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Disappointingly this is a topic that comes up all too often. Only last week we wrote about how you have to want to lose $2 billion.

We have yet another example of lack of personal responsibility or willingness to take and accept losses. In this case with an elaborate cover up.

The SEC are charging Atlanta-based Summit Wealth Management over a Ponzi-like scheme involving private investment funds. Manager Angelo A. Alleca appears to have first defrauded his 200 or so investors in a fund of funds. Rather than investing their money in funds as he’d advertised, he traded the funds himself. He then ran up a string of losses from which he could not recover. So in order to hide the losses, he created new private funds — with new investors — to trade in the hope of winning back his losses and paying back the original funds. He continued to lose and so in effect compounded his losses.

Furthermore Alleca issued false account statements to investors in the original fund and in the follow-on funds in order to cover up the actual losses the clients were having on their investments.

If you manage public funds, you have to have integrity. You simply have to treat their money like you would a newborn child. If you have trouble handling losses then don’t handle other peoples money.

Elaborate scheming like this suggest that on an emotional level you want the drama. The costs of playing out your emotional needs in the market place are expensive if it’s just your own account but when it exposes other people it really is catastrophic.

If you are set up as a business that invests in funds then you invest in funds. If you want to trade OPM then set up as a CTA or Hedge Fund. If you don’t have the reputation yet to warrant investors there may very well be a reason but you certainly don’t lie and cheat to do so. Perhaps like in this case you aren’t a good trader who is able to surrender to losses or take responsibility for you actions in front of your clients.

Yet another example of why it is important to develop a strong Inner Voice.

You might also consider reading Systematizing Losses To Feel Good post on the subject of the feelings around taking losses.

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“Out with the old in with the unwell” about the new construction of the Nasdaq had a punch line to it about fattening America.

The current obesity epidemic is already worrying enough with 35.7 percent of adults and 16.9 percent of children age 2 to 19 being obese.

The forecasts are downright scary. The Center for Disease Control and Prevention (CDC) projects that in EVERY STATE the rate will reach at least 44 percent by 2030. In 13 of the states the number will exceed 60 percent.

It’s unquestionable that the USA needs to change its ways (for the record Europe is a fast follower of the US so there is no place for smugness).

We like trends but here is one that on a personal level you would be well minded to stay off.

We also like thinking in terms of systems. Is your personal system one that you are following and one that allows you to maintain a freedom from being part of the obesity trend?

Financially however, let’s face it, since this trend involves will power it is unlikely to be changing for the majority any time soon. This is the proverbial heavy stone in motion and it is likely to keep on rolling.

With these projections it may be worth giving some serious consideration to finding stocks involved in medicine, medical care, diet drugs etc to start to trade for what is looking like a very fat bull market.

Fat and getting fatter

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India last year backed away from what was then controversial and remains controversial – allowing the international big box companies like Walmart, Tesco, and Carrefour into the Indian retail market.

These companies already have business in India but up to now have to sell through smaller retailers. This new deal will allow them to sell directly to the Indian consumer.

It’s always been controversial as the owners of small businesses and corner shops that abound in India fear they will be put out of business.

Anyone who has been to India knows that they have perfected bureaucracy and a further look into this new ‘opening’ suggests that the government are up to their usual tricks. There seem to be conditions to this deal that have not been made fully clear as of yet. Both Tesco and Walmart in statements have said they are of course interested in developing their business in India but await details, which could mean “who do we pay off now?”

Relevant to our interest in commodities and farming, is that one of the advantages put forward by the promoters of allowing these foreign companies into the market, is that it will help India’s notoriously unproductive agriculture to develop. That as a result of the former restrictions on foreign business being lifted these companies will have a positive influence on the lives of the farmers.

Raising both India’s agriculture production and the lives of those involved is obviously desired but currently in India a farmer can only own 5 hectares of land by law. How can Indian farmers honestly be expected to compete with other productive nations who don’t put restrictions in place?

Walmart, et al may bring in expertise but before getting too bullish on their effect on agriculture remember the Government of India will still need to get out of its own way and allow farmers to run profitable businesses without imposing the usual ubiquitous red tape, or corruption at the upper end of the political spectrum.

Given the glacial pace of change I suspect more “stop and start” before this story really sees the positive change for Indian agriculture that may potentially manifest.

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Passing by a Jeet Kune Do training center in Hong Kong earlier today got me thinking of Bruce Lee, his life, his martial arts and movie careers, and most importantly, his philosophy.
In one of my favorite books about Bruce Lee, Dynamic Becoming, author James Bishop covers Bruce Lee’s life and martial arts philosophy, some of it, could have easily come out of a trading book, without a doubt, Bruce lee could have been a great speculator.
The following are two sample quotes from the book, both relate to martial arts, life and trading.
“The great mistake is to anticipate the outcome of the engagement; you ought not to be thinking of whether it ends in victory or in defeat. let nature take its course, and your tools will strike at the right moment.”
Too many speculators, traders and investors are emotionally over invested in their ideas. In their mind their research is solid, their charts pointing higher and positive outcome is anticipated.
In fighting as in trading, anticipating particular outcome can lead one to get caught off guard at the most dangerous moment, when your opponent (the market) does something highly unpredictable, the ability to act in these moments requires ones to instantly apply the right tools, such as execute a stop loss on surprise negative news event, a tough psychological task when one is over anticipating a particular outcome.

“We must first understand ourselves in order to know anything and to understand and solve problems.”

As in the martial arts, trading starts with a battle with ourselves first and our opponent second. We must beat our fears, our insecurities and our emotional weaknesses, a speculator that does not understand himself is likely to have tough time applying the right tools of the craft.

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The Dow Jones Industrial Average (DJIA) is one of the popular futures trading vehicles and overall bell weather for the US economy. A change in structure takes effect Sept. 24: we have one in and one out.

I’d like to say out with the old, in with the new but there is a joke hidden here regarding the restructuring.

Leaving the DJIA is Kraft Foods Inc. and as its replacement we have UnitedHealth Group Inc.

Kraft have an average volume of 13,085,419 and a market capitalization of $70.92 B in comparison to UnitedHealth with 4,990,008 and $55.83 B respectively.

What’s interesting is what this may indicate about the areas considered most important to the US economy.

Kraft are a food company predominantly known for packaged foods.

UnitedHealth are a health and well-being company (one key component of the company being UnitedHealthcare Medicare & Retirement).

Now the joke at the beginning is that it may be out with the old and in with the new but UnitedHealth are banking on the old. So it is more a case of getting in with the old and the numerous ways a company like UnitedHealth can profit off the back of the unwell (dare I risk saying as a result of over-consumption of the exciting companies products) and the ever aging US population.

Out with the food and in with the old.

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