Even ‘Street Urchins’ Understand How To Trade The Market

Former trader and current man who had a whole weekend to find something one of colleagues wrote to disagree with, Richard Breslow, is out with his latest daily missive and unsurprisingly, he thinks you still don’t get it.

What is it he thinks you don’t get? Well generally speaking, you don’t seem to get much of anything as far as Richard is concerned, but as far as today’s piece goes, Breslow thinks maybe you should stop worrying so much about the next central bank meeting and focus a little more on “squeezing the juice” out of whatever’s working right now.

You might recall that last week, Cameron Crise wrote a short piece on how important it is to separate what policymakers are likelyto do from what you think policymakers should do. And while Richard thinks “both are interesting questions,” he wants you to understand that those questions “also share the trait of being equally unhelpful when trying to make money.”

The thing to do, Richard figures, is BTFD until that stops working because “if you’ve cashed in on the previous one-hundred times” it worked, by the time it finally stops working you’ll be so far ahead that it won’t matter.

Every Target logistics manager-turned vol. seller agrees or, as Richard puts it, “most street urchins” would tell you the same.

There’s just one small problem here. Breslow tries to say that predicting what policymakers will/should do is “unhelpful when trying to make money,” only to turn around and say that the “the only thing you need to debate” is whether “sovereign wealth fund, QE and buyback flows” will continue.

Sorry Richard, but those two questions are one and the same.

More below…

Via Bloomberg

I was reading a note warning traders to avoid focusing on what policy makers should do and concentrate their efforts on sussing out what they will do. Both are interesting questions, deserving of discussion. And they also share the trait of being equally unhelpful when trying to make money. The only reliable way to have a consistently high Sharpe ratio is to figure out what the important (read “big”) players will be up to–and then get in front of them. Get that right and what happens down the road becomes largely irrelevant.