Trading Wisdom for Aspiring Hedge Fund Managers

[darkhorse]

Quote from sle:

People who have blown up (including quants at LTCM, which is a fashionable topic) have exhibited either some sort of fallacy in their numerical analysis or in their critical thinking. Dumb luck and access notwithstanding (which pretty much excludes all market makers), people who were and are making money posses both critical thinking and the numerical skill set in one or another form.

+1.

The fatal mistakes of hubris tend to show up as logic errors of exposure or neglect that amplify mortality risk. Rocket scientists don't always think things through, especially when possessed by delusions of grandeur. Paul Tudor Jones: "Don't be a hero. Don't have an ego."

 

[PHOENIX TRADING]

Quote from sle:

People who have blown up (including quants at LTCM, which is a fashionable topic) have exhibited either some sort of fallacy in their numerical analysis or in their critical thinking. Dumb luck and access notwithstanding (which pretty much excludes all market makers), people who were and are making money posses both critical thinking and the numerical skill set in one or another form.

Horse apples, plenty of people with critical thinking skills can *rationalize anything away and make retarded decisions if not emotionally grounded.

*They are blithely unaware of their"some sort of fallacy in their numerical analysis or in their critical thinking" until it's too late.

 

[PHOENIX TRADING]

Quote from darkhorse:

+1.

The fatal mistakes of hubris tend to show up as logic errors...

Quite frankly you seem to gloss over it's the condition of "hubris" first that causes the latter, not the other way around.

In essence you are conflating the problem and mistakenly assigning it as a "logical error".

 

[sle]

Quote from PHOENIX TRADING:

Horse apples, plenty of people with critical thinking skills can *rationalize anything away and make retarded decisions if not emotionally grounded.

*They are blithely unaware of their"some sort of fallacy in their numerical analysis or in their critical thinking" until it's too late.

Someone who rationalizes anything away is not using his critical thinking skills, that's by definition. Critical thinking assumes impartial reasoning based on facts, a consilio.

Also, I do not see how being "emotionally grounded" prevents anyone from making mistakes in numerical analysis or information processing. If you are acting based on bad information or the initial assumption is simply wrong, it does not matter if you are emotionally as solid as a rock, you still going to lose money. If you are acting based on solid modeling, your thought process included risk assessment and the process excludes any sort of discretionary stupidity, you will do all right regardless of your emotional state.

 

[PHOENIX TRADING]

Quote from darkhorse:

1)You didn't even manage to disagree with me properly. 2)If you don't have critical thinking skills, your odds of avoiding the behavioral finance traps will be slim.

1) Well excuse me for putting you in checkmate without explaining all the steps to you.

2) You have reading comprehension problems. I already stated critical thinking skills have their place.

 

[PHOENIX TRADING]

Quote from sle:

Someone who rationalizes anything away is not using his critical thinking skills, that's by definition. Critical thinking assumes impartial reasoning based on facts, a consilio.

That assumption is a pretty big IF,...

Tell you what I'll let you go on with your hallucinations on the subject, it's a subtle point that you probably have internalized anyway.

 

[colonial dr]

dark horse

Thank you for posting this thread. I hope it stays active for a long time so many can read the gold here.

 

[sle]

Quote from PHOENIX TRADING:

That assumption is a pretty big IF,...

Tell you what I'll let you go on with your hallucinations on the subject, it's a subtle point that you probably have internalized anyway.

What exactly am I hallucinating about? In the few placed I've traded at, I have seen people with problems going beyond simply not being "emotionally grounded", people with real psychiatric illnesses (bipolar disorders, clinical depressions, even schizophrenia) who still managed to have very impressive trading careers.

Let me distill it for you: To succeed in this business, you only need critical thinking and numerical skills. There is no specific emotional or psychological training needed to be a profitable trader or investor.

PS. I have also worked with a blind lady. Despite the fact that she could not see the charts, I am sure she could still trade circles around jack hershey.

 

[PHOENIX TRADING]

Quote from sle:

What exactly am I hallucinating about?

Let me distill it for you: To succeed in this business, you only need critical thinking and numerical skills. There is no specific emotional or psychological training needed to be a profitable trader or investor.

I think you summed up your hallucination quite nicely.

 

[sle]

Quote from PHOENIX TRADING:

I think you summed up your hallucination quite nicely.

Care to prove me wrong or shall we agree to disagree?