What the heck is it with all the traders trying to be Karl Popper? Just shut up and trade already.
The last thing we need in trading are a bunch of self-appointed Philosopher wanna-be’s doling out pronouncements. I never trust a guy who uses the word “epistemology” in the same paragraph twice. Consider yourself warned…
Read Alchemy of Finance few times. Never made money of it. Wish I had got the warning earlier !
For the uninformed, who are you talking about? Taleb, and?
There are several who seem to be taking themselves too seriously.
Michael is obviously talking about Victor Sperandeo’s books that are 70% philosophy. :) I Just had to get that dig in there. Totally agree with the sentiment. I do have a question after reading your blog post on the “SEC Short selling rule.” Why is naked short selling illegal? Why should you have to locate shares and pay an interest rate to borrow them from someone else all for the privilege of potentially getting bought in at some point? I’m sure there is a good reason for it, but I haven’t found it yet.
I don’t think we’re using philosophy in the same manner. Trading philosophy
is one thing, trying to be Karl Popper is another.
If you didn’t have to borrow, you could potentially have a situation where
there could be more shares sold “naked short” than there are shares of the
stock in the float.
Everyone needs to get paid. The B/D will lend the long money if they agree
to a) pay interest on the loan, and b) hypothecate their securities to the
firm so the firm can in turn lend them to a potential short seller.
Short sellers pay for the borrow and have to pay any dividends to the longs.
All of this takes human capital and paperwork. Everyone in the process has
compliance and capital requirements.
One way to avoid it all is to buy put options.
I think people mostly philosophize when in crises mode.