The year of 2011 was an interesting and eventful year in monetary policy. As the chart below shows, the GDP weighted average interest rate of central banks crept up in the first half of the year as commodity prices remained buoyant, economic recoveries showed signs of gaining momentum, and inflation was the key concern in emerging markets. But this was then followed by a reversal in course in the later part of the year as the specter of the European debt crisis and slowing global growth raised downside risks for growth and price stability, spurring central bankers to cut rates and otherwise ease policy settings.
Full story: http://www.centralbanknews.info/2011/12/what-will-2012-bring-for-global.html [more]
With the popularity and feedback on my previous article on the top 10 financial crisis documentaries, here's my take on the top 10 trading documentaries. In the list that follows, the topics covered range from quantitative trading, getting started as a trader, a day in the life of a famous trader, the demise of trading pits, a look at the global foreign exchange market, and a history of market bubbles. These documentaries are a great source of inspiration as well as learning, and anyone who has traded in the markets knows that inspiration and learning are critical inputs to success.
1. Trader - Paul Tudor Jones
This documentary follows famous hedge fund trader Paul Tudor Jones, giving an insight into how a typical day looks, but also some of the unique personality traits and thoughts the man has. The documentary is somewhat dated, but is long on entertainment and inspiration, but perhaps a little short on education, but definitely worth a watch.
2. Million Dollar Traders
This 3 part reality TV show is an experiment by hedge fund manager, Lex van Dam, to see whether he can train a handful of ordinary people into becoming successful traders. Basically this is The Apprentice meets financial markets. Perhaps the most interesting learning that this series gives is the psychological aspects of trading, you see some of the traders blowout, some of the get caught like a deer in the headlights, while others keep their cool. This one is long on inspiration, entertainment, and insights.
3. Rookie Trader
This is one for the beginners, it follows a CNN news anchor as he attempts to learn how to trade. He speaks with some trainers, coaches, and experts in trading to learn the basics e.g. market terminology, risk management, psychology, and basic operations. Informative for the beginners, and likely entertaining for the more advanced traders.
4. Billion Dollar Day
Here's another oldie but a goodie, this one follows a day in the life of three foreign exchange traders/dealers in New York, London, and Hong Kong. While the fashion and the technology have certainly moved on, it's still an interesting watch from the perspective of understanding the various players in the forex market, particularly in terms of the commercial banks - who largely rule the market.
5. Quants: The Alchemists of Wall Street
Some traders rely on luck, some on their instincts, some lucky ones use their employer's balance sheet, but another breed of traders takes the psychology and luck aspect out, instead focusing on the more scientific side of making money in the markets. The quants develop sophisticated algorithms and use highly advanced computing and connectivity technology to exploit statistical anomalies and patterns in the market. This documentary provides one of the best insights into this arcane corner of Wall Street.
6. Trillion Dollar Bet
But market scientists are not infallible; this documentary looks at the rise and fall of Long Term Capital Management, a hedge fund founded by PhDs and Nobel prize winners; the big names of financial theory. While their meteoric rise and profitability were astounding, equally astounding was the fundamental flaws in their trading thesis and underlying assumptions that lead to their subsequent demise. A fascinating documentary and a good reminder that so-called 'long-tail' events can have a nasty habit of derailing the best laid plans.
With the rise of technology came the fall of old ways of doing things, Floored is a documentary movie that chronicles the demise of the pit trading, or "open outcry" markets (the old days where markets were not trading engines housed in server farms, but a rowdy crowd of individuals shouting out and hand signalling orders to each other). Very interesting look at how the pits used to work, and an interesting look at how the old traders are adapting (or otherwise) to the new world of technology based markets and trading.
8. Tricks With Risk
As anyone who deals with financial markets should know, to make money you have to take on risk. How you manage or package the risk makes a great degree of difference as to how much you will make or lose in various scenarios. Indeed, some say the role of traders is to take on risk from those who do not want to hold the risk themselves; risk is a key stock in trade of a financial market participant. But as this documentary reveals, dealing in risk can get you burnt - and in the worst of times e.g. AIG, mismanaging risk can burn the entire system!
9. Betting on the Market
Anyone who was around during the late 1990's can attest to the euphoria of the massive bull market. Valuations went to extremes, everyone was talking about the new economy, and of course everyone was an expert! There will certainly be another massive bull market at some point, and this euphoria will return, so take a look at this documentary for a glimpse at what will be to come. Brilliant little documentary for stock investors.
Speaking of bubbles, why not look back in time to see one of history's most infamous bubbles, the dutch Tulip bulb trading bubble. Perhaps nothing illustrates best the excesses of crowd psychology than the tulip bubble, so this one makes the list as a reminder that all markets are ultimately driven by the thoughts and emotions of the people that are buying and selling.
Hopefully these documentaries help your trading, or at least entertain you during the holiday period. Please be sure to point out any I might have missed, or that should be in the top 10. Best wishes for 2012, may it be a year of profits and prosperity!
Thanks to www.financedocumentaries.com for finding all these documentaries (and others!) [more]
The past week in monetary policy featured decisions from 8 central banks around the world from Europe to Africa. Those that changed interest rates were; Sweden -25bps to 1.75%, Hungary +50bps to 7.00%, and Russia -25bps to 8.00%. Meanwhile, those that announced no changed to interest rates were; Morocco 3.25%, Japan 0.10%, the Czech Republic 0.75%, Ghana 12.50%, and Turkey 5.75%. Brazil also announced some fine tuning measures to the way it pays interest on reserves, effectively further loosening monetary policy settings. [more]
The global financial crisis of 2008/9 has left a significant economic dent, with the global economy slow to rebound, and with a banking crisis transitioning to a sovereign debt crisis in some countries. Indeed many people have felt the impact on their own balance sheets; with house prices and stock prices well off their highs, and in some cases with fixed income assets wiped out. The crisis is sure to leave a lasting psychological impact on all who were touched by it. But of course, with great challenge comes great opportunity, and one of the opportunities is for learning. So after watching a series of crisis related documentaries, I present here what I think are among the top 10 financial crisis documentaries.
1. The Fall of Lehman Brothers
To me the very title of this documentary was one of the defining moments of the financial crisis. What was previously unthinkable became reality, and at this moment I believe the greatest shock-wave was sent out across the global financial markets. So if there's any documentary on the financial crisis to watch, I think this one tops the list. [more]
The past week in monetary policy saw interest rate decisions announced by 11 central banks. Of those adjusting interest rates, all were reductions; Mozambique -100bps to 15.00%, Mauritius -10bps to 5.40%, Norway -50bps to 1.75%, and Denmark -10bps to 0.70%. Meanwhile those that held interest rates unchanged were: US 0-0.25%, Hong Kong 0.50%, Chile 5.25%, Switzerland 0-0.25%, Sri Lanka 7.00%, India 8.50%, and Colombia 4.75%. The US FOMC also announced no changes to its quantitative easing programs, and the Swiss National Bank maintained a strong stance on its exchange rate floor with the Euro.
Full story: http://www.centralbanknews.info/2011/12/monetary-policy-week-in-review-17-dec.html [more]
The past week in monetary policy saw interest rate decisions announced by 14 central banks around the world. Those changing interest rates were: Australia -25bps to 4.25%, EU -25bps to 1.00%, and Serbia -25bps to 9.75%. Meanwhile those holding rates unchanged were: Canada 1.00%, Armenia 8.00%, Iceland 4.75%, Poland 4.50%, Namibia 6.00%, New Zealand 2.50%, UK 0.50%, Botswana 9.50%, Peru 4.25%, Korea 3.25%, and Indonesia 6.00%.