Monday, April 13, 2009

Rehashing the Future

in this morning's newsletter I quoted some criticism that a reader (former reader actually, as he decided not to renew his subscription) had of my service. the gist of his complaint was that he felt I "spend way too much time rehashing good calls [I]'ve made in the past."

so I responded to him by saying, "if you can reference a couple instances of my rehashing simply for rehashing sake in the reports (ie bragging without any context to current outlook), I'll give you a free month's subscription. perhaps I can reform myself."

anyway, I also made that offer to all the other subscribers of the newsletter. furthermore I spent this morning's entire letter contemplating whether I was guilty of this sin, and if so, in what way.

although no-one so far has taken me up on the challenge to get a free month, I did get several emails from readers about the structure and content of the newsletter service. while each note is worth addressing, I do not want to waste any more space in the newsletter itself on this stuff, as we do have important business to take care of. so I will post the responses from readers here on the blog.

we start with a note from Mr P:

Dear Kyle

I would have felt no need to reply except I thought your letter this morning invited it.

I would say

1) I have no criticism at all of you "rehashing" and what you say of reappraising is surely right. (By the way I also thought you very lucid about markets being derivative and catalysing turning points).

2) I value your scepticism about gold - having been involved all the way from 2000 I do not need anymore (even good) bullish analysis.

3) I am increasingly interested in currencies to park a large cash component and I wonder whether these may give the tell from when we are going to move from deflation to inflation (perhaps many many months to go).
If I had any criticism it is that I would have liked you to have followed up more on this - and the NZD in particular so please put it in your indexes. NZD left the station almost at the same time as you first mentioned it and so far there has been no retest. If agriculture generally gets more separate from other commodities you would have thought it might seriously decouple from the AUD. As I suspect bank failures have still to worsen in the months ahead a country which really has a less vulnerable banking system would be a haven indeed.

4) It must be a great strain to write every day but it is much appreciated. I am terrible about remembering whether such and such a subscription renews automatically or otherwise. I would certainly like to continue to receive your work.

With thanks

heck, it must be quite a strain to read my stuff everyday too! but your interest in my work is much appreciated from my end.

after this correction plays out, I'll be more bullish on Gold than anyone. the more closely it follows my script in the near-term, the higher it will fly later on.

Also, I will accommodate your interest in the New Zealand Dollar the best I can in the near future. it is frustrating for both of us how NZD has been on a one way track the last few weeks. whether it can keep moving like this is uncertain.

next up is a note from Ms F:

Good morning, Lucas.

I'm hoping I might serve you by chiming in from the bleachers in response to today's Letter.

you spend way too
> much time rehashing good calls you've made in the past. I was hoping you
> would concentrate more on the future & the related probabilities

The moment I read J's humble opinion, the voice in my head said 'rehashing good calls? bullshit'. Indeed, tho', given the offer of a free month, I wish you were guilty as opined, as I would be working on the documentation now...

But, given J's stated hoping you would concentrate more on the future & the related probabilities, I presume to suggest that J wants you to direct him to the holy grail; he wants high probability trades.

Lucas, instead of focusing on the unsubstantiable allegation about purposeless rehashing, I suggest that you recognize J's apparent disappointment about your failure to deliver high probability trades, which I do not recall your serving up in your blog which preceded your newsletter (at least during the period when I read it).

Lucas, let it go. Just do what you do and be your authentic self; and don't worry about my or anyone else's expectations. There will be some of us with whom you strike a chord; and many others to whom you will have no appeal.

I have told you before why I read you...I want to learn from you...a student here...Lucas, I can truthfully say that I have not read a single Letter which the voice in my head has adjudged a waste of time. How's that? I've experienced lots of bewilderment and wtf moments and delight about your elegance and brilliance and amusement about and empathy for your struggle sometimes to show up... and for me, the time spent with your Letter has always been worthwhile.

