not a financial bubbles

In any decade,

one sector of the financial markets is usually dominant. There is one corner of the financial universe where so much new stuff is happening, and it is of such importance to the rest of the world, that it is far easier for a young, ambitious person to make their mark than anywhere else.
In the 1980s, it was mergers-and-acquisitions deals.
In the 1990s, it was the venture capitalist who backed technology companies, and the bankers who arranged initial public offerings for dot-com companies on the stock market.
In the 2000s, it was hedge funds, along with the derivatives traders that supplied them with products.
But in the 2010s, it will be currency trading.
There are already plenty of signs that the foreign-exchange markets are hotter than a sunny day on Venus.
Deutsche Bank AG reported last month that its currency- trading platform for retail investors had a 40 percent increase in customer numbers in 2009. Ordinary investors clearly see exchange trading as an area of the market they want to be in.
In London, which is the global currency-trading hub, strong growth is also evident. According to a Bank of England study, daily trading volumes rose 13 percent to $1.43 trillion in October compared with April last year. In the U.S., foreign- exchange trading volumes rose 28 percent to $675 billion a day in the six months ended in October, according to a Federal Reserve-affiliated study. Those are impressive numbers. The volume of London trading isn’t quite back to pre-credit crunch levels, but it is getting close.
Debt Crisis
There are several good reasons for expecting currency trading to be the focus for financial markets this decade.

First, the sovereign-debt crisis. Governments took on huge debt to combat the financial meltdown. That didn’t really fix the problem. It just shifted it from one place to another. Now there are doubts about whether nations can service their obligations. The only way the markets can discipline governments, or pass a verdict on their performance, is via the currency markets. However the crisis eventually works out, it is the foreign-exchange markets that will be in the driver’s seat.

Second, the dollar is in long-term decline. Regardless of how well the U.S. recovers, the rise of new economies such as China, Brazil and India means America won’t be the dominant force in the world that it once was. The result? The dollar’s special status is coming to an end. That may be a good thing after some intense volatility as the world adjusts. Again, it is currency traders who will be in control of that transition.

Third, the advent of new reserve currencies. With the dollar on the way down, the world will need something as a reliable store of value. There are plenty of candidates: It might be gold, an International Monetary Fund-sponsored basket of currencies, or a new world currency. Who knows, it could be something nobody has thought of yet. Ultimately it will be foreign-exchange traders who decide what works and what doesn’t. link

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BERLIN (Reuters) - A majority of Germans want debt-ridden Greece to be thrown out of the euro zone if necessary and more than two-thirds oppose handing Athens billions of euros in credit, a poll published on Sunday showed.

Vocal opposition to aid for Greece from members of Chancellor Angela Merkel's coalition also grew at the weekend with several senior politicians expressing skepticism, especially as Germany's own recovery is fragile.The Emnid poll for Bild am Sonntag newspaper showed 53 percent of Germans asked said the European Union should, if necessary, expel Greece from the euro zone.Athens has struggled to convince investors it is tackling its debt crisis and markets are nervous about a default.EU leaders discussed the issue last week and offered words of support but failed to outline concrete steps, further unsettling markets. Euro zone finance ministers are expected to discuss Greece again on Monday and Tuesday.Merkel has adopted a cautious stance on support, saying while Greece will not be left on its own, it is up to Athens to sort out its own problems.The poll also showed 67 percent of Germans did not want Germany and other EU states to give billions of euros in credit to Greece."If we start now, where do we stop?" Michael Fuchs, deputy head of Merkel's conservatives in parliament, told Welt am Sonntag newspaper."I can't explain to people on unemployment benefit that they won't get a cent more but Greeks can draw a pension at 63."In her first term, Merkel raised Germany's retirement age to 67 from 65 in an effort to rein in the deficit to meet EU goals.

RESISTANCE GROWING?

Merkel's coalition partners, the pro-business Free Democrats (FDP) are even more resistant to helping Greece."Solving this problem cannot be about aid for Greece," FDP budget expert Otto Fricke told Welt am Sonntag. "If anything, it's about keeping any damage away from German tax payers."Germany suffered its sharpest post-war recession last year and the upturn in Europe's biggest economy stalled in the fourth quarter, data showed on Friday.Such data fuels economists' warnings about helping Greece.Former European Central Bank chief economist Otmar Issing, who has played a leading role in advising Berlin during the credit crisis, said financial support for Greece from euro zone countries would be misguided."That is the way to the whole building subsiding," Issing told Welt am Sonntag, adding Greece had to take further steps itself, pointing in particular to the generous pension system.Harvard University economist Kenneth Rogoff even warned Germany could face similar problems to Greece."Germany's public finances are not on a sustainable path," Rogoff told Welt am Sonntag. "There will come a time when Germany will have its own Greece problem ... it won't be as bad as in Greece, but it will be painful," said Rogoff.Germany's budget deficit is forecast to grow to 5.5 percent of gross domestic product in 2010 and Merkel has vowed to consolidate the deficit as soon as the recovery allows.However Rogoff, a former International Monetary Fund chief economist, said helping Greece was unavoidable.
"As long as Germany isn't ready to kick Greece out of the euro zone, it must help," said Rogoff who also said an option would be for the Greek government to secure bridging credit. link

