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Originally Posted by scorcherjf
Large banks and hedge funds have rules and regulations to abide by and of course they'll do anything within their power to maximize wealth to shareholders and/or profits while still conforming to their set of "constraints." If anything, the ones to blame are the government policies, lack of regulation and oversight, and out-dated rules and regulations which are often way too slow at keeping up with current market trends and technologies. It often takes a meltdown or a crisis for them to wake up and finally act and by then it's already too late (i.e. LTCM, tech bubble, quant crisis 07, CDS/MBS crash 08, junk rally 09, and now the EU/PIIGS and China). And yes, individual investors will often bear the brunt of the damage since they're typically slower at acting (they have other jobs usually), don't have as much information (asymmetry), and lack the tools necessary to be as liquid - three things that are required for arbitrage-free and efficient markets.
True, the probability of guessing correctly during bull markets is higher but that's obvious. What separates amateur traders and experienced ones is often their risk management. Sure their success rate is probably similar, but the one who correctly sizes his/her trades will ultimately yield superior performance.
Your views of our government and financial markets really sounds niave... I actually had similar thoughts years ago when I was still a student testing different strategies. Once you actually do some digging and learn how a lot of the financial systems work like the federal reserve's role, the house banking committee, etc. and how they interact with each other you'll probably realize that everyone's not out to "get you" and big brother isn't there just to squash down the little guy. Perhaps one day you'll realize that the other players aren't "cheaters" but merely acting within their capacity - you would probably do the same if you were in their position so try and see things from other perspectives.
About the CPA... that's accounting which isn't exactly finance. Why would you expect them to teach CPA's how the whole banking and financial system works when it's something that's barely even taught in business schools or finance degrees? Do some research and look at what those degrees actually say they attempt to teach you and you'll see that it's mostly quantitative tools which are necessary in the field. It's up to the person to use those tools to learn about what they want after with a more disciplined and objective viewpoint. Their understanding of the banking system may not be any better than yours, and if it is, it's not because of their fancy degree but because they've sat down and reasoned through it rather than dismissing the whole system as a scam.
Anyway, with your charts, "mini cup handles", triangle breakouts, etc. you make pretty common mean reversion predictions. My amateur advice to you would be to scrap those etch-a-sketch drawings on charts and use more solid indicators (credit spread and vol swap rates perhaps) and build a model that you can backtest and verify. My amateur economic advice would be to keep an eye on China. Sure they may have increasing inflation and some local debt issues recently but their growth is insane and it seems to be hard for capitalist americans to comprehend how a controlled government could actually be successful. The U.S. is in a terrible position right now with their public debt, labor unions, and possibly declining into stagnancy. It's a lot easier to fight inflation than deflation... look at Japan's history.
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1. The banks and HF's do cheat...we dont have the same access as them(quant boxes, inside info, etc)...you are naive if you think just because soemthing isnt against the law it is still immoral cause look at who is writing the laws...you say I would do the same thing if I was in their position and youre right I would, because I am human, but its still cheating in the end...we dont get bailouts, they do...they do because "they" ARE the govt and politics...you think the politicians are working for us?...lol...we told them 1000:1 no bailouts but they did it anyway...we told them no Obama healthcare and they did it anyway...politicians are paid servants.
2. you dont think a CPA takes finance classes?...
![Smile](images/smilies/smile.gif)
...why dont most people in banking understand fractional banking?...why dont they teach how banking works in college?...hmm...so we must learn and dig info like this on our own?...hmmm...odd.
3. you imply I use charts only...dont think so...I was watching CDS and RMBS credit spreads before you were prob working...how do you think I sold most real estate holdings in 06'???...why I went short financials in 08'...I watch it all...I look at M2 and M3(non-published now, I wonder why)...gotta watch money flow into certain stocks and sectors...Elliott Wave, Dow Theory, Effective Volume, Mkt delta....they are all useful to some degree but the key is to synthesize all the info to something useful for yourself...you imply alot of things but you have no idea what I use and how I trade...techn. analysis is only a part of the equation.
4. agree with you inflation easier to deal with then deflation...cause nominal gains in equity mkts give the illusion of wealth and the sucker game can continue longer.
5.with more experience, imho you will respect tech analysis and volume data more...TA and volume data doesnt lie...but people do.