, with pyramiding at key inflection points based on an informed sense of the macro picture.
Its said frequently that 'volatility is not risk' but most people can't beat the market, therefore if the market price changed after the person entered that position, that movement tells you more about what that asset is worth than the person's opinion or hopes the price is only 'temporarily' there
Volatility IS risk for most people, the fact that people who can beat the markets say the opposite will only further complicate the life of the avg trader or investor because now he will be more complacent about adverse moves. You are far more likely to get hurt big time thinking markets are dumb than thinking that markets are efficient
Volatility IS risk for most people, the fact that people who can beat the markets say the opposite will only further complicate the life of the avg trader or investor because now he will be more complacent about adverse moves. You are far more likely to get hurt big time thinking markets are dumb than thinking that markets are efficient
Quote from Daal:
Its said frequently that 'volatility is not risk' but most people can't beat the market, therefore if the market price changed after the person entered that position, that movement tells you more about what that asset is worth than the person's opinion or hopes the price is only 'temporarily' there
Volatility IS risk for most people, the fact that people who can beat the markets say the opposite will only further complicate the life of the avg trader or investor because now he will be more complacent about adverse moves. You are far more likely to get hurt big time thinking markets are dumb than thinking that markets are efficient
If you can't beat the market then you shouldn't be actively involved, so the question is moot.
It still doesn't make a lot of sense to say volatility equals risk, because the opposite is not true. The absence of volatility does not equate to the absence of risk -- just ask investors in the Bear Stearns Cioffi and Tannin funds.
Furtherrmore, for many trading strategies volatility = opportunity, i.e. without positive volatility excursions the strategy would not work. So in that sense volatility may be risk but it is also reward.
And finally, for the conservative investor in high quality dividend paying stocks, volatility is NOT risk assuming the investor is not leveraged. Permanent capital loss is a danger, but it is a danger defined by intangibles other than day to day vol. Your investment in a stock with volatile earnings but a sound business model might see a lot of fluctuation quarter in and quarter out, but provide relaible yields over time, whereas another investment in a silky smooth earnings-manipulated corporation might be a Sharpe Ratio dream right until the day the CFO is imprisoned for fraud.
Volatility is not risk. Assumed correlations between volatility and risk equate to a false positive, except when staying power is reduced through excessive use of leverage. But then the statement begs changing to "leverage is risk," which is also not true in a universal sense.
The discussion is far more nuanced than most allow for. The idea that volatility is risk is a useless statement popularized by equally useless Modern Portfolio Theory (MPT).
Quote from darkhorse:
If you can't beat the market then you shouldn't be actively involved, so the question is moot.
It still doesn't make a lot of sense to say volatility equals risk, because the opposite is not true. The absence of volatility does not equate to the absence of risk -- just ask investors in the Bear Stearns Cioffi and Tannin funds.
Furtherrmore, for many trading strategies volatility = opportunity, i.e. without positive volatility excursions the strategy would not work. So in that sense volatility may be risk but it is also reward.
And finally, for the conservative investor in high quality dividend paying stocks, volatility is NOT risk assuming the investor is not leveraged. Permanent capital loss is a danger, but it is a danger defined by intangibles other than day to day vol. Your investment in a stock with volatile earnings but a sound business model might see a lot of fluctuation quarter in and quarter out, but provide relaible yields over time, whereas another investment in a silky smooth earnings-manipulated corporation might be a Sharpe Ratio dream right until the day the CFO is imprisoned for fraud.
Volatility is not risk. Assumed correlations between volatility and risk equate to a false positive, except when staying power is reduced through excessive use of leverage. But then the statement begs changing to "leverage is risk," which is also not true in a universal sense.
The discussion is far more nuanced than most allow for. The idea that volatility is risk is a useless statement popularized by equally useless Modern Portfolio Theory (MPT).
Notice how you don't address the elephant in the room which is the market price will be right more often than the avg person 'correct price' even if sometimes turns out to be completely wrong(like in CDOs). If you think this question is moot then don't waste my time replying
Quote from Daal:
Notice how you don't address the elephant in the room which is the market price will be right more often than the avg person 'correct price' even if sometimes turns out to be completely wrong(like in CDOs). If you think this question is moot then don't waste my time replying
Elephant in the room? It's a non sequitur.
Who gives a shit what the average punter thinks? The fact that the average market participant loses money, and guesses wrong more often than not, does not translate into making "volatility equals risk" a true, valid, or useful statement.
You keep trying to be clever, and it keeps not working out for you...
Quote from dhpar:
you both try to be clever and it does not work for anybody. this thread is just disintegrating due to egos of few posters here...
I'm not "trying" to do anything -- just enjoy the intellectual back and forth.
But I need to get more efficient about time allocation anyway, so if your view is generally shared I'll consider unsubscribing to the thread.
Quote from darkhorse:
Elephant in the room? It's a non sequitur.
Who gives a shit what the average punter thinks? The fact that the average market participant loses money, and guesses wrong more often than not, does not translate into making "volatility equals risk" a true, valid, or useful statement.
You keep trying to be clever, and it keeps not working out for you...
lol, so essentially you countered arguments I never made(no vol equals no risk, among others) misquotes what I said 'for most people volatility IS risk' to 'volatility equals risk'. straw man king, all of that in a debate you don't find any use in(which begs the question of why even get involved). I'm sure this behavior has nothing to do with your need to enhance your self-image by telling others that they are wrong and you are right
Quote from Daal:
lol, so essentially you countered arguments I never made(no vol equals no risk, among others) misquotes what I said 'for most people volatility IS risk' to 'volatility equals risk'. straw man king, all of that in a debate you don't find any use in(which begs the question of why even get involved). I'm sure this behavior has nothing to do with your need to enhance your self-image by telling others that they are wrong and you are right
Daal, everything I am saying is clear and straightforward. I will quote you straight up, just to underscore the point:
Quote from Daal:
Volatility IS risk for most people
That is the argument you made, flat out, in the form of a direct statement. It is the argument I was countering. Volatility is not risk in any meaningful sense of the term -- not for "most people," not for anyone. There are far better ways to express what "risk" is and where it comes from. The points I made were in clarification of my counterargument to what you said.
Is this not obvious? How can you be so remarkably obtuse?
We are on such different planes that you misattribute your own statements and don't even understand why your retorts don't make sense.
I have not done any self-enhancing to my image on this thread at all. My replies have focused on logic, information, and the point of view of one experienced practitioner, that is all. From the standpoint of idea contribution, food for thought, and articulation of a coherent market philosophy, I have contributed a lot to this thread.
You, on the other hand, have resorted to some version of ad hominem, hand waving, or inaccurate generalization almost every time you have been challenged. This is not opinion, this is objectively verifiable for anyone willing to bother checking back through the thread.
I WANT to be charitable and friendly, Daal, in the spirit of good-natured debate. I WANT to see you as a fellow market traveler to engage in back and forth exchanges with. But you keep acting like a fucking idiot, posting drivel that I feel compelled to respond to, on some level, because when I am party to a conversation I have a need to speak up.
But you know what, fuck it. Maybe the light is no longer worth the candle, in terms of 'participating in the conversation' of this thread. Putting posters on ignore seems like a half measure. So I'm done with this thread for a while, maybe for good.
See you guys.