Hello, All!
I hope nobody has gotten the impression that commodity trading is peaches
and
cream. It is difficult work and IMO works best when a non-pro day trades
with a
good deal of money behind him/her. I like day trading because small
losses do
not mushroom into huge losses and even at $2.50 per side commission,
commissions
can take 5% or more of your profits.
As a twenty-something my mentor in all this was Jim Kneafsey who was also
my
thesis advisor in grad school. Jim left academia to found Cambridge
Financial
where his clients were at first small speculators that were referred to
him by
Robbins Trading Co., the same company that put Larry Williams on the map.
Later, his customers were huge pension funds within Massachusetts. In his
first
year trading for the MBTA Pension Fund, Jim took its $4MM stake and within
a few
months returned $4MM in profits. A few months later he returned $2MM
while the
original $4MM was earning T-bill interest.
Like most CTAs (Commodity Trading Advisers) Jim positioned traded, i.e.,
kept
the trades overnight for at least a couple of days and nothing was done at
Cambridge Financial without Jim's direct approval. The problem with that
was
that cancer took Jim's life almost just as quickly as one of his futures
trades.
It was very tragic because Jim never smoked and was very athletic having
been a
minor league ballplayer in the Cincinnati farm system. While ill, Jim
lost
control of everything and in the aftermath of his death it was discovered
that
the MBTA account was around $40MM in the red (shorting can do that).
The point of this is that MBTA had a team of trustees following Jim's
trades as
well as the auditors from Mellon Bank, the fund's custodian. If the
professional bean counters from two financial entities can lose track
about
what's going on, what does that say about the rest of us? And that's why
I
don't like to hold a trade overnight, although I do at times (perhaps once
per
week).
With best regards, Lubow.
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