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The Isaac Newton Trade Print
Written by Site admin   
Sunday, 03 December 2017 19:50

Isaac Newton was a very clever man. Mathematician, Astronomer, Agriculturist, Theologian and Physicist, read about his incredible achievements here in Wickpedia.

Regrettably, clever men are just as falible (dumb stupid) as anyone else when it comes to playing in the markets as a newbie. Our egos tell us it can't be that difficult as we know all there is to know about Astronomy, Physics, Banking Finance, HR, electronics, being a big shot entreprenuer, etc., etc. For those to whom humility doesn't come easily, the markets will be a painfully great leveller. 

Isaac got it right to start with, he made significant money by getting in on a bubble early. It was the South Sea Company that just everyone was talking about (nothing like Bitcoin mining or Ethereum of course - they can't possibly be bubbles?)

The problem with bubbles is that they are just like infectious diseases. They're infectious! Everyone is talking about it and with the excited prospect of money for nothing, almost everyone gets involved. This is how they always work out, like any story they have a start a middle and an end, it's never any different.

pst newton south sea bubbleIsaac newton ended up broke.

“I can calculate the movement of stars, but not the madness of men.” ~ Sir Isaac Newton (after losing a fortune in a stock bubble)

Remember the Bunker-Hunts, thought they would turn a leagcy of $2Billion into some significant money. They cornered the Silver market back in the late 1970's, running it up from just a few dollars per ounce all the way up to $50+. A proper fortune was there's for the taking. Only problem, when they stopped buying they realised they were the only ones who were buying and the short sellers bankrupted them.

Winston Churchill, learned how to become humble in his market exploits. Churchil had just stepped down as Chancellor of the Exchequer, now that's a man who must know a thing or two about finance and the markets. 1929 seemed such a good year to put money into the raging US stock market.

It took about six weeks to lose his fortune. Wonderful invention, trading on margin. It means that those who know a market is only ever going up, can control many times their original fortune in the market, just think of the money that will be made. Mega millions, what could go wrong?

"Churchill’s small fortune wasn’t “frittered away,” it was decimated. The losses were more devastating because he had been purchasing stock on margin. It took him many years to crawl out of the financial hole he found himself in." Catch the full story here.

Studying history can be a great education. Read Charles Mackay's, Extraordinary Popular Delusions and the Madness of Crowds, or start here at Invstopedia. But of course who wants to read history because - it's different this time!

(Of course, Initial Coin Offerings are nothing like those old bubbles from the past.)

 

 

From the blog

Another great trade & It's the interest rate differential

Another great trade and a special deal for you below...

At the recent London Forex Show I talked about some of the key issues that impact and move the major currencies. Amongst these were, will US interest rates keep rising and will the US Dollar strengthen or weaken.

The talking heads have told us all about how the US$ is doomed. It's the trillions of US debt they say, and expectations of a US recession kicking off this year.

And then the big one is the global petro dollar decline. China and Russia can now by-pass the US$ strangle hold on world energy markets and trade in Renimbi, Roubles and Euro's.

And then there is the Donald. Whenever he has an audience he tells us that the "gentleman at the fed likes a strong dollar". Clearly, Trump wants it to weaken to make US exports cheaper than the competition and keep 'his' stock market boom going.

The USDJPY just ignored the dollar doomsters...

Read more...

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