If You Never Cash In Then What's The Point of Playing. Polemic's Farewell.



It's been a long time since I rock and rolled,
It's been a long time since I did the Stroll.
Ooh, let me get it back, let me get it back,
Let me get it back, baby, where I come from.
It's been a long time, been a long time,
Been a long lonely, lonely, lonely, lonely, lonely time. Yes it has.

Led Zeppelin


This will be my last regular post so please indulge me in a little retrospection. Macro Man will have to morph into a new beast but more on that later.

As has happened with my great TMM friends CPMPPI and Nemo before me, my life is changing in a way that will prevent me from being able to devote the attention to this blog that it deserves. After twenty five years of service in the City I am about to make a huge break and move on to a completely different project.

When I took on the keys to Macro Man from the original a little shy of four years ago, as part of the three man Team Macro Man, I was at once daunted with the prospect of having to write properly for the first time in my life (a skill which I never felt I was particularly suited to, having an almost dyslexic inability to spell) and a fear of how to combine a background that was not reflective of either the original Macro Man nor my team member's expertise as fund managers in their own rights, with my own views on the markets. For I have always been on the sell side of the fence where FX has been my specialty (where the overlapping bits of all the other asset classes meet in the centre of the asset Venn diagram) and this has naturally lead me to have a broad asset interest. In FX we tend to have to have a clue as to what's going on in the world as a whole as unlike Bond or Equity sales, we can hardly say "My dollar is greener than his, buy mine".

But this function of other asset class’s factors driving FX would often lead to trades that though intuitively sounding right, would, when analysed along their own logic trees, make betting on a roulette roll look preferable. For example a typical FX patter would run along the lines - Iran is making aggressive noises in the middle east (chance that it really is aggressive 80%), this means that global oil supply may be threatened (80%), which means that oil prices may go up (80%) which means that Norwegian oil revenue would go up and that the country balance of payments will benefit (80%) and that would mean that their FX rate will appreciate (80%) and meanwhile Japan as a net oil importer will see its current account suffer (80%) and so the currency ]go down (80%) so therefore buy NOK/JPY. Which is great to argue when each step of the argument has an 80% outcome but when you sum all those 80%s it isn't many steps before you are below 50% from the original point and in the final case only at 0.8^7 = 21%. Whilst the example above is loose and subject to nit picking I hope it gives and idea of how quickly the odds drop and would often lead the realist in me to asking people wanting to buy NOK/JPY on such an argument why they didn't just buy oil. Which sort of didn't make me a good FX salesperson. But it's a good example of where Pink Flamingo's are fluttering onto lawns that they really don't belong on.

But as we know, the world of FX is populated by many characters each with their own behavioral biases, both on the client side (client menagerie here) and the sales side (sales menagerie here). One day I hope to sit down and write a book titled "The Players Around The Table" to flesh out my understandings of the behaviorally different poker players around a markets table. It is behavioral as much as mathematical. In fact as the maths is naturally more predictable than the behavior, it instantly makes a lot of the maths redundant as a lead indicator as it gets behavioral discounted ahead of time. As we have so often seen, mathematical trading models have to be adaptive to cater for the behavioral feedback loops they create in their own markets. TMM have been a long proponent of fading pack behavior and our facetious development of Dinner Party Indices, Taxi Driver Indices et al were all sharp references to such.

But the world of FX does appear to be changing fast. The old world sell side is starting to see the pond dry up with fish fighting for margin against the machines that are cutting spreads to suicidal slivers under the drying glare of the new regulatory sun.

It is somewhat ironic that the regulatory intensity designed to flatten the playing field across banks to the customer's benefit is actually creating an elevated plateau of super players who are protected from competition by the cliff cost of entry that new regulation is imposing. Perhaps this could well be the regulator/policy makers plan, with the whole business being pushed towards a model of a single super platform which, voila, is easier to manage from a regulatory control perspective. Which leads one to wonder what edge the banks will have in the future world of FX which is currently suffering its own schisms as the authorities' investigations into WMR fixing fixing is beginning to highlight general practices that once were deemed acceptable in the "unregulated" market but are now seen otherwise. On that side of things it had always been a dream of mine that when I did start up a large fund I'd name all the component sub-funds names such as "Large Investor", "Smart money", "Triple A", "Asian Sovereign" and finally "Profit taking" and "Stop loss" and end up making more money suing banks for disclosing my name to the market (as they continued to use such terms as "Smart money selling” and "Stop loss buying" to cloak the flows of their other clients) than I would in normal trading.

But anyway, the world is changing and so is my future career. Whilst I will continue to trade my own money and pop back now and again hopefully as a guest poster in any new TMM structure, I am taking up a fantastic offer of a senior post in a successful creative company catering to the needs of those with very large boats. A complete and total departure from my past but not only does this marry up many of my own dreams, it is domiciled by the sea in one of the most beautiful parts of the UK. It's time to cash in a life of City hours and stress for a better lifestyle but no doubt a whole new type of stress. If you never cash in then what's the point of playing?

