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« December Jobs Forecast | Main | Respect versus Arrogance »

January 05, 2007

Comments

oldprof

Bill -
Thanks for your excellent observations. One of the fascinating things about trading and investing is that there are many ways to do well. One variable is the time frame.

For long-term investors, energy stocks (to take a commodity example) may provide an opportunity. We like the "upstream" names, but they get caught up in the front month spot prices because they are in the ETF's.

We use models with different time frames. It is sometimes correct to add to positions in one time frame, and at the same time, it can be right for those on the speculative trade to sell. Trading risk/reward differs from investing, as you indicate.

Bill aka NO DooDahs!

The same dips-, er, pundits currently expressing that "Dr. Copper's" fall is predictive of a fall in "the economy," were notably lacking in talking up the strength of "the economy" when copper was marching from $1.50 to $4.00. I wonder why? Perhaps because they only present data which supports their mostly unchanging opinions?

Regardless of the relationship between the futures price of copper and the various inaccurate (and meaningless to active, nimble speculators) measurements of "the economy," it is apparent to any with eyes that rampant speculation had caused a disconnect between *several* commodities and their "fundamentals" - copper included.

Some of us made money riding the speculation up, and I am certain that some will make money riding it down as well.

We're not *all* interested in leading indicators of "the economy," for two reasons. First, what most people call "the economy" is simply an inaccurate, aggregate hodgepodge that is reflective of the reality for no one individual in particular. Second, "the economy" doesn't move the financial markets in the slightest. What moves the markets is money changing hands, and retail traders can make exceptional returns just following the money.

Love the blog! I wind up coming back here often!

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