Wednesday, July 13, 2011
Free special issue of Expiring Monthly
I wrote last month about the options journal Expiring Monthly. For those who like to sample before making a commitment, a special issue with highlights from volume one is now available for free download (and no form to fill out). Both Condor Options and Option Pit have the download link.
Tuesday, July 12, 2011
Bhuyan, The Esoteric Investor
If you’re bored with the standard investing vehicles and want to cast a wider net (pun intended), Vishaal B. Bhuyan’s The Esoteric Investor: Alternative Investments for Global Macro Investors (FT Press, 2011) has three suggestions: demographics, fish, and water.
The author’s specialty is longevity and mortality risk instruments such as life settlements, reverse mortgages, and longevity reinsurance. He edited Reverse Mortgages and Linked Securities, which I reviewed earlier. In The Esoteric Investor he writes about the so-called life markets in the context of the looming demographic crises, with Japan being the poster child for potential demographic disaster.
I was most intrigued, however, with the second part of the book on tuna. I remember being stunned when I read a while back that a 754-pound bluefin tuna had fetched a record $396,000 at the world’s largest wholesale fish market in Tokyo. That’s a whopping $525 a pound! Talk about tunamania!
I didn’t know how these bluefish tuna went from being mere glints in their mother’s eye (actually, a mature female lays millions of eggs over a period of months—and a good thing because it has been estimated that fewer than one in a million survives) to a very high-priced course at a top Tokyo or New York restaurant. Here’s how tuna fishing and fattening goes in Australia, the prime supplier of high-end tuna to Japan.
Southern bluefin tuna are born in Indonesian waters. “For the next eight years, they leisurely work their way around the west coast of Australia, crossing the Great Australian Bight en route to the east coast.” The best-case scenario is that they will circumnavigate Australia and return to their birthplace to spawn and begin the cycle anew. “But many will not make it that far. They will pass unscathed through Western Australian waters and the Great Australian Bight, but then they will find that their migration route has brought them into the perilous seas off South Australia, where boatloads of fishermen with nets are dedicated to keeping them from completing their instinct-inspired journey.” (p. 88)
After spotter pilots locate schools of tuna and radio their location to the waiting “chum boats,” the fishermen on these boats throw baitfish into the school, “causing the tuna to become excited and follow the boat.” Then “a net is shot around the school of fish and the chum boat. The spotter pilot overhead directs the boat out of the net just before it closes, leaving nothing but fish behind. The net is pursed around the school, perhaps thousands strong.” The trapped tuna are then transferred to a net cage, similar to a floating corral, which tows the fish to one or more of 150 pens off Port Lincoln. Each pen contains from 20 to 50 tons of fish.
“These tuna are a precious commodity—which is exactly the right term—and they are pampered and coddled to an extent that would embarrass a purebred Pekingese. Every day of the year, the bait boats make the 5-mile journey to the pens around 6 a.m. and then return to the Port Lincoln marina to pick up another consignment of baitfish to feed the penned tuna. At 2 in the afternoon, they do it again. Stehr Group feeds 60 tons of pilchards a day to their tuna; over the season that adds up to 5,500 tons.” (p. 86)
The tuna are kept in these fattening pens for several months until they are big enough to be slaughtered. No need to go into the gory details here. And then off to the Tsukiji tuna auctions.
Well, I obviously got hung up on tuna—and I didn’t even write anything about the problems of overfishing and other ecological concerns—and have neither time nor space to do justice to the book as a whole. Perhaps at a later date I’ll do another post on it because it is an intriguing book. Most of the investing opportunities are not for the retail investor (water being the exception), but they’re interesting to read about nonetheless. Maybe someday we’ll get a fish ETF or futures contract in the U.S.; Norway’s fish exchange (FISH Pool ASA) launched a salmon futures contract back in 2007 and traded over 100,000 tons in 2010. The ticker FISH isn’t taken yet.
The author’s specialty is longevity and mortality risk instruments such as life settlements, reverse mortgages, and longevity reinsurance. He edited Reverse Mortgages and Linked Securities, which I reviewed earlier. In The Esoteric Investor he writes about the so-called life markets in the context of the looming demographic crises, with Japan being the poster child for potential demographic disaster.
I was most intrigued, however, with the second part of the book on tuna. I remember being stunned when I read a while back that a 754-pound bluefin tuna had fetched a record $396,000 at the world’s largest wholesale fish market in Tokyo. That’s a whopping $525 a pound! Talk about tunamania!
