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In many messages there is another thread. Did you know that the average
family has an outstanding credit card debt of 20 grand that is re-financed
as mortgage debt. and that families that have taken out these loans are
usually in greater debt than before. This study was done by Brittan
Associates in Atlanta.
Now banks and mortgage companies are killing each other to make second and
third mortgages. Well, we all talk about deflation..it there are any
problems with the economy watch the real estate bubble come tumbling down.
Well I know this is not an indicator that you can punch in...Tokyo and Hong
Kong had their real estate bubble. You cannot finance growth forever based
on debt. Watch Consumer confidence indicators for a clue of when the stock
market may be turning around. I am assuming we are still in a bull market.
And keep your eye interest rates. But you folksknew that!
It took a lot of guts for cpbow to speak up.
-----Original Message-----
From: Conrad Bowers <cpbow@xxxxxxxxxxxxx>
To: Trader J <editorial@xxxxxxxxxxxxx>
Cc: Omega List <omega-list@xxxxxxxxxx>
Date: Sunday, August 02, 1998 10:30 AM
Subject: Re: NUNS OF THE NFA
>Trader J wrote:
>>
>> By what right, by what moral code, by what standard of justice, do you
>> presume to regulate my freedom to act? The public good? Who is the
public?
>> Everyone but me?
>>
>>
>
>
> No one should prevent you from acting in any way that does not harm
>another. Nor prevent you from expressing your opinion, whether it be
>about the government or about corn.
>
> However, as soon as you choose to operate a business, you begin to
>operate in an arena that is governed by certain regulations. If someone
>is offering food for $, then he/she must follow health regulations. As
>one who works in a chemical related industry, I doubt I am permitted to
>sell industrial strength chemicals to the general public who has not had
>appropriate hazard-communication about how to not injure themselves with
>the chemical. (BTW, you want to see regulations, paperwork, etc.? - run
>an industry that uses and then must appropriately dispose of
>chemicals... but whats the alternative; without the regs., the chemicals
>would be in YOUR drinking water).
>
> Futures trading is risky. I started out with the Ken Roberts course
>which is pitched to small traders, even "struggling families" (taken
>from his tape). I didn't actually use KR's methods because I was
>concerned about a lack of a track record. Instead I subscribed to a
>signal service (Commodex). Commodex had a brochure which stated that
>they made about 100% per year on margin and showed a graph suggesting
>using 50% of acct. as margin in a full account. (In another piece of
>lit. they showed a portfolio using 33% of margin. I have to give them
>credit for that, but they did not really explain why you should only use
>this low a % for a small account) Elsewhere in their brochure they
>stated that their max. drawdown was 40% in 20 or 30 years of realtime
>trading. But this was for a port. of 30 or more commodities! I did not
>realize that trading just a few would likely not have as consistent
>results. So I figured i would pick a port. that would use about 60% of
>margin since they stated a max. dd of 40%.
>
> I had many educational and other debts (about 40K). So over the course
>of a few months i borrowed 20K (on credit cards!). I assumed that I
>would make about 40% per year and would be able to pay off both what I
>borrowed plus the old debts in just a few years. Well it didn't work
>that way. After following Commodex quite closely, the acct. was down
>80%. I never risked more than about 5% (one exception was one trade @
>10%). Commodex appeared to be making money, just not in the commodities
>I was following. I felt I had to stop and sure enough that was when the
>good trades came along in my portfolio. Commodex finished out the year
>in profits, I believe even in the limited portfolio.
>
> I have had several runups in my account since the first phases, but
>have not been able to recover permanently. As it stands now, the debts
>have already ruined my credit rating and I stand on the brink of
>bankruptcy. I am resisting that as a solution because i don't think
>its' responsible, but eventually one of my creditors may force me into
>it. Even if i recover, my credit is screwed for 7 years or so. Never
>mind buying a house. Interest rates on car loan would be sky high,
>etc. (My 84 car which barely runs now is yet another problem. It
>humiliates me every morning as i drive to work).
>
> I recognize that I made mistakes. But some of them were made because I
>had information that was incomplete or not adequately explained for
>someone unfamiliar with portfolios, drawdowns, etc. (I had never
>invested in anything but a CD before.) In my opinion, there needs to be
>a minimum level of risk disclosure in any material presented to the
>public and that needs to be set more complete and clearer than presently
>required. And yes, the NFA and/or CFTC should be involved (perhaps
>even writing a standard brochure *illustrating* the risks). They could
>also write standard definitions of how drawdowns should be calculated,
>etc. (none of this drawdown as a % of 10 years cumulative profit which
>i've seen occasionally). They could set a minimum, standardized
>performance data set that must be presented. In my view requiring
>registration with the NFA is not a bad idea. Not only does it provide
>them with funds to keep operating it lets them know who the vendors are.
>
> Believe me, I am not proud to submit this opinion because of what it
>says about me. But I feel strongly that the "free speech" advocates are
>in good measure off base here. **Yes, for the public good there needs
>to be regulation. And that starts with the regulating agencies knowing
>who you are.** Just like we have to get a permit to discharge our
>treated wastewater.
>
>P.s. While i think Ken Roberts material is extremely misleading, I
>don't want to be too hard on Commodex. I didnt' understand at the time
>about the need to use it but they post a trade by trade track record on
>their website (commodex.com). There are some real problems with what
>prices they use for entries and exits but using the dates provided you
>actually could construct what the results would be for your own accont.
>Given that its a report (hypothetical but without the benefit of
>hindsight- ie., not backtesting), it may be worth something. But I
>believe they, and all vendors recommending trading need to supply a
>*illustrative* chapter on risk management.
>
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