Focus on Probability… Avoid Financial Newman’s

I don’t believe in financial coincidences…there is only ‘inside information’ for the few and ‘probability’ for the masses.

I know I am not part of ‘the few’. The ‘few’ can’t stand me either. Not surprisingly ..both of my neighbors ‘think’ they are the few. The ‘few’ that think they are ‘the few’ are a real headache. But I digress.

I am focused on probability. I am always trying to stack it. I follow strength in prices and smarter people than me that have to move markets (because they control bigger chunks of money). I believe if you stay small enough you can focus on the important things in kids and dogs and stacking the odds for them.

It is amazing how obvious the ‘few’ become if you watch them as much as I do.

The ‘few’ control financial media. They control the investment banks, the trade desks, the ratings agencies.

The ‘few’ are very frustrating to watch because in hindsight it all becomes so obvious. They become a long stream of financial ‘Newman’ moments:

Just last week Brazil got downgraded to Junk by S&P. I am pretty sure Brazil was junk when they decided to build 100 soccer stadiums in the Amazon (5 years ago)…but who cares about getting in front of a mess when you can panic everyone after it’s worthless.

EWZ data by YCharts

Today Brazil rallied 4 percent. The lesson just might be that junk is worth a lot more than just ‘it could be junk’. If you watch as much of this bullshit as me you start to see the pattern. The S&P is a ‘Newman’.

The ‘Few’ push Barron’s (also one of the few) to tell you Facebook is likely going to $15…not that it could possibly go to $92. Barron’s is ‘Newman’. I yelled ‘Newman’ when I saw their cover on $BABA this weekend:

$BABA vs $FB September covers

— pach (@pach) Sep. 13 at 12:51 AM

The markets are pretty wide open for anyone with a little bit of savings. If you decide to invest, you will have your ‘Newman’ moments. It is part of the business of investing. I don’t think it is funny, but if you can’t laugh about this industry, you might just want to avoid it.

As for probability, anyone can learn the basics and apply it to managing a portfolio. Probability is not just taught at Stanford and MIT.

One comment

  1. Newman says:

    Well, now the few are yakking on about the correction being over and China stabilising … are they pumping before another dumping?

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