I didn’t know how these bluefish tuna went from being mere glints in their mother’s eye (actually, a mature female lays millions of eggs over a period of months—and a good thing because it has been estimated that fewer than one in a million survives) to a very high-priced course at a top Tokyo or New York restaurant. Here’s how tuna fishing and fattening goes in Australia, the prime supplier of high-end tuna to Japan.
Southern bluefin tuna are born in Indonesian waters. “For the next eight years, they leisurely work their way around the west coast of Australia, crossing the Great Australian Bight en route to the east coast.” The best-case scenario is that they will circumnavigate Australia and return to their birthplace to spawn and begin the cycle anew. “But many will not make it that far. They will pass unscathed through Western Australian waters and the Great Australian Bight, but then they will find that their migration route has brought them into the perilous seas off South Australia, where boatloads of fishermen with nets are dedicated to keeping them from completing their instinct-inspired journey.” (p. 88)
After spotter pilots locate schools of tuna and radio their location to the waiting “chum boats,” the fishermen on these boats throw baitfish into the school, “causing the tuna to become excited and follow the boat.” Then “a net is shot around the school of fish and the chum boat. The spotter pilot overhead directs the boat out of the net just before it closes, leaving nothing but fish behind. The net is pursed around the school, perhaps thousands strong.” The trapped tuna are then transferred to a net cage, similar to a floating corral, which tows the fish to one or more of 150 pens off Port Lincoln. Each pen contains from 20 to 50 tons of fish.
“These tuna are a precious commodity—which is exactly the right term—and they are pampered and coddled to an extent that would embarrass a purebred Pekingese. Every day of the year, the bait boats make the 5-mile journey to the pens around 6 a.m. and then return to the Port Lincoln marina to pick up another consignment of baitfish to feed the penned tuna. At 2 in the afternoon, they do it again. Stehr Group feeds 60 tons of pilchards a day to their tuna; over the season that adds up to 5,500 tons.” (p. 86)
The tuna are kept in these fattening pens for several months until they are big enough to be slaughtered. No need to go into the gory details here. And then off to the Tsukiji tuna auctions.
Well, I obviously got hung up on tuna—and I didn’t even write anything about the problems of overfishing and other ecological concerns—and have neither time nor space to do justice to the book as a whole. Perhaps at a later date I’ll do another post on it because it is an intriguing book. Most of the investing opportunities are not for the retail investor (water being the exception), but they’re interesting to read about nonetheless. Maybe someday we’ll get a fish ETF or futures contract in the U.S.; Norway’s fish exchange (FISH Pool ASA) launched a salmon futures contract back in 2007 and traded over 100,000 tons in 2010. The ticker FISH isn’t taken yet.
Monday, July 11, 2011
Baiynd, The Trading Book
Anne-Marie Baiynd is a thoroughly engaging writer. The Trading Book: A Complete Solution to Mastering Technical Systems and Trading Psychology (McGraw-Hill, 2011) may not be the greatest thing since white bread, but it’s a darned good read.
As the subtitle indicates, the book moves between the nuts and bolts of a discretionary technical trading plan and—dare I go there?—the nuttiness of the unprofitable trader. She walks the reader through a series of trades that, in their full complexity, rely on analyzing candlesticks, moving averages, Fibs, and Bollinger bands. And she proves that one can actually describe trades in clear, cogent prose. The discretionary trader who uses some or all of these tools will learn their subtleties. The person who doesn’t know what tools to use will get a good sense of how to begin to structure trades, piece by piece.
In this review, however, I’ll focus on a couple of psychological takeaways from the book.