Lucas, just another presumptuous view from an appreciative reader...


you are probably right that J wanted more in the way of explicit trades. that's understandable, I suppose. there are opportunities to trade based on my analysis but the Letters are not currently focused on frequently recommending specific positions. if people just want explicit trade recommendations and nothing else then that could be arranged, but that would require a different format for the service. but it has occurred to me over time that actively trading (ie day- or swing-trading) based on another person's recommendations is a recipe for failure. for one, there is the issue of getting the information out to the readers in a timely manner. and two, I just don't see how anyone could be successful trading "another man's game" like that. even if the recs are spot on, the fact they are acquired 'secondhand' would make it difficult to properly exploit the opportunities, as the all-important aspect of self-belief is missing from the equation.

here is an email response from Dr C:

Hi Kyle,

You know my abilities better than I know my own, so you know my strengths and limitations. That said, it would never have occurred to me to make the remark that your reader made, and I can not identify with it at all. On the contrary, your take on the markets is completely new and thought provoking to me. I am thinking especially of all the ratios that you emphasize. That is completely new to me and instructive. Though I must admit as a practical matter, I have no idea what to do with ratios, i.e., how to set up a trade that takes advantage of them. That might be worth spelling out. But I read your letter every day with pleasure and in the spirit of learning something new.

Also, does anybody realize that you put that letter out EVERY DAY?! Holy shit. That is an enormous commitment and service. Your offer to adjust to what the readers want is sensible within reason, but in my book you are doing an excellent job.

Sorry I couldn't be more help with that Padovian physics article. The Abstract is supposed to be a concise summary of the content of the article. If it was, I did not get it. Perhaps it is a Chinese style. Or perhaps it does not contain major content. I can't tell from the Abstract.

Rock on,

I will give a tutorial on trading price ratios in the near future. thank you for that suggestion.

and finally some comments from Mr R, who I have Known longer than most of my other readers, as he was a client of mine back when I was a precious metals broker.

Some thoughts so far.
I am in it for the long run as I do enjoy your writing. However, if you are serious about having this a long term subscription base, I'd suggest stop some of the funny and swearing stuff. I personally I don't care and even enjoy it, but if you are to succeed you need to be a bit more professional.

People buy these type of subscriptions to make money and few more recommendations other than Forex type probably are appropriate. Only a very small part of the population is interested or cares about $ trades.

Maybe too many charts. I suggest cutting back and EXPLAINING better what that means, to you the investor, and what you should look at buying to take advantage of what the chart signals.

Have a chart of a few key recommendations and the track record. Then it is always there to see as part of the report, but you have to say nothing.


you may have a point about the swearing, so I'll see about toning it down. but the funny stays. when I lose the ability to make myself and my clients chuckle a few times a week, then I'm out of this business.

I analyze and make recommendations based on what I am interested in, and what I am good at. I spent a long time coming up with the currency trade in question and I have a lot of confidence in it. if people aren't interested in this one, then they can be patient until something else comes up in the markets that I feel has a similarly high probability of success. there are many ways to invest/speculate, but my preferred way is to take action on a few well considered opportunities a year. this currency trade is one of them. later in the year I may see a great opportunity in Metals, or Bonds or whatever. but when I look at the current dynamics of the foreign exchange I see opportunity.

and it may be that more people are interested in currencies than you would think. over half my business comes from people outside the United States, so perhaps the rest of the world has relatively more interest in currency market conditions than Americans do.

I too often feel that I rely too much on the charts. but since I primarily analyze the markets with a 'data first' approach, the charts are necessary. I assure that examining market data is more profitable than reading the news. but I will make a greater effort to explain what I see in the charts in the future.

when I first started the service I kept up 'model portfolios' for stocks, futures and forex. it was a huge pain in the ass. so about a month into it I stopped that, and basically told the readership that they are the investors/traders, not me. I'm just yer analyst. on the one hand that put more responsibility on the subscriber to interpret my work, but on the other hand it has freed me up to do my job, namely analyze the markets.

but there may be a middle route between keeping up full model portfolios and doing nothing at all. I'll give it some thought.

that's it! now I got to get to work on rehashing the future for y'all yet again.