Books and Systems from 1970s and 1980s

[LauraRomans]

Does anyone use a book or system from the past decades?

Day traders survived without computers.

Do you think the market has really changed so much?

 

[Sigma-D]

Does anyone use a book or system from the past decades?

Day traders survived without computers.

Do you think the market has really changed so much?

Before computers the only day traders were those on the exchange floor and they had a much closer relationship with what was going on than is possible with any amount of processing power today. These days almost everyone is off floor, but the lone retail trader is still at a massive disadvantage compared with the commercial operators. The biggest disadvantage is that they think having a screen or two gives them the same perspective as those in the business. In the old days, it wasn't possible for so many to so easily trade the markets and therefore lose money just so easily. Entry subs are minimal today, back then you had to have the wherewithal to play.

The market has changed massively in just the last 10 years for many reasons, some fundamental some technological. The markets have also changed significantly due to political and monetary influences since the 2008 bump and the relationships which existed between various asset classes prior to that have been massively impacted and will likely continue to exhibit skews to the old established correlations for years to come. You need to adapt to these changes.

People haven't changed at all in a psychological sense, but the constituents of the markets has quite dramatically altered.

The only old systems and old books that stand the test of time are those that stay close to the fundamentals and operate on the simplest and fewest of premises and which factor in the here & now.

 

[gerryg]

Yeah good idea. But I think there is much more experience with that book, free of heavy calculations (especially related to technical analysis). There is a chance to adapt them to contemporary trading conditions. new things are well-forgotten old ones.

 

[NVP]

markets never change ......we just think they do

anyone want to buy a tulip bulb ?

 

[Sigma-D]

markets never change ......we just think they do

anyone want to buy a tulip bulb ?

But that’s the thing, markets do change. The equivalent of your tongue-in-cheek tulip example is the current UK housing market. Various government schemes have bidded up expectations to the extent that although geographically lumpy, there are some outlier sized increases in property prices. Nationally, they’re still 16% lower after adjustment for inflation than they were pre-2008. The potential for another bubble is obvious and that’s because those considering getting in to the market now will do so based on extrapolations of similar increases into the future and interest rates where they are right now. The BoE’s FPC will be looking at this with a view to stiffening lending requirements to choke off this ‘irrational exuberance’ as we head to what is expected to be a minimum 3% MLR by 2019 and possibly back to 5% levels. But those who do bundle in now borrowing at 5 or 6 times earnings are going to come a right royal cropper on the first uptick of rates.

My point being FPC didn’t exist and now it does. It’s an extra factor in playing a market which didn’t have to be be considered in the past.