The European single currency is facing an 'inevitable break-up' a leading French bank claimed yesterday.Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide 'sticking plasters' to cover the deep- seated flaws in the eurozone bloc.The stark warning came as the euro slipped further on the currency markets and dire growth figures raised the prospect of a 'double-dip' recession in the embattled zone

The hard-hit 'Club Med' countries of Greece, Spain, Portugal and Italy once flourished within the eurozone. Now the financial markets have turned on Athens, and Greece's neighbours fear they could be next

For the past few weeks the question has been whether Germany will rescue Greece and the other floundering eurozone economies from their own excesses. The point at issue now may be more whether Germany will even be able to afford such an exercise. Europe's largest economy seems to be heading for a "double dip" recession – raising fresh doubts about Berlin's ability to finance any possible rescues for the so-called PIIGS – Portugal, Ireland, Italy, Greece and Spain – the eurozone states with the weakest public finances.

5 fatal flaws of trading

Close to ninety percent of all traders lose money. The remaining ten percent somehow manage to either break even or even turn a profit – and more importantly, do it consistently. How do they do that?
That’s an age-old question. While there is no magic formula, one of Elliott Wave International’s senior instructors Jeffrey Kennedy has identified five fundamental flaws that, in his opinion, stop most traders from being consistently successful. We don’t claim to have found The Holy Grail of trading here, but sometimes a single idea can change a person’s life. Maybe you’ll find one in Jeffrey’s take on trading? We sincerely hope so.
The following is an excerpt from Jeffrey Kennedy’s Trader’s Classroom Collection. For a limited time, Elliott Wave International is offering Jeffrey Kennedy’s report, How to Use Bar Patterns to Spot Trade Setups, free.
Why Do Traders Lose?
If you’ve been trading for a long time, you no doubt have felt that a monstrous, invisible hand sometimes reaches into your trading account and takes out money. It doesn’t seem to matter how many books you buy, how many seminars you attend or how many hours you spend analyzing price charts, you just can’t seem to prevent that invisible hand from depleting your trading account funds.
Which brings us to the question: Why do traders lose? Or maybe we should ask, ‘How do you stop the Hand?’ Whether you are a seasoned professional or just thinking about opening your first trading account, the ability to stop the Hand is proportional to how well you understand and overcome the Five Fatal Flaws of trading. For each fatal flaw represents a finger on the invisible hand that wreaks havoc with your trading account.

Fatal Flaw No. 1 – Lack of Methodology
If you aim to be a consistently successful trader, then you must have a defined trading methodology, which is simply a clear and concise way of looking at markets. Guessing or going by gut instinct won’t work over the long run. If you don’t have a defined trading methodology, then you don’t have a way to know what constitutes a buy or sell signal. Moreover, you can’t even consistently correctly identify the trend.
How to overcome this fatal flaw? Answer: Write down your methodology. Define in writing what your analytical tools are and, more importantly, how you use them. It doesn’t matter whether you use the Wave Principle, Point and Figure charts, Stochastics, RSI or a combination of all of the above. What does matter is that you actually take the effort to define it (i.e., what constitutes a buy, a sell, your trailing stop and instructions on exiting a position). And the best hint I can give you regarding developing a defined trading methodology is this: If you can’t fit it on the back of a business card, it’s probably too complicated.

Fatal Flaw No. 2 – Lack of Discipline
When you have clearly outlined and identified your trading methodology, then you must have the discipline to follow your system. A Lack of Discipline in this regard is the second fatal flaw. If the way you view a price chart or evaluate a potential trade setup is different from how you did it a month ago, then you have either not identified your methodology or you lack the discipline to follow the methodology you have identified. The formula for success is to consistently apply a proven methodology. So the best advice I can give you to overcome a lack of discipline is to define a trading methodology that works best for you and follow it religiously.

Fatal Flaw No. 3 – Unrealistic Expectations
Between you and me, nothing makes me angrier than those commercials that say something like, “…$5,000 properly positioned in Natural Gas can give you returns of over $40,000…” Advertisements like this are a disservice to the financial industry as a whole and end up costing uneducated investors a lot more than $5,000. In addition, they help to create the third fatal flaw: Unrealistic Expectations.
Yes, it is possible to experience above-average returns trading your own account. However, it’s difficult to do it without taking on above-average risk. So what is a realistic return to shoot for in your first year as a trader – 50%, 100%, 200%? Whoa, let’s rein in those unrealistic expectations. In my opinion, the goal for every trader their first year out should be not to lose money. In other words, shoot for a 0% return your first year. If you can manage that, then in year two, try to beat the Dow or the S&P. These goals may not be flashy but they are realistic, and if you can learn to live with them – and achieve them – you will fend off the Hand.
For a limited time, Elliott Wave International is offering Jeffrey Kennedy’s report, How to Use Bar Patterns to Spot Trade Setups, free.