Let’s start with the trading journal—that thing that every trader knows he should keep and yet so few do. The author admits that initially she herself put the task of creating and using a trading journal on an “I’ll eventually get around to that” list. She writes: “I resisted the urge early on because it seemed like a lot of work that would actually interrupt my trading, then I resisted because I did not know what to write down, then because I felt a bit lazy, and then because the last thing I wanted to do was review horrifying trades to remind me about how bad I was.” Eventually she came to the realization that “what I had been doing had given me what I had gotten, and since I didn’t like the state I was in, writing a trading journal (as well as a lot of other changes) started looking really good to me.” (pp. 135-36)
She recalls that “the months of journal writings chronicling major defeat were gut-wrenchingly emotional, ramblings of a trader at her wits’ end, but every day I just kept coming back. About every six weeks, I’d break them out and read over the past trades, and though the queasy feeling stayed reading many of them, it was invaluable—like a road map in the dark and a chance to review actions with a mind no longer clouded by the emotions of that day. Reading my old trades and talking them out loud was critical to my advancement as a trader.” (p. 142)
One of the things that traders have to confront in their journals is the incredible difficulty of sticking to their system or plan. “Trading is a bit like this. We are playing a game where we have, let’s say, three doors from which to choose. Behind the first door is a man wearing a set of brass knuckles, and he’s waiting to deliver a shot to the face; the second door is our brokerage firm, which will take a transaction fee for simply opening then closing the door; and the third is a lovely knapsack full of Benjamins. Every time we open a door and close it, our items shift around between doors.” (And you thought we were simply dealing with the Monty Hall problem!) We have a system that is very reliable if well executed. So we put on our first trade, choosing door number one. We encounter “Knuckles”—definitely no fun. Our next trading signal sends us to door number one again. Do we really want to open that door again? Of course not. But we muster up the courage and open the door, unfortunately later than we should have—“and there’s Mr. Broker fleecing our pockets.” You get the picture.
Baiynd continues: “If we choose to day-trade or to swing-trade … , the scenario just described is a large measure of our daily existence, and how we fare has far more to do with our abilities to follow direction, address fear, and manage our exposure than any system out there.” (pp. 48-49)
Since we’re all to varying degrees flawed traders, reading some of the ways to confront our failings is an important first exercise. The Trading Book makes that exercise exceedingly palatable.
As the subtitle indicates, the book moves between the nuts and bolts of a discretionary technical trading plan and—dare I go there?—the nuttiness of the unprofitable trader. She walks the reader through a series of trades that, in their full complexity, rely on analyzing candlesticks, moving averages, Fibs, and Bollinger bands. And she proves that one can actually describe trades in clear, cogent prose. The discretionary trader who uses some or all of these tools will learn their subtleties. The person who doesn’t know what tools to use will get a good sense of how to begin to structure trades, piece by piece.
In this review, however, I’ll focus on a couple of psychological takeaways from the book.
Let’s start with the trading journal—that thing that every trader knows he should keep and yet so few do. The author admits that initially she herself put the task of creating and using a trading journal on an “I’ll eventually get around to that” list. She writes: “I resisted the urge early on because it seemed like a lot of work that would actually interrupt my trading, then I resisted because I did not know what to write down, then because I felt a bit lazy, and then because the last thing I wanted to do was review horrifying trades to remind me about how bad I was.” Eventually she came to the realization that “what I had been doing had given me what I had gotten, and since I didn’t like the state I was in, writing a trading journal (as well as a lot of other changes) started looking really good to me.” (pp. 135-36)
She recalls that “the months of journal writings chronicling major defeat were gut-wrenchingly emotional, ramblings of a trader at her wits’ end, but every day I just kept coming back. About every six weeks, I’d break them out and read over the past trades, and though the queasy feeling stayed reading many of them, it was invaluable—like a road map in the dark and a chance to review actions with a mind no longer clouded by the emotions of that day. Reading my old trades and talking them out loud was critical to my advancement as a trader.” (p. 142)
One of the things that traders have to confront in their journals is the incredible difficulty of sticking to their system or plan. “Trading is a bit like this. We are playing a game where we have, let’s say, three doors from which to choose. Behind the first door is a man wearing a set of brass knuckles, and he’s waiting to deliver a shot to the face; the second door is our brokerage firm, which will take a transaction fee for simply opening then closing the door; and the third is a lovely knapsack full of Benjamins. Every time we open a door and close it, our items shift around between doors.” (And you thought we were simply dealing with the Monty Hall problem!) We have a system that is very reliable if well executed. So we put on our first trade, choosing door number one. We encounter “Knuckles”—definitely no fun. Our next trading signal sends us to door number one again. Do we really want to open that door again? Of course not. But we muster up the courage and open the door, unfortunately later than we should have—“and there’s Mr. Broker fleecing our pockets.” You get the picture.
Baiynd continues: “If we choose to day-trade or to swing-trade … , the scenario just described is a large measure of our daily existence, and how we fare has far more to do with our abilities to follow direction, address fear, and manage our exposure than any system out there.” (pp. 48-49)
Since we’re all to varying degrees flawed traders, reading some of the ways to confront our failings is an important first exercise. The Trading Book makes that exercise exceedingly palatable.
