TheRiskBlog

Today’s post deals with media phenomenons, that for us as traders can be very important.
As we know markets are made by people who sell and buy. And most of these people read newspapers or news related websites. So if we are able to discover what interests them the most, it helps us creating a better opinion about the markets.

There is quite a bit math involved with risk management. To be on the safe side we have to cope with ratios, P&L equations, risk engines, no trade zones, beta, volatility and so on. Most of this stuff is straight forward though and can be done with only a little knowledge of the formulas behind it. But here is an article about something that has not yet found its way into risk management.

If there was one big news this week, it was surely Warren Buffetts acquisition of Burlington Northern Santa Fe (BNI) railroad. But although the deal itself is interesting, another thing caught my attention.

On Thursday I discovered an interesting Article in the Wall Street Journal: “Transport Stocks Blaze a Path”

Mere mortals like us have no business competing with this guy, thats why we calmly sit down and listen when he talks. This is a real pro and he has been right about the markets at numerous occasions, so we listen again and adjust our risk management accordingly.

Very often while coaching, a customer asks me what to do with insider information. I personally think that a lot of people go the wrong path when trading off of insider information.
Here is what i do: