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Kent,
Thanks for the reasoned reply. I was probably cranky, but I don't like
being accused of lying and probably overreacted.
Now I should address a few of your points.
First, we've been talking about a newsletter or some such vehicle for a
couple of years (between my brother, my dad and myself). You can see just
how fast we've moved on it. :) Second, I was the one who wanted to do it,
since I felt that it would accelerate our capital accumulation. My original
thought was to set up a fund, where we charged a % of the profits as a fee
(no profits, no fees, period!). Somehow my brother got involved in sending
out that little family note to our relatives and a few friends. On one of
his last couple of trips to the Orient, he was approached by a couple of
clients and suppliers to provide them with our recommendations and he
refused to do that.
Maybe I should explain a little about our background so that you will
understand where we're coming from.
My dad was the President and CEO of a fairly large family business with
2,000 employees or so (I think). We owned the largest independent Tool &
Die company in the State of Michigan with over 250 Tool & Die Makers
(Congress Tool & Die). Our larger manufacturing division (Congress Die
Casting) was a major supplier to Chrysler, General Motors and Ford and our
Congress Drives Division was the largest manufacturer of pulleys in the US
(sold at Sears and supplied to other companies like Whirlpool). In
addition, we developed a product call Permawick (or Fluidwick) that replaced
all the felts used to lubricate fractional horsepower electric motors. This
product was a major improvement and is the reason today that you don't have
to oil most electric motors manufactured in the world. With a little
research, this can all be verified, but again I really don't care since I
lived it.
Our father was pressed into the family business when our grandfather had a
stroke. He had to leave the University of Michigan (they mailed him his
Diploma) to take over the business. He never wanted to go into the
business, but it was the Depression and he didn't have much choice with 5
brothers, a sister and an ill father at home (with our grandmother). I have
lots of tales about our grandfather, but lets just say he partied too much
(primarily with Henry Ford) and had a stroke before he was 60 years old. It
turns out this was caused by a genetic defect that caused the premature
demise of several members of our family, but that's another story. Anyway,
dad was always interested in futures and preferred them to the manufacturing
business and that's how my brother and I both got started with futures as
well. The family sold the businesses in the mid-50s (to ACME Precision, I
believe with Permawick going to Marty Abel) and retired. He's been retired
for the last 45 years doing nothing but working on commodity systems.
Now my younger brother has had a long, successful career in the
semiconductor industry and has been involved with a couple of start-ups, the
last one sold to Lucent. He still advises start-ups and has set up a rep
business marketing semiconductors. I think I posted that he was in Taiwan a
month or so ago. What I didn't say was that he was there with someone from
Palm checking out the manufacturing facilities. Subsequently, he signed
Palm as a major account (I think they buy $20mm a month, but I really don't
remember). He should make a bundle from his rep business. This is why he
refused to even consider getting involved in providing trading advice to his
customers in the Far East. You don't bite the hand that feeds you.
I have been involved with computers since graduation from college in 1961.
A stint with IBM, consulting with a Big '6' firm and CIO of a major ad
agency sort of rounded out my background. Since I was involved with
computers early on, we've used computers in developing our futures systems
beginning in 1961 (main frames) and we moved to minis and then to
microcomputers in the old CP/M days. We were several years ahead of Wall
Street with regards to using computer for research. I retired about 8 years
ago and do some consulting whenever the desire strikes me. I'm currently
CTO of a new Internet startup, but have decided to quit since it interferes
with my Mr. Mom duties. The real reason is because I sort of question
whether the huge block of stock is worth the time and effort, with the
NASDAQ collapsing. I may wait a month but I've fairly made up my mind, even
though I basically work from home and only go in 2 mornings a week.
Now our dad doesn't trade anymore, since he's more interested in the
calculations and developing new systems. At 91, he doesn't feel the need to
take the risks. My brother and I do all of our trading in addition to
working on the systems.
I guess what I'm trying to say, is that we have been fairly successful
without trading futures and that is why we have been able to recover
financially from our 40+ years of poor money management. We've always been
able to finance our own reentry into the game. We have fairly substantial
incomes without trading futures. We're not rich, but we're comfortable.
Now as I said earlier, I brought up the possibility of setting up a fund
several years ago, since that would enable us to shortcut saving the capital
ourselves. I probably came up with that idea after a big loss. :) Since
then, the application of money management has really eliminated any need to
follow up with it. My friend, John Bollinger, is the one who talked me out
of moving ahead with the fund approach (John lives a couple of blocks away
and his daughter and my son went to preschool together) and runs a fund
himself.
Since then, we started thinking about a newsletter, but as you can see from
the speed with which we move, nothing has happened here either, and there's
no urgency.
Your point about a futures trading account is quite correct. My logic in
setting up a fund was to enable us to raise the equivalent of $500k rather
than saving it ourselves. Since we're now well beyond that number, any
requirement has been eliminated. The only thing left is EGO. At our
current pace, we're still planning on setting up a web site but who know how
long this will take since it's not a high priority. Once that's done, my
thought is to provide the service via an Internet newsletter for free for a
period of time while we get a feel for what's involved in running an
Internet newsletter. At that point, we'll have to determine whether we want
to continue and what to charge. If there's no demand, the site will quietly
go away. We might just give it to our kids and let them run it.