Sunday, July 10, 2011
Happy birthday, blog
By the way, I found the image on Deborah Melmon’s blog, Deb’s Art—lots of amusing illustrations.
Friday, July 8, 2011
Covel, Trend Commandments
It’s time for a beach book, and Michael W. Covel’s Trend Commandments: Trading for Exceptional Returns (FT Press, 2011) fits the bill perfectly. The many, many “chapters” are bite-sized, and there are mighty few intellectual challenges to get in the reader’s way as he turns pages faster and faster. The thesis is familiar: trend following is the surest path to trading success. Very little how-to, lots of passion about trading and living an engaged, courageous life. And spiced up with swipes at the likes of Warren Buffett. As I said, a beach book—and therefore one that is difficult to review in a meaningful way.
So, instead, let me pull out three passages, not all Covel’s original ideas, that I think are worth quoting in part.
First, footnoted to Ed Seykota’s website but in Covel’s prose: “All trends are historical. None are in the present. There is no way to determine a current trend, or even define what current trend might mean. You can only determine historical trends. … [T]he only way to measure a now trend, one entirely in the moment of now, would be to take two points, both in the now and compute their difference.” (p. 39)
Second, on figuring out when to get out of a trade, compliments of Peter Borish: “You need a prenuptial agreement with the market.” (p. 75)
Finally, from the “chapter” on statistical thinking, “Trend following is about non-normality of market returns. You will never have, nor will you ever produce, returns that exhibit a normal distribution. You will never produce the mythologically consistent returns that many believe to exist. … Trend following’s alpha comes from letting winners run on the right-hand side of a fat tail and cutting losses short on the left-hand side. Eliminating losing positions and holding onto profitable positions puts you in the big game hunt for positive outliers. A normal distribution is simply worse than useless as a risk management tool.” (p. 137)
So, instead, let me pull out three passages, not all Covel’s original ideas, that I think are worth quoting in part.
First, footnoted to Ed Seykota’s website but in Covel’s prose: “All trends are historical. None are in the present. There is no way to determine a current trend, or even define what current trend might mean. You can only determine historical trends. … [T]he only way to measure a now trend, one entirely in the moment of now, would be to take two points, both in the now and compute their difference.” (p. 39)
Second, on figuring out when to get out of a trade, compliments of Peter Borish: “You need a prenuptial agreement with the market.” (p. 75)
Finally, from the “chapter” on statistical thinking, “Trend following is about non-normality of market returns. You will never have, nor will you ever produce, returns that exhibit a normal distribution. You will never produce the mythologically consistent returns that many believe to exist. … Trend following’s alpha comes from letting winners run on the right-hand side of a fat tail and cutting losses short on the left-hand side. Eliminating losing positions and holding onto profitable positions puts you in the big game hunt for positive outliers. A normal distribution is simply worse than useless as a risk management tool.” (p. 137)
Wednesday, July 6, 2011
Fischer, Trading with Charts for Absolute Returns
Robert Fischer, author of Fibonacci Applications and Strategies for Traders, The New Fibonacci Trader, and Candlesticks, Fibonacci, and Chart Pattern Trading Tools has a new book out: Trading with Charts for Absolute Returns (Wiley, 2011). In it he explains chart pattern recognition, especially Fibonacci and Elliott wave principles; trend channels and trend lines; and, his ultimate weapon, the PHI-ellipse. The PHI-ellipse must be computer generated and is available as part of Fischer’s Fibotrader software package (fibotrader.com). The software can be used free as long as the user is willing to import .ascii data manually.
Although the book clearly promotes the software package, it offers quite solid tips on how to work with support and resistance lines—and, among other things, use false breakouts to one’s advantage. The author identifies patterns such as support lines based on three valleys and a false breakout and its counterpart, resistance lines based on three peaks and a false breakout.
