If you harbour thoughts of vengeance the passing of time will increase your joy. This is an old adage which is always true. Think to how many years have passed by in order to arrive to this sacred ordeal on the financial markets  and you will realize how much I find everything enticing. The financial tsunami landed from US onto Europe and we will see now how this disaster can devastate our lives. Even if your pockets are laden with money since you are successful traders when all your neighbors, your friends, your family will be depressed there will be no untroubled place for you. And if tough times are coming closer and closer spineless men are vanishing.

Just to remind you how the story unfolded: in 1998-2000 many discovered to be champion traders (maybe us, who knows ?). In 2001 we encountered a little problem: markets are not bullish forever. In 2003 many of us hoped that windfall money was to be distributed every 5 years so that 2003 had to be a wonderful year. But is was not. In 2008 many of us discovered that … markets were not a good job for them. This crisis is different from the previous ones our generation saw. This is an OTC crisis, an “over the counter” nightmare nobody knows where it started and nobody know when it will end. And precisely because it is over the counter nobody knows anything and many did not even understood why it happened. Markets, the good ones, the respectable ones, the regulated ones, did their job in a perfect way. The OTC market crashed. And many of those that thought to be heroes now are simply … unemployed even without knowing the real reasons for that. And if you survived you take your revenge.

Now everybody is looking for a specimen of the survivor because really few still exit on the markets. I got phone calls from people I met in 2001 or even back in 1997 when I started my career. People that disappeared for 10 years and that now are coming back, calling you simply to say hello but in reality they want the check if you are among the survivors. As after a fierce battle soldiers are counting those of them who died, those who are wounded, those who are alive, the same happens here.

I got a phone call from a guy that is managing a hedge fund in Geneva: he started asking how I was and he ended up crying. Losses were huge, something in their complicated algorithm did not work, who knows, and how he is jobless. A successful businessman got in touch again after years we met: his millions vanished in structured bonds. This is how it goes when you invest in too much complicated financial tools: markets wants your money back. Forever.

Keep things easy, do not be greedy. This is the old adage, but we forget it too often. We think that we are smarter, that we can second-guess the rule, that we know indeed a new rule since we discovered it in the nuances of the market trends and congestions. But nothing is real, it is just a dream.

I try always to keep my feet well rooted in the land where my parents are buried. It is difficult because dreams are a reason to live and when reality is trivial it looses all its interest. We do not want to trade with a simple channel breakout because …. It is simple, too simple for our ego. Neural nets conversely will work, they are complicated, their functioning is outside the common man reach. We do not really arrive to understand them 100% but we know they are for smart people, that is smart money like us.

Nobody in this situation is without guilt and me either. And unfortunately it is absolutely useless to comment: this time I was wrong but I learned a hard lesson for the future. If you believe in technical analysis or in quantitative finance the future will never be different from the past, there will be more o less noise but patterns will stay the same. Forever. So let’s wait for the next financial crisis when we will repeat with Qohelet “Look at this never seen thing – but there is nothing new under the sun – a repetition of people coming and people going …”

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About Author

Emilio Tomasini is Chief Editor of the Italian edition of TRADERS’ MAGAZINE (www.traders-mag.it), the leading monthly publication in Europe for trading and investment, and since 1999 he organizes the TRADERS’ CUP the most important real money European trading competition (www.traders-cup.it). His personal weekly free newsletter L’Indipendente di Borsa (www.indipendentediborsa.it) is one of the most reputable Italian financial media and counts more than 100.000 readers. His website in English is www.emiliotomasini.com

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