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| A good question. A decent reply requires more explanation than just a few words. I'll keep this to a few words. In the 50's through about 1966 traders & commercials were more atune to fundamentals; except technicians (bar charts, trend lines, %R & cycles) were present. There existed a core crowd very familiar with agriculture & marketing (keep in mind there were CBOT member-families who'd been part of the exchange for generations)-there was sort of an esprit de corps-tradition. Grain markets were overwhelmed with supply, government programs & the markets were akin to 'watching paint dry.' Two CME firms began to grow in those days with branch offices throughout the midwest & those offices included 'squawk boxes' allowing folks to 'hear the action' -so to speak. These two firms were directed by owners very familiar with and experienced in cattle & hogs. The CME crowd could be described as a young, aggressive bunch, with white hats, rolling into Dodge City...a group which fed on risk. The boys over at the CBOT would be best described as the senior elders 'in charge of Dodge City, also with white hats, but standing as a group in front of City Hall & the Church & in a mindset of 'mild shock' about these upstarts with all their 'fancy ideas.'
I was fortunate to know a few of these old timers in the cattle business, mostly located in NW Ia, Nebraska, Kansas & Texas. These boys enjoyed deep experience in the cattle business, deep money and absolutely no fear of risk. There were quite a few limit-position traders amongst some of those old cattle names. Imagine for a moment about attending a fat cattle auction & gathering a group of those guys in the coffee shop to show them your Elliott Wave charts!! 50 to 80 year old boys capable of writing very big checks and while they would be too polite to laugh -there would have been an element of skepticism. As a broker building a big business, I studied charts in private & in-depth fundamentals in public. These old cattlemen watched range conditions, grain price prospects, genetics, & in retrospect were pretty darn sharp as they attempted to look at everything & if you were going to trade with them, you needed to know 'your stuff.' They could separate the wheat from the chaff after just a few words. It was a unique crowd. Some were teetotalers & amongst a few of those were the occasional small town poker games of a size to see the occasional farm or ranch trade hands. Some were hard driving whiskey drinkers willing to take you to the edge. I recall walking out of a high dollar Phoenix restaurant with a fellow who was perhaps the largest cattle feeder in the USA at that time...a Nebraska lad. I noted he 'jingled' as we left & when we jumped into the cab, I discovered his suit pockets were full of silverware with the idea to 'see if he could get by with it.' The risk & potential of commodities has a 'draw influence.' I recall a fellow from England walked in one morning, about 1976, wanting to speculate & after working up a few ideas for him...the position limits were too low for his appetite, so in addition to futures I got him involved in buying, storing & selling meat products. As a simple farm youth, I was always amazed at to the amount of money some folks possess for risk-taking purposes.
Commodity funds in those days walked a rocky path. Markets evolve and adapt. When the two metals boys tried the soybean squeeze (they forgot that at that time there were more RollsRoyces parked in the CBOT garage than anywhere else on earth) & they soon learned grains trade differently than metal.
Various systems traders came into play, which whetted the appetites of the hard core traders...most of those fell into disarray as the market learned to fade those systems...Capitalism=separating $$ from the careless ..speculating in futures has always been a 'money separating process' (some folks dislike for me to say that), but let's face it...the truth is (in my opinion), it's a money game. Commissions add up to a large number & clearing fees & etc. Sort of like a 'shearing' activity. Swing & and out of the market & stop losses & minor trend lines & etc.....the fees soon eat into the nest egg requiring some New Blood.
Today, there still exist big fund managers who are fundamentalists. Their problem? Selecting markets into which they can get in and out without running the market up or down on themselves. The computer platforms are more fair in a sense to the general public but each market is a bit different & in addition to watching the technical side for possible highs & lows, it is also necessary to anticipate where are the 'trigger points' for the funds--you cannot stand in front of them until they have their package filled.
Funds don't upset me too much (usually) as it's still the same old story: once you are in the market with your money...how do you get out? The larger you trade, the bigger the challenge to 'get out gracefully' ...reminding myself...I've experienced a few 'very ungraceful' exits & had one in the early days which was, downright humiliating.
I should add, again in my opinion, there is trading & then there is trading. Most good traders I have known experienced a major train wreck early. When the marketplace, because of your actions, removes all of your money, because of a careless act, it is an emotion difficult to explain. Particularly if you have a family to feed and clothe. You either build on it, or walk away or look for a bridge. One of my long term friends, because of an error when he was a runner at the CME (made $300K on his error-intended to buy one contract--inadvertently (communication & too many fingers) bought a bunch--& his clearing member boss margined it for him) from which he built an empire....he was one of the rare birds who seemed to have a golden touch.
Edited by SeniorCitizen 4/10/2010 04:09
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Question for Senior