The PHI-ellipse is not a new trading tool (the author introduced it already in 2001), but it has taken Fischer time to develop trading rules based on it. So what is it? As you might imagine, it is an ellipse where “the ratio of the major axis divided by the minor axis of the ellipse is a member of the PHI series 0.618 – 1.000 – 1.618 – 2.618…. A circle, in this respect, is a special type of PHI-ellipse with a = b (ratio a:b = 1).” But, without tinkering with this ratio, there’s a problem. “PHI-ellipses with increasing ratios ex = a:b of major axis to minor axis turn very quickly into ‘Havana cigars’—and … become so narrow that they can hardly be applied to charts as an analytical tool. … To make PHI-ellipses work as tools for chart analysis, the mathematical formula that describes the shape of the ellipse is transformed. The ratio of the major axis a to the minor axis b of the ellipse is still under consideration, but in a different way—in mathematical terms, ex = (a:b)x.” (pp. 142-43)
What makes the PHI-ellipse so special? It is a trend-following trading tool designed to keep the investor in the trending market as long as possible. It integrates price and time into a single tool and can dynamically adjust to price moves. On the downside, it cannot be part of a fully automated trading system.
Fischer takes the reader through the best peak/valley structures for drawing the PHI-ellipse and offers rules for trade entries. And he, of course, directs the reader to the companion web site. The software is free to download for a 15-day trial; afterwards, if you don’t pony up the subscription fee, it turns into an .ascii-only data program.
Although the book clearly promotes the software package, it offers quite solid tips on how to work with support and resistance lines—and, among other things, use false breakouts to one’s advantage. The author identifies patterns such as support lines based on three valleys and a false breakout and its counterpart, resistance lines based on three peaks and a false breakout.
The PHI-ellipse is not a new trading tool (the author introduced it already in 2001), but it has taken Fischer time to develop trading rules based on it. So what is it? As you might imagine, it is an ellipse where “the ratio of the major axis divided by the minor axis of the ellipse is a member of the PHI series 0.618 – 1.000 – 1.618 – 2.618…. A circle, in this respect, is a special type of PHI-ellipse with a = b (ratio a:b = 1).” But, without tinkering with this ratio, there’s a problem. “PHI-ellipses with increasing ratios ex = a:b of major axis to minor axis turn very quickly into ‘Havana cigars’—and … become so narrow that they can hardly be applied to charts as an analytical tool. … To make PHI-ellipses work as tools for chart analysis, the mathematical formula that describes the shape of the ellipse is transformed. The ratio of the major axis a to the minor axis b of the ellipse is still under consideration, but in a different way—in mathematical terms, ex = (a:b)x.” (pp. 142-43)
What makes the PHI-ellipse so special? It is a trend-following trading tool designed to keep the investor in the trending market as long as possible. It integrates price and time into a single tool and can dynamically adjust to price moves. On the downside, it cannot be part of a fully automated trading system.
Fischer takes the reader through the best peak/valley structures for drawing the PHI-ellipse and offers rules for trade entries. And he, of course, directs the reader to the companion web site. The software is free to download for a 15-day trial; afterwards, if you don’t pony up the subscription fee, it turns into an .ascii-only data program.
Tuesday, July 5, 2011
Light, Taming the Beast
Larry Light’s Taming the Beast: Wall Street’s Imperfect Answers to Making Money (Wiley, 2011) is perfect summer reading fare. The author, a financial reporter and editor, is a skilled storyteller. In this book he explores a range of investment strategies and instruments, traces their development, and in the process profiles some of the best-known investors and academics.
He covers value investing (Benjamin Graham and Warren Buffett), stocks (Jeremy Siegel), indexes (John Bogle), bonds (Bill Gross), growth investing (Thomas Rowe Price), international investing (John Templeton), real estate (Donald Trump), alternatives, asset allocation, short selling (James Chanos), hedge funds (Alfred Winslow Jones and Steve Cohen), and behaviorism (Daniel Kahneman and his followers).
Light’s thesis is that “investing success does not come in one flavor” and that “the trick is to be sufficiently flexible to dip into any or all of [the approaches he describes], but by the same token, to know their limitations.” (p. 254) He does a good job of spelling out these limitations. Even for more experienced investors who are well aware of many of these limitations, Little’s prose is so quick-paced that the book should be read, not skimmed.
