Moral Condemnation for Traders

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In the recent copy of Golf Digest, sitting on the coffee table in your editor’s hotel room, we happened on a two page ad for the SPDR Gold Exchange Traded Fund. It’s a pretty add, with lots of gold in it. The headline says, “Gold has a reputation for preserving wealth. Then again, we’re only going back 5,000 years.”

There must be a lot of rich golfers out there. Gold made a new high when the December futures contract traded at $1,273.20. Maybe more investors are using gold as a hedge against bad monetary policy. Or maybe they just like bright shiny things.

It will take a weaker Aussie dollar for the Aussie gold price to match the move in USD gold. But in the latest issue of Australian Wealth Gameplan we published last week, Murray wrote an article on the strength of the Aussie dollar and the future of the gold price.

He said that he was, “Skeptical of this strength continuing in the short term and am waiting for a failure under 89c to return to a bearish stance on the AUD. If this were to occur then we would see the AUD price of gold rallying.

“Therefore we seem to be approaching a time when all the moons are aligning for a sustained move higher in the AUD price of gold. Even if the AUD continues to trade higher we could still see the USD price of gold breakout to the upside.”

“Australian gold stocks seem to be sensing this state of affairs and have been rallying strongly for the past month. Perhaps the huge bull market in gold stocks that we have been waiting an eternity for has finally arrived.”

We concurred and in the same report recommended an Aussie gold producer. It’s a household name and not an undiscovered junior explorer. But that’s because our strategy in the Gameplan is fundamentally conservative. We wanted some exposure to the rising gold price, but not a huge amount of risk.

Of course there are many other ways to play the rising gold. It depends on your style and tolerance for risk and appetite for excitement. Being a dullard, we prefer relatively safe and boring ways to make money – or not lose it. Murray, on the other hand, is a trader.

That brings us to some feedback we’ve received on a note sent out earlier in the week. You may have received it yourself. It’s about how Murray is using his proprietary trading method to try and wring more profits out of blue chip stocks. It’s ruffled a few feathers.

Dear Dan….

You said…

“Just a quick note.” “Listen, I don’t want to ramble on and on here”.

Bull@#$&…… Just look at how many words you typed…Even more than that goose politician taking 17 minutes to say he was going with Labor.

Love your pitch and happy to test out the offer…. Thank you. But don’t go on for so long that it takes forever to get to the pitch….I have seen this before in your letters to us. It doesn’t do your image good. You are really above this sort of thing. Or… get someone else to sub edit your work if you can’t, so we get a clean neat pitch on just what the deal is and you won’t grow old typing.

Bruce

Thanks for taking a punt Bruce. It’s not the first time we’ve been told our letters too long. But maybe we should explain (without droning on). We’ve often been told our letters are condescending and insulting to the intelligence of our readers so it’s probably time we say why we write long letters like that.

In this case, the subscription price for the Slipstream Trader is not trivial. Before asking you to make a financial commitment like that, we want you to be sure of exactly what we’re trying to do, why we’re trying to do it, and what we think you could gain if we’re successful. It takes a while to tell all that. But we’d rather be thorough than omit something you might later find important. The more you know ahead of time, the more you know what you’re getting into.

The other reason is that we want to do business with the sort of customer who’s comfortable with unconventional and sometimes controversial ideas. As an investor, you have to find some kind of advantage over everyone else. We try and find ideas on the margins…before they reach a tipping point and become conventional wisdom. That’s how you buy a stock cheap and watch it go up.

The idea of doing something you’ve never heard or something that seems to contradict everything you’ve been told to id understandably terrifying for most people, although some people naturally are addicted to it. You could say the long letters have a way of sorting out which sort of person you are (or want to be): the kind that’s willing to take a punt and look at things from a different perspective, or the kind that bins the letter because we’re obviously blowhard steak knife salesman. By the way, your knives are on the way.

More seriously we’re also trying to show you is how we think. Hopefully each long letter has at least one useful or interesting idea that you get for free even if you don’t want the end product. That’s our goal anyone, to make the letters useful by giving you an insight or strategy you might not have had before. That’s why it doesn’t bother us when people guess the name of stocks we might be writing about in our promotions and then send us triumphant “Gotcha!” emails.

Those people are missing the point. Anyone with a modem and a brain can figure out the stocks we’re writing about. But figuring out how to find those stocks in the first place, become a better and more profitable investor, and be aware of threats and opportunities ahead of others….those are the real benefits of the newsletters we publish. Or at least that’s our goal. And we want customers who are after more than just a stock tip. Thus, the longer letters. But we will have a look around for a sub editor.

Not impressed with this promotion. Thought you were a small stocks advisory. I pay for your recommendations and advise, information and reports ,not to be touted with promotion products to buy something else. I’ve not been impressed for a few months and have been deciding whether to pay for another year. This is definitely not in your favour.

Tasma

It sounds like you should ask for your money back Tasma. We’re not publishing ideas because we think they will make you happy. We’re publishing ideas we think you should know about if you want to save or make more money.