Fatal Flaw No. 4 – Lack of Patience
The fourth finger of the invisible hand that robs your trading account is Lack of Patience. I forget where, but I once read that markets trend only 20% of the time, and, from my experience, I would say that this is an accurate statement. So think about it, the other 80% of the time the markets are not trending in one clear direction.
That may explain why I believe that for any given time frame, there are only two or three really good trading opportunities. For example, if you’re a long-term trader, there are typically only two or three compelling tradable moves in a market during any given year. Similarly, if you are a short-term trader, there are only two or three high-quality trade setups in a given week.
All too often, because trading is inherently exciting (and anything involving money usually is exciting), it’s easy to feel like you’re missing the party if you don’t trade a lot. As a result, you start taking trade setups of lesser and lesser quality and begin to over-trade.
How do you overcome this lack of patience? The advice I have found to be most valuable is to remind yourself that every week, there is another trade-of-the-year. In other words, don’t worry about missing an opportunity today, because there will be another one tomorrow, next week and next month … I promise.
I remember a line from a movie (either Sergeant York with Gary Cooper or The Patriot with Mel Gibson) in which one character gives advice to another on how to shoot a rifle: ‘Aim small, miss small.’ I offer the same advice in this new context. To aim small requires patience. So be patient, and you’ll miss small.”

Fatal Flaw No. 5 – Lack of Money Management
The final fatal flaw to overcome as a trader is a Lack of Money Management, and this topic deserves more than just a few paragraphs, because money management encompasses risk/reward analysis, probability of success and failure, protective stops and so much more. Even so, I would like to address the subject of money management with a focus on risk as a function of portfolio size.

Now the big boys (i.e., the professional traders) tend to limit their risk on any given position to 1% – 3% of their portfolio. If we apply this rule to ourselves, then for every $5,000 we have in our trading account, we can risk only $50-$150 on any given trade. Stocks might be a little different, but a $50 stop in Corn, which is one point, is simply too tight a stop, especially when the 10-day average trading range in Corn recently has been more than 10 points. A more plausible stop might be five points or 10, in which case, depending on what percentage of your total portfolio you want to risk, you would need an account size between $15,000 and $50,000.
Simply put, I believe that many traders begin to trade either under-funded or without sufficient capital in their trading account to trade the markets they choose to trade. And that doesn’t even address the size that they trade (i.e., multiple contracts).
To overcome this fatal flaw, let me expand on the logic from the ‘aim small, miss small’ movie line. If you have a small trading account, then trade small. You can accomplish this by trading fewer contracts, or trading e-mini contracts or even stocks. Bottom line, on your way to becoming a consistently successful trader, you must realize that one key is longevity. If your risk on any given position is relatively small, then you can weather the rough spots. Conversely, if you risk 25% of your portfolio on each trade, after four consecutive losers, you’re out all together.

Break the Hand’s Grip
Trading successfully is not easy. It’s hard work … damn hard. And if anyone leads you to believe otherwise, run the other way, and fast. But this hard work can be rewarding, above-average gains are possible and the sense of satisfaction one feels after a few nice trades is absolutely priceless. To get to that point, though, you must first break the fingers of the Hand that is holding you back and stealing money from your trading account. I can guarantee that if you attend to the five fatal flaws I’ve outlined, you won’t be caught red-handed stealing from your own account.

0210

When a true genius appears in the world, you may know him by this sign, that the dunces are all in confederacy against him.
Jonathan Swift (1667-1745)

Affairs are easier of entrance than of exit; and it is but common prudence to see our way out before we venture in.
Aesop (620 BC-560 BC)

Secret operations are essential in war; upon them the army relies to make its every move.
Sun Tzu (544 BC-496 BC)

Cy Charney suggests that the best executives are those who hire good people and then delegate. What duties to delegate? “Document your activities for a week. Divide tasks into two categories – those that you can do - those that can be delegated.” Delegated duties should include routine meetings and collecting data.

There's too much tendency to attribute to God the evils that man does of his own free will.
Agatha Christie (1890-1976)

Women leaders have an edge over male leaders, according to Caliper, a Princeton, N.J. consulting firm. Though women score lower on ego than men, they are more assertive and more persuasive, said Herb Greenberg, president and CEO: "When somebody tells a woman that she may not have what it takes to succeed, a woman will try harder, maybe to prove that person wrong."