[I]I start now a new series here, I write here down my own thoughts about my second COT book as I read it. I write down anyway always for myself what I think is important to look it back later, so I decided why not to post it here too? Important: I write down the own words of the author, in the right order as it comes in the book. However I will not structure the different thoughts and do not write down which pages they were. I just want to mention the sentences which I find important for myself. This is not the same value for you as reading the book (hopefully you will all read it when you have the time for it), however it is better than nothing. I also make my own summary in the end of each post.[/I]
[B]Introduction[/B]
This is a rigged business. The exchanges, the brokerage firms, and the large funds have set the table for themselves, created for themselves that are different from the rules for the smaller players in the game. There is one set of rules for hat they can do and another for the average trader or adviser.
Frankly, I have no problem with that. It is their game, and they have the marbles. But we need to know of those differences to not get sucked into their game. To win at this game you need not only know the rules but not be trapped into the fallacies.
To that end let me expose a few of them:
[I]First fallacy[/I]: "These guys know something". Experts have been correct in predicting the future less than 22% of the time. (Wall Street Journal survey evaluation)
[I]Second fallacy[/I]: "If they knew something, the'd tell you". Finally, I got it; they (brokerage firms) are in business to make money and despite hat they say or do, brokers that generate huge commissions get huge rewards. The incentive is all about commission, not customers.
[I] My wake-up call[/I]. What I learned is that we are very much in this game on our own. There is one thing you have been told, though, that is true; there are people who know more about the markets than you. Lots more. You've searched high and low for these people, and thought brokers or the media would dredge up their advice. Wake up, Charley, that's not the way the game works.
[I]The superpowers[/I]. What you are about to learn is that there are true superpowers of the marketplace, so critical to market structure they are required, by federal law, to report their massive buying and selling once every week. If they don't report they will be hit with massive fines and/or go to jail. I suspect only one investor or trader out of 10 000 is aware of this vital information, posted, for free, on the Internet every week. Most investors are looking at charts instead of the buying and selling of these people who move the charts.
85% of mutual funds don’t do as well for you as if you had just bought the laggard Dow Jones Industrial Average stocks.
When most people think of investing, they think of stocks and bonds. That’s traditional thinking. What they are not aware of is that each day about five times more dollars change hands in the commodity markets.
[B]Meet Your New Investment Partner and Adviser [/B]
The mission of the CFTC is to protect amrket users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and options markets.
Futures contracts for agricultural commodities have been traded in the United States for more than 150 years and have been under federal regulation since the 1920s. In recent years, trading in futures contracts has expanded rapidly beyond traditional physical and agricultural commodities into a vast array of financial instruments, including foreign currencies, U.S. and foreign government securities, and U.S. and foreign stock indexes.
Large hedgers that are users want to buy at low prices, hereas large producers want to sell at high prices.
We were somewhat surprised to find that the Large Hedgers were consistently superior to the Large Speculators.
[I]Summary[/I]: well, it was some usual thoughts, I thought to grab out this time a bit of history too about CFTC. The first imporessions are good from the author, I am looking forward to start the real work!