Honestly, if you don’t like reading about other ideas or ways to make money in the market, then you’re definitely not going to like being a long term customer of our business. We have no idea who’s going to be right or wrong about investment ideas. So we hire researchers who work their tail off to find the best ideas in their chosen field. We tell our customers about those ideas. If you’re not the type of person that’s interested in them, that’s fine. But you’d probably be happier with a much more traditional advisory service.

Mr. Denning.

Thank you for honouring me with your offer that I read with interest, but in all fairness to what you have read from Murray Dawes and his advice, with the results as claimed, it is made apparent that the real truth of the matter is not mentioned once. Nowhere is the truth told of the fact that although there are some who may be the winners if the prices continue to rise and fall, only to rise and then fall again, so that the buying can be achieved by some who then may sell to others who then must make a loss in their case, if there is then to be the opportunity for Murray’s followers to be able to make the capital Profit that you would aptly describe as Wringing More Money from the Stocks You Own.

What you surely fail to describe correctly, is that the ownership of shares can respectfully achieve a rightful profit through the dividends that the Owners at the right time should then earn as their rightful form of gain from their investments.

In fact there is only one truth in what your Wringing will squeeze from the Stocks in the ASX market and that is the fact that for every gain there must be a loss by another investor who might be you if you have to sell when the market is down, but that is never mentioned.

If you want to ruin others for your personal gain in the selling of your Wringing Scheme, rather than your ownership of shares; or if you want to buy shares when all investors have lost their faith in the Market, then you will be recognised, and as many may say in St Kilda, ‘God help you’ as you will get only what you deserve.

So I write to honestly ask that you reconsider your suggested release in 48 hours time (that will be less that 36 by the time you read this) and then you will be able to explain ‘why’, so that the share market may be able to help everyone to be legitimately involved in the developing of our Country through their holding of shares. One that I appreciate might not be yours if the truth were to be found out.

Please see if you can be honest or if it might be that you are simply replaying the story in the Bible, of Christ’s entry into the Market Place. And I am sure that you are fully aware of that moment through your education as a child.

With kind regards TBC,

Sorry mate. You have us confused and mildly offended. To say that trading stocks is “ruining others for personal gains” is bizarre. Trading is not investing, and that’s made clear in the letter we’ve written. But that doesn’t make it immoral or unethical. It’s not for everyone. Clearly it’s not for you. But you are not everyone. And everyone is not like you.

You’re right to point out that there are two sides to every trade and for every winner there is a loser. But you seem to think the share market should not have winners and losers. We think the better strategy is not to be the loser.

In Murray’s work, he’s helping people identify selling points in stocks they may own or buying points in stocks that may want to own. It may not be God’s work, but we never said it was. We said it might be something you should look at if you own blue chip stocks.

You do raise an interesting point, indirectly, about whether the capital markets exist to allocate capital to businesses or whether they’ve become a casino. Debating that point, while being philosophically and theoretically interesting, won’t determine whether you make or lose money this year on your portfolio. Murray’s objective is to help you not lose it and then to add to it.

By the way, it also sounded like you made a veiled suggestion that if we published the letter, we’d be recognized on the street and eventually get what we deserve, which we’re assuming is not an ice cream sundae. To be honest, it doesn’t seem like a very Christian sentiment or suggestion.

But just as Jesus kicked the moneychangers out of the Temple, let us not bring Jesus into the trading pits. Trading on faith is not likely to be a successfully strategy anyway, although someone somewhere is probably selling a hedge fund with that premise. Thanks for your long note. But we’re going to publish the letter anyway, assuming that while it may not be for everyone, some people may actually like the idea and give it a shot.

If you haven’t read the letter, by the way, look for it later today. More comments welcome. Send them to dr@dailyreckoning.com.au

Dan Denning
for The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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10 Comments on "Moral Condemnation for Traders"

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Lachlan
Guest

Looks like gold will close around 1275. On the daily chart it seems declining trend in momentum since DEC 09 is broken…despite the fact it was only painted on the first place by naked short selling. If the power of the bullion banks is truly broken then I guess I better train my telescope so I can observe golds trip to the moon ;)

Biker
Guest

Test: Soros says

Biker
Guest

Jeeeez! How about that?!~ :D

Ross
Guest

AUD-Kiwi just missed the Kiwi buy mark of 1.3. Panic ensues for Reserve Bank and APRA sods who phone Ralph Norris demanding he keeps the sovereign beggar’s clip in AUD, rather than buying up half the NZ South Island’s dodgy paper.

Ben
Guest

There’s little joy for anti-gold people lately.

It’s too expensive, it’s risky, it brings no income, inedible, in a bubble………

Music to this gold lovers ears!

Biker
Guest

There you are, Steven. A happy gold bug.
Buy gold and sing…!~ :D

Lachlan
Guest

Excellent advice Biker ;)

Biker
Guest

Well, Ben’s ‘Happy Phase’ lasted a couple of hours, anyway!~ :D

panama
Guest

Hi Biker, are you still at it!!

mike
Guest

…f is for golf, the game with a t…d is for gold, like honey and bee…m is for gol’m, not even a golem, so so ends this poem…o well, at least i can szzzing…!…

wpDiscuz
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