33. Derivatives and TA, again

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Derivatives

One of my more random topics in my previous blogs was about derivatives -- a particularly esoteric aspect of trading in various markets. Well today I was sharing a table at a Starbucks I'm almost never in (in the Fox Plaza complex where I once lived, in fact) with a group of people talking about the crazy dangerous kinds of derivative trading. The kind where if anything goes wrong you will be facing a ruinous margin call. One of the people even recounted an episode in which he was hit by a margin call on the Friday after Brexit and was only saved by their not being able to reach him and waiting until Monday to close out his position -- which had already started to recover by then. And we're talking about a loss of tens of thousands of dollars.

He did this kind of trading for a living while the other couple just dabbled. I couldn't quite tell if he was working some sort of a con on them or not. If you're willing to consider naked puts or naked calls you are almost certainly ripe to be conned. 

TA

While it was curious for me to be over-hearing that conversation, the only reason I recount it is that it got me thinking of Technical Analysis (TA) in general and, with the U.S. Presidential election on everyone's mind, I couldn't help thinking that a TA phrase already applies.

With TA you are always studying stock charts looking for patterns and trends -- and trend changes. There are key prices -- new highs, new lows, various support levels -- that everyone watches and responds to. If a stock price falls past a support level, even if it rebounds later, the damage is done and everyone watching that chart will now be expecting a fall to the next support level or, if there isn't one, a free-fall.

What I was thinking, about the Trump campaign making it past the convention, is that, regardless of the outcome of the election, the damage is already done. There is no longer a commonsense support level in American politics. Reality politics is the new reality. 

California seems to be grooming a new generation of attractive (in both senses of the word) democratic politicians in Gavin Newsom (our ex-Mayor and our current Lieutenant Governor and possibly our future Governor) and Kamala Harris (our former city DA, current state DA, and likely next Senator) for national office. I wish they were options right now. But will even these "fresh" faces be up to the challenge of a political reality version of American President (play on American Idol) four or eight years from now? Maybe the Democratic party should start grooming a Kardashian.

Next - 34. On Republics + Old Navy