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I know I will regret wading into this but having actually been decapitated by
the october 98 surprise rate cut I have to put my two cents worth in.
Specifically , back in 98 a mechanical model i had developed shorted the SPUS
30 seconds before the surprise rate cut. Took a 53 handle loss on a system
which normally risked 4 handles to make 10. Luckily i was trading one quarter
size other wise i would have been out of business.
It is not , IMHO, whether you were right or wrong in todays move. Someone
will always be on the correct and incorrect side of those moves when we are
talking futures.
The problem is that they are surprise announcements. My trading style for
example does not take a position before news , ie an FOMC meeting. So from a
fairness perspective it does seem inappropriate for the Fed to do these types
of things.
However I do not think that has any practical bearing on the situation other
than to realize that greenspan is not going to let the market tank and when
he intervenes he does so in a way that punishes shorts.
The other practical aspect to todays action speaks to the question of risk.
Just because you lucked out and were flat or long just before the surprise
has no bearing on what the future holds.
Dale
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