Take, for instance, the case of a $50 short gone bad. “Maybe XYZ’s rivals trip over themselves and the company’s management gets its act together. Amid joyous shouts on Wall Street, XYZ vaults to where the air is rare, hitting $100. Your broker will want you to put up more margin, often an extra 30 percent of the value. Worse, you have an unlimited liability. The damn XYZ stock could keep on levitating. The higher it flies, the more you are out of pocket to buy it back. For you, this is a real nightmare on Wall Street, with the broker playing the role of Freddy Krueger.” (p. 203)
Or take real estate, “a realm of cruel ironies.” Think back to the building frenzy in Dubai with the 2,717-foot-tall Burj Khalifa (its post-bailout name) viewed as the “crown jewel” of Dubai. Although this skyscraper was 90 percent sold, “other Dubai commercial structures stood forlorn. … That left the Burj as a massive mockery of the promise that real estate was a gift that kept giving forever.” (p. 140)
And, on a stroll down memory lane, think back to when Hillary Clinton “parlayed a $1,000 grubstake in cattle futures into $100,000 over 10 months. … When her trading success came to light in 1994, with the Clintons in the White House, there were dark mutterings that she must have cheated somehow. The editor of the Journal of Futures Markets was quoted as saying: ‘This is like buying ice skates one day, and entering the Olympics one day later.’ But no malfeasance was ever proved. Most likely, Hillary Clinton was preternaturally lucky.” (p. 169)
The cast of characters in this book is vividly described. “Known for his brightly colored bow tie and unorthodox enthusiasms” could refer only to Jim Rogers. And you may recall that Bill Gross “reacts to mistakes seriously. After a bad call on junk bonds, he took a sabbatical of several months to clear his head. His wife told the New York Times that he once recommended a Pimco fund to the owner of his local doughnut shop and, when it lagged for a while, ‘he could hardly go in the shop for his favorite coconut cake doughnut.’ “ (p. 97) I was surprised to read that he actually eats doughnuts.
All in all, Taming the Beast is a delight to read, especially in comparison to so many of its very dull competitors in the investing space.
He covers value investing (Benjamin Graham and Warren Buffett), stocks (Jeremy Siegel), indexes (John Bogle), bonds (Bill Gross), growth investing (Thomas Rowe Price), international investing (John Templeton), real estate (Donald Trump), alternatives, asset allocation, short selling (James Chanos), hedge funds (Alfred Winslow Jones and Steve Cohen), and behaviorism (Daniel Kahneman and his followers).
Light’s thesis is that “investing success does not come in one flavor” and that “the trick is to be sufficiently flexible to dip into any or all of [the approaches he describes], but by the same token, to know their limitations.” (p. 254) He does a good job of spelling out these limitations. Even for more experienced investors who are well aware of many of these limitations, Little’s prose is so quick-paced that the book should be read, not skimmed.
Take, for instance, the case of a $50 short gone bad. “Maybe XYZ’s rivals trip over themselves and the company’s management gets its act together. Amid joyous shouts on Wall Street, XYZ vaults to where the air is rare, hitting $100. Your broker will want you to put up more margin, often an extra 30 percent of the value. Worse, you have an unlimited liability. The damn XYZ stock could keep on levitating. The higher it flies, the more you are out of pocket to buy it back. For you, this is a real nightmare on Wall Street, with the broker playing the role of Freddy Krueger.” (p. 203)
Or take real estate, “a realm of cruel ironies.” Think back to the building frenzy in Dubai with the 2,717-foot-tall Burj Khalifa (its post-bailout name) viewed as the “crown jewel” of Dubai. Although this skyscraper was 90 percent sold, “other Dubai commercial structures stood forlorn. … That left the Burj as a massive mockery of the promise that real estate was a gift that kept giving forever.” (p. 140)
And, on a stroll down memory lane, think back to when Hillary Clinton “parlayed a $1,000 grubstake in cattle futures into $100,000 over 10 months. … When her trading success came to light in 1994, with the Clintons in the White House, there were dark mutterings that she must have cheated somehow. The editor of the Journal of Futures Markets was quoted as saying: ‘This is like buying ice skates one day, and entering the Olympics one day later.’ But no malfeasance was ever proved. Most likely, Hillary Clinton was preternaturally lucky.” (p. 169)
The cast of characters in this book is vividly described. “Known for his brightly colored bow tie and unorthodox enthusiasms” could refer only to Jim Rogers. And you may recall that Bill Gross “reacts to mistakes seriously. After a bad call on junk bonds, he took a sabbatical of several months to clear his head. His wife told the New York Times that he once recommended a Pimco fund to the owner of his local doughnut shop and, when it lagged for a while, ‘he could hardly go in the shop for his favorite coconut cake doughnut.’ “ (p. 97) I was surprised to read that he actually eats doughnuts.
All in all, Taming the Beast is a delight to read, especially in comparison to so many of its very dull competitors in the investing space.
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