Not Everyone is a “Fade”
- Dynamic Hedge
- May 11th, 2011
Dynamic Hedge blogs about correlation, relative value and quantitative analysis at http://www.dynamichedge.com
It costs nothing to ride the information train. That's why it's always been so dangerous.
I treat all information derived media sources with skepticism. It's so easy to fall down the rabbit hole of opinion and promotion that exists in a one-hour new cycle. Most if not all of this noise is designed to distract and derail your trading and investments.
The global trend of bad and distracting information shows no sign of abating. I have never made money off of any information gleaned from the media except to fade, or take the other side, of the story. In fact, following information from so-called experts has been the single biggest contributor to losses in my trading career. Those who wish to influence me now have to provide a mountain of evidence in order to get my attention. This puts me at almost COIF-like status in my dealings with the interweb. Disregarding is second nature and fading opinion is reflex.
In the new world of the Market Participant Editor, I may have to rethink my stance. There are certain sources that have overcome my massive burden of proof and shown that, not only are they not a fade, but they should be listened to. Traditionally, market participants and news editors move to the beat of a different drum. Someone who has a little skin in the game may not deserve the same level of contempt.
Basically, after a year of blogging and talking with others through Stocktwits, I have reluctantly come to come to terms with the fact that there are some traders out there with game who are speaking up. There are such low friction communicative means to get a message out that people who would have never had a blog 10 years ago are now posting regularly and engaging the community. Traders have to be much more selective of who they use as a fade and whose opinion they value. It's not just reflex anymore because if you fade the wrong sentiment with conviction you can lose your house.
Market Participant Editors don't get a free pass from me just because they're a writer with a trading account. They still need to be held accountable -- and some, quite frankly, are still a fade. The fire hose of information is still just as difficult to navigate as always.
Do not take this as permission to sit back and listen to the recommendations of online traders. The vast majority are still garbage and I would NEVER put a position on just because I heard about it on the internet. Consider this permission to open up to the fact that there that there are other people in the world who actually have some game and are willing to engage others with ideas.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.