We have over 400,000 man-hours invested in developing our trading system and
thousands of hours of computer time over the last 40 years. We have also
been around for a long time, and have never seen a profitable system
publicized. Either the system quit working (Williams and his Silver System
comes to mind) or it died slowly over the next 6 months (my paranoia can
suggests possible reasons for this). And finally, we have to address the
big question. If the system is so good, why sell it? That's exactly the
question that keeps coming up in our own conversations and that's exactly
the reason why we've been so slow moving in the direction of a web site or
Internet newsletter or a fund. Will any of them happen, I really can't say.
If we keep making these trades, we might never go public.
Guy
Paranoia...you only have to be right once to make it all worthwhile!
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of Kent Rollins
Sent: Wednesday, May 31, 2000 9:13 PM
To: metastock@xxxxxxxxxxxxx
Subject: Re: [OT] WARNING
I think Mark was just trying to provide a warning for those who might not be
aware that one might be needed. I'm not saying one is needed *in this
case*, I take Guy at his word. I've been following him for about a year now
and I've seen him go thru learning money management and repeatedly admit
that he's busted his trading account many times. I feel that Guy has been
very consistent in the time that I've been reading his posts and take him
for who he says he is. Guy, if you are chumming the waters, my hat is off
to you because it has been a masterfully convincing job over the months. :)
I am assuming that this list is like the Omega list in that it is like and
iceberg: 90% of the people on the list lurk and never post. JimO who runs
the Omega list says there are over 1000 people subscribed and there are only
about 20-30 people who post regularly. The others are the masses of people
who blow out their accounts in a few months' time. They come and go and no
one ever knows they were here. And in an industry where every single player
HAS TO HAVE a large, liquid, easily accessible pile of cash. If you have a
$100,000 account, that is considered small in the trading business. Think
about that. $100,000 is not a lot of trading capital. If you say to the
average Joe on the street, "My trading account is ONLY $100K.", they would
look at you like you were nuts. Say that to a fellow trader and they'll say
"Yeah, I know what you mean."
In the Gold Rush in the the 1800's, it was the people who sold the "picks
and shovels" who made the easy money with no risk. Some of them were honest
pick and shovel vendors, some weren't. Here, the pick and shovel vendors
are the Equis', Omega's, Motley Fools', Quote.com's, and "trading signal"
vendors. I pay about $550 a month for 2 realtime datafeeds. The only bill
I pay that is more than that is on my mortgage. I paid Omega $200 a month
for a year to buy their software. If you're a scammer out there looking to
skim a few bucks with a bogus con, there are hundreds of new people trading
each month, replacing the hundreds who blew out last month, and the fresh
meat hasn't learned that there isn't a holy grail. If you can show them The
Way, they will gladly pay you $50 a month until they blow out or figure out
you're a scammer or get disgusted with your lousy advice. I fell for the
Omega commercials: "All you need is a trading signal."
Mark's warning was harsh. But it got attention. If you knew that you
shouldn't believe that Guy can make you 50% a year, then you've been around
long enough to know the way things work. There are a lot of people who
haven't been around that long and won't be around long enough to learn that
lesson. And I believe they are the ones who Mark intended the message for.
I have been on the Omega list for almost 2 years now and I have come to
respect Mark's opinions. He claims to have been in the business for over 20
years and I take him, like I take Guy, at his word. I have seen Mark take
on seemingly the whole Omega list at times, and I have seen some extremely
kind and generous things said about him. Some of Mark's posts concern some
of those esoteric things that only veterans in an industry ever realize,
much less verbalize. The warning was on one of the more concrete things in
trading.
When people on this list complain that Guy and Jim talk about too much
personal stuff, you know the 2 of them are comfortable on this list. I'm
comfortable on this list, also. And I think it is in that spirit of comfort
that Guy discusses potential returns of his system. Guy also comfortably
discusses the fact that he might start a website where people could
subscribe and get the signals from his system. The fresh meat, the ones who
never post and won't be here much longer might take those 2 pieces of
information and stumble across a website like the one I recently got spammed
for and say "Well, here's another Guy Tann. I have a $100,000 futures
account and he can make me 50% a year and he only wants $250 a month and I
will only have to place trades based on EOD data so I can drop my 2 realtime
datafeeds and save $300 a month." A few months later, they have a $5,000
futures account. That story is being played out by hundreds of people
across the country right now and they don't even know it. Some of them
won't even know it after they've gotten the margin call.
Guy, if you're the kind of guy I think you are, you don't want to mislead
people. You've said that you want to start a website for subscribers. If
you do, you will have to post certain disclaimers. Why not start now? It
could be as simple as inserting something like "unaudited" everytime you
quote your system's accuracy or you could write up a simple disclaimer for
your sig. Are you legally obligated? Maybe not. Morally?
And since I took the time to write all this crap, I'm going to ask the
question that everyone should ask when they flip thru the ads in Futures mag
or click their way thru cyberspace: why would you, Guy, take a good system
like yours, now that you have the money management down, and a sizeable
trading account, and go thru the hassle of setting up a website and dealing
with subscribers who you will either have to charge a good chunk of change
per subscriber (in which case they will expect more attention) or have to
have a lot subscribers (in which case there will be the a large number of
people who shouldn't be trading in the first place and they will do it
incorrectly and some of them will call you with threats that you would be
concerned about, I've seen it happen)?
Kent
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