Question About Economic Numbers

Trader Scott’s Market Blog

 
Question:

Thanks for your efforts!

Great job. People are very visual so, videos, graphs, and the like are great to make your points and illustrations.

It’s very good, it’s simple and to the point, and informative.
Here’s a question from me for the future:

Q: Do you traders have any odd ways to gauge the economy because the government numbers are so often cooked? I’ve heard how brokers will count cargo ships moored off of Singapore via satellite photos month over month to the number of trailer containers piling up in Amsterdam with nothing to fill them up. I even heard that if the semiconductor people do bad in the summer, it means that the Christmas season will be a bust because the manufacturers aren’t buying diodes and chips to put in games and toys for the holiday season.

Any interesting ways traders gauge how good or bad things are that are a bit unconventional, strange, or funny?

My Reply:
Thank you for the input. I do appreciate it when you guys keep on me and let me know what I’m doing right (and wrong).

And I hope that my writing style keeps improving and getting simpler to decipher.
To your question. And realize that most everything that we’ve ever learned about markets is completely useless.

But yes, you’re correct, so I spend zero time paying attention to government numbers. In fact, I spend almost no time working on economics at all. Markets do not = economics. Markets generally lead economics. So why spend any time “analyzing” economics, why not spend our time focused on markets. It’s fine to be thinking about economics, it’s interesting, but it will do almost nothing to help us with markets. Markets move on LIQUIDITY aka SUPPLY and DEMAND. So that’s where almost 100% of our focus should be. I biasedly believe that my method is by far the best, but there are other ways, I guess. But all of the best traders/investors that I know focus almost totally on trying to determine and judge movements in LIQUIDITY.
And I agree with you that there are plenty of traders who look at unconventional ways to make their determination as to where markets are headed. And what is the overall track record of these folks. It’s lousy, I assure you.

Too many people in this business look for any non-researched ways, legal and illegal, to get an edge. And these people will almost invariably fail. Why? Because it takes many years to learn to judge LIQUIDITY. And more years to learn how to use that skill to consistently be profitable. And they;re looking for shortcuts to success. But there are none. Only hard work, patience, passion and determination works, just like everything in life, as you know. And these folks are among the people with whom I am competing. It has for years given me the determination to keep working hard and it makes success even sweeter.
And I will add that I came on the show here, here, here and here to warn that the oil and commodities were forming a major bottom.

This was right into the lows when there were stories all over the place claiming that oil would fall to $10. And among those stories were the clowns claiming oil would continue to plunge due to all of the cargo ships moored off of Singapore, etc. They were, of course, completely wrong.
So yes there are lots of funny ways that traders use to gauge markets. But the boring, drudgery is the true avenue to success.
But you have to find the way that’s most comfortable for you. I’m sharing my experiences to hopefully make it easier for you guys to take the baton and get to where you want to go.