≈ I’m Lovin’ It. ≈
The financial markets still have enough place for creativity, for sure. Although most people like to shoot for the big gains while others love to shoot for modest ones in low-risk strategies, our day-to-day trading office can still be considered a fertile soil for experimentations. Until the machines take over, obviously.
In 1973, a 24-year-old kid graduated from Harvard Business School with an expertise in trading commodities. He worked for two years on Wall Street until he created his fund out of his own apartment in 1975.
At that time, this kid had two clients: McDonald’s and a chicken producer. The former wanted to add a chicken nugget to the menu. The latter was not able to hold the price of poultry still: high volatility was a killer during those years. If McDonald’s set a fixed menu price and the chicken price skyrocketed, margins would be squeezed in a way that could make the new menu item unviable.
In 1850, Frédéric Bastiat published an essay titled “Ce qu’on voit et ce qu’on ne voit pas”, “That Which We See and That Which We Do Not See” in English, commonly known as “The Parable of the Broken Window”.
The kid was bright and figured out a solution based on that which we do not see:
Full-grown chicken = Baby chick + Corn + Soymeal
The problem was not the price of the chicken, but the grains. The kid suggested combining them into a synthetic future contract that would hedge the producer’s exposure to price fluctuations.
The idea worked brilliantly and in 1983 the Chicken McNugget was created.
Ray Dalio was the name of the kid and Bridgewater was the name of the fund he created out of his own apartment.
Chart of the Day
Virus? What virus?
From: “The world is ending! The movie “Outbreak” is becoming a reality! SELL!!!!”
To: “Who cares? BUY!”
Video of the day
Trading Concept Check: Scoring the price chart
Scoring a price chart is an important part of qualifying technical price patterns, the general premise is simple: a technical analyst or technical trader studies the price action on the chart and (…)
Today’s line up
Tales of a Technician
Trading Earnings and the Amazon Problem
How about that Amazon earning gap! The more I analyze it, the more lessons I can find worth mentioning. As a precursor to today’s comments, I highly recommend reading “11 Things you Need To Know Before Trading Earnings.” It provides the backdrop needed to understand my analysis below fully.
Traders Lounge 11 PM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show Replay
If you missed last night’s episode where Coache Tyler Craig talked about Options to Enhance Stock Ownership or would like to watch it again, check it out here.
Bear Market Survival Guide MasterMind Group 8:30 PM EST
Owners of our premium system The Bear Market Survival Guide are invited to attend. System architect, Tyler Craig, will be showing how to apply the principles taught in the course. You will find the recordings to previous meetings below.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Trading Justice Podcast Episode 359: Is the Business Cycle Dead?
Is the traditional business cycle dead? In this episode, Matt, Tim, and Mark will discuss this idea, its flaws, and some of the economic history that brought us to this current place in today’s economy. Listen to the episode in the player below:
Financial freedom is a journey
The Tackle Today series is brought to you by Tackle Trading.
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
# Sign up now for a 15-DAY FREE TRIAL #
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
