Writers Are Writers; But A Chess Player Moves In Silence.

Forex Market Commentary  

It is human nature to move in crowds.

There's great safety in numbers and it is human nature to look over your shoulders to see what your fellow is doing. it is a primeval instinct of preservation that goes back to the days of the stone age when we were not the apex predator and had to cluster into social groups in order to fight back and survive. being in a herd has it's advantages. However, the herd is not always moving in the right direction and some will break away from the pack before the whole rushing crowd goes headlong towards the edge of a cliff and go hurtling down that steep and rugged precipice unto their doom.

If you have been reading all the news reports the one thing you will consistently notice is that everyone seems to have the same mindset in that they tend to react to today’s news all at once. It is an overwhelming feeling once you can discern how writers in various papers and journals and websites and commentaries all cry out at once whenever some little news hits the Reuters news wires.

The majority of hedge fund managers today have now more or less become complacent and blasé and overwhelmingly tracker-orientated in the markets. Since the hedge fund industry has become a full noisy crowd the fight for investor funds has become such a squabble that the average hedge fund now manages considerably less than it did a good ten years ago.

Yet still there are a few exceptional hedge fund managers who can stand away from teeming  throng. These are the really very smart traders that tend to move in silence in the opposite direction from any piece of news that hits the news wires. Remember JP Morgan deciding to sell stocks when he got a stock tip from a shoe shine boy in New York at the turn of the 20^th century? Remember how foolish the great Jesse Livermore was to listen to advisers and trade his fortune on the news tips to lose everything in commodities?  Fat lot of good it does to listen to people if you cannot find the courage within you to make your own decisions.

Smart hedge fund traders track interest rates globally. What is the US Fed up to? What about the ECB?  What are the views of the Bank of England? Hedge fund traders always monitor the open market operations particularly of these three central banking groups as well as the Bundesbank in Germany and central Bank of Japan. Interest rates are the foundations for the determination of the money market price dynamics. The price of money in respective economies then influences the local stock markets and thus determines the value of a respective currency.

Thus, in summing up, there’s a lot of writing out there but indeed how much of all the news you read is actually a solid piece of analysis? Stock writers and bankers have their own interests in mind when they tell you about equities because the whole institutional system is designed to convince the retail customer to invest in stocks. So in reading articles always try to take a few steps back and ask yourself: does this person who writes this article about a stock or bond or currency have any vested interest in expressing his or her opinion as such? try to discern impartiality before taking decisions.

It is extremely hard to find pure impartial reporting. That is why writers will remain writers and smart hedge fund traders good chess players because while the whole world is crying about something going on, the smart traders have seen it already and made their move.

If everyone is talking about a Dow correct every time the Dow slips 100 points like today where would you think the smart traders are? After all the notion of a slowing US economy isn’t really new news. We knew about this since November last year and the smart traders already prepared for this pricing Nov 16 money at plus 75 basis points. What does the media world know? It only knows the present when the smart money has already moved to the next room.

Thank you

Pieter Bergli - Trader X 16

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