The Trend is Your Friend.......

It has been a somewhat slow summer, so I decided a few weeks back to re-read (or read in some cases) a few "classic" trading texts. To determine which books I should read, I go by some of the reading lists at Amazon (i.e. "Top Ten Trading Books) or book recommendations of other traders. I look for the common denominators, those books that end up on the most lists. I discovered this slim text on many of the lists, so I decided to read it for the first time. It reminded me time and again of some very basic, and important trading tools.

Richard D. Wyckoff wrote this book between 1932-1933. It began as a series of articles in a leading financial magazine. The book is a series of lists, axioms, and how-to articles. Here are just a few basic principles behind Wyckoff's method:

1. Determine the overall trend of the market. Markets trend up, down and sideways. Buy into the direction of the market.
   
2. Of the following: what stock to buy, why to buy a stock, or when to buy a stock - when rules, timing trumps all!
3. Always protect yourself using stop losses one or two points away (depending on price of course.....)
4. Let your winners run and close out losses IMMEDIATELY. Why settle for 3 point profits and 30 point losses......
5. Riding a dead horse, switch to a live one. Or, long in a bear market, then get out and get short!
6. Observe which side, the bulls or bears, possess the greatest power and go with that side.
7. Abandon the idea of making money from news-driven events (i.e. earnings reports).
8. A weakening market means some market movers have sold considerably more than others are willing to buy.
9. Always keep your risk acceptable.
10. The night before the market opens, read about the 100 most active stocks of the that day, then decide which will move the soonest, the fastest, the farthest, and in which direction the move will occur.
11. Systematically control profits in excess of your losses.
    

Wyckoff's emphasis on trends is understandable. By 1932-33, many people had seen their entire savings wiped out by selling into the greatest financial panic of all time. Wyckoff, and many other savvy traders, were only too happy to buy stocks at rock-bottom prices, and hold them until the prices had recovered. Does this scenario sound familiar? We are in the middle of downward-moving market, with no bottom in sight. Wyckoff's book offers some very important lessons for these volatile times.

The Boys Are Back in Town......

I don't watch SNL too much these days. I once viewed it pretty religiously, but I got older, and SNL has always skewed demographically towards an 18-30 male demographic. A couple of weeks ago, I was hanging out with my nephew on a saturday night and SNL came on so we watched it. Ashley Ketchup was the guest host. Apparently he is a young actor, graced with some comedic talent. Plus, I hear he is married to an older actress of some renown, Demi Glaze. Anyway...we were chatting, hanging out....until Gnarls Barkley came out and sang "Run". The group completely re-energized the show, which had been lackluster until that point! When I stopped watching SNL many moons ago, there were very few bands that could come out and change the entire tenor of the show with their performances. One was Neil Young, who sang "Keep on Rocking in the Free World" in 1989. Another was the late, great Roy Orbison. He came out and had the entire audience under his gaze when he sang "Crying" with Dennis Hopper as guest host. Of course there have been others. Elvis Costello during the second or third season, when he changed his playlist at the last minute, Gil Scott Heron, Patti Smith, Nirvana, David Bowie. But it seems these days, when you have people like Ashley Simpson performing.....well, you understand. I am nostalgic, and nostalgia is nothing but melancholic by nature.......

The Man in the Grey Flannel Iron Mask.....

What, me worry??





Robert Downey Jr. was box office poison for a few years. I remember when he ws facing yet another drug charge a few years ago (cocaine and heroin...that old chestnut...) and the court of popular opinion seemed to be, "Let him rot in jail for awhile, maybe that will teach him a lesson...." Well, I hate the court of popular opinion and it's great to see it proved WRONG once again! Downey Jr. is a really fine actor, one of a handful of actors who are not over-hyped to within an inch of their lives, and that makes him ready for........the man in the iron mask. You really have to tip your hat to him, he has come a long way in the last ten years.

It was very smart to cast him as Tony Stark. The guy is a lot like Toby Maguire; both are excellent actors, and both wear their hearts on their sleeves. However, Downey is dangerous. He has a side to him, like a young Albert Finney or Richard Harris. Without him as the film's center, without his insouciant sideways smile and sardonic grin, the movie would be just another blow-em-up-over-the-top Hollywood spectacle. But the movie is good.....quite good in fact.

Downey's soul now belongs to the studios, at least for the forseeable future. I am sure he is contractually obligated to do Iron Man 2, 3, 4 and 5. I attended an opening day screening at a theatre in lower Manhattan and most shows that day were sold out. it will undoubtedly be the number one box office attraction until the next BATMAN installment comes around. If Downey has another fall from grace during the upcoming years, and I really hope he doesn't, it will be very interesting to note public reaction now that he represents a franchise.

Truly, madly, deeply......

LUST, CAUTION is a lovely film from Ang Lee (The Ice Storm and Crouching Tiger, Hidden Dragon). Lee is a genius at mining the very individual, personal, and emotional devastation of characters. Usually these characters are operating against a background of political upheaval or unrest. Intimacy becomes impossible. As their personal selves become obliterated, they develop a shared bond with another person struggling against similar forces. In The Ice Storm, a group of adults drink to much, they have affairs, and they completely abandon their children. The children resort to drugs, alcohol, random sex, and acts of deliberate cruelty. All this ensues with Watergate unfolding in the background. Remember when the young boy and girl (Christina Ricci and Elijah Woods) decide to have sex while Ricci's character dons a Richard Nixon mask......

LUST, CAUTION is set during a different turbulent period, the Japanese occupation of China during World War II. The two people at the center of the storm are a high-ranking Chinese party official named Mr. Yee, played by the incomparable and fearless actor, Tony Leung. Leung is fast becoming one of those international actors that doesn't really have to do anything......you know everything there is to know just by looking at his face. There is a silence, a quietness there that is just devastating to watch. He is like a young Max Von Sydow or Takashi Shimura. This guy could not register a false note if he tried. Wei Lang plays a young woman who is enlisted by a group of militant Chinese actors, in order to infiltrate the ranks of the newly formed Japanese/Chinese coalition.

A lot has been written about the graphic sexuality of the movie and it is plentiful, acrobatic, and really well-done. Sex is control, or a release from being controlled, or a reversal of the master/slave roles. Both Tony Leung and and Wei Lang are absolutely fearless actors, more so when they are completely naked to each other. There is something touching when Leung's character slowly begins to let his guard down. He slowly begins to trust once again. There are no masks when they lie next to each other, completely spent after another intimate moment. This movie is has a terrific ensemble of supporting actors. Especially wonderful is Joan Chen as Mr. Yee's long suffering, manipulative wife. Watch the scenes where the women play Mah Jong. The women's comments about society, and themselves is absolutely great dialog.