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Diary of a Hedgehog: Biggs' Final Words on the Markets by Barton Biggs

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The First Word in Analyst Is Anal

December had been a good month for me with a gain of over 5%. Now I was babbling bullishly about prospects at the start of 2011. However, the main thrust of the essay is about the great trader Jesse Livermore and the wisdom of the Old Turkey. Neither one was an analyst. I think it was Livermore who once said, “Analysts write long research reports when they don’t have the time to write short ones.”

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December 20, 2010

If the gods of the market ever promise anything, it is a fair guess that for next year they have in mind volatility. I happen to go into 2011 feeling optimistic about the global economy and fairly confident that sentiment, valuations, earnings, and history are supportive of further gains in equities. However, the world and the economic recovery are still so fragile that a black swan event or variations in the high-frequency data can and will violently swing sentiment and markets. Whipsaws are painful for the performance and demoralizing for the psyche. Making money in financial markets in such an environment is about being an investor but also about being a trader. I’m disdainful of the sustainability of prop trading but very respectful of those titans that have the gift and have built huge organizations and fortunes.

The finest trading book ever written is Reminiscences of a Stock Operator (John Wiley & Sons, 1994) by Edwin LeFevre. ...

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