So it is time for me, Polemic, to bow out and head off into the setting sun. It has been a real thrill and pleasure and I am going to miss Macro Man tremendously as there were moments of pure joy (most notably the single hour that it took CP and I to pen this xmas post through raging hangovers) but I hope that I have left enough tears and laughter in the Archives, Glossary and Top Tips to keep my memory alive. You can still find me at polemic.paine@gmail.com and would be delighted to stay in contact with you all especially the regular commenters who have been instrumental in keeping this blog alive during our off periods. Of course I would especially like to hear from you if you have a very big boat!

So long and thanks for all the fun
Polemic



TMM will be auditioning for new members so sharpen your quills and sharpen your wit and standby for for more details.
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39 comments

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Vasastan
admin
March 11, 2014 at 3:59 PM ×

Well, let this long time reader be the first to transmit a massive thank you for all the insight and humor you have provided. You will be missed. Suggestion for new blog: "Macro boat man"?

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Anonymous
admin
March 11, 2014 at 4:01 PM ×

I am sad to see this. I really enjoyed your blogs (all of you) in these years. Best of luck on your new adventure!

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CV
admin
March 11, 2014 at 4:05 PM ×

Oh dear Polemic, I am sad to hear this, but all good things have a beginning and an end. Thank you (and the rest of TMM) for your effort!

Good luck in whatever you are up to. (please tell me it is not an IT start-up or something, you need to be quick to get that IPO through before the whole thing collapses ;))

Best

Claus

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Nic
admin
March 11, 2014 at 4:22 PM ×

I learned so much from you, I am absolutely gutted.
Good luck!
Nic

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Anonymous
admin
March 11, 2014 at 4:36 PM ×

First Time, Long Time as they say, though also apparently Last Time:

I've been a lurker since the original MM, and I've never not seen this blog as must-read, both for its specific insights and (your protestations to the contrary, Pol) the quality of the writing.

I'm sorry to see it go, but I'm grateful for the effort.

Fair winds and following seas to you.

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Anonymous
admin
March 11, 2014 at 4:37 PM ×

CC Says
" it is domiciled by the sea in one of the most beautiful parts of the UK"

Morecambe will grow on you no matter what the others say.

Good fortune go with you.

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maximm
admin
March 11, 2014 at 4:58 PM ×

Sad day...

Best of luck with the new venture!

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Corey
admin
March 11, 2014 at 5:13 PM ×

You mean I'm going to have to come up with my own trade ideas?!

Feel like I just lost a good friend, but understand and not surprised. Had secretly been hoping you were considering offering TMM as a subscription service to supplement your income but I knew the chances of that were slim considering anything of that sort would require a commitment to posting regularly which dilutes the content if you have nothing to say. Best wishes.

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Anonymous
admin
March 11, 2014 at 6:16 PM ×

Thank you sir and the best of luck!
- a reader and blogger

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Anonymous
admin
March 11, 2014 at 6:37 PM ×

C says
Sorry I had to be a wee bit quick earlier as I was pressured at the time.
Let me be a bit more expansive with my praise now. I care not a lot how right you may ,or may not have been in the past. I don't read this blog for the purpose of soliciting other people's bright ideas. I will miss most the erudite humour with which you managed to communicate your idea. I meet so few people (miniscule actually) I would be glad to buy a pint for so take this for what it is worth .You qualify for a pint!
I've reinvented myself quite a few times in my life so let me say this .Just enjoy the journey, the experience of the change ,the stimulation of the new and leave others to worry/measure it only upon performance metrics.
Bon Voyage Pol.

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Leftback
admin
March 11, 2014 at 6:57 PM ×

Exclusive, local paparazzi spot Pol at work in his new gig?:

A Life On The Ocean Wave

Seriously, guv'nor, words cannot suffice to express my gratitude for the insights and trading ideas, not to mention the endless chuckles, guffaws and coughing and spluttering with coffee coming out of my nose due to your apparently bottomless vault of jokes, witticisms and bon mots.

May your future be rich in every way, Mr P. We are truly indebted, and you are owed many pints.

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Anonymous
admin
March 11, 2014 at 7:11 PM ×

Great work. Enjoy cashing in those chips!

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Antipodean
admin
March 11, 2014 at 7:29 PM ×

All the best Pol, always appreciated your thoughts on the mkts and life in general.

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March 11, 2014 at 7:55 PM ×

Thanks Pol. Really enjoy your post and market insights.

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MoreLiver
admin
March 11, 2014 at 9:06 PM ×

All the best, and thank you for the fish.

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amplitudeinthehouse
admin
March 11, 2014 at 11:45 PM ×

Timing is everything they say, and this may have a higher meaning.
Thanks for enlightening us to the City culture , for we would bet a penny to a pound that you are of the right persuasion to shine it through in words.
Many thanks and see you around!

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Anonymous
admin
March 12, 2014 at 3:18 AM ×

I'm a "Johnny retail" type who always enjoy the posts and commentary here, even though I don't always understand it ;-)

Good luck to you and the MF boat biz. https://www.youtube.com/watch?v=avaSdC0QOUM

-Whammer

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Anonymous
admin
March 12, 2014 at 7:32 AM ×

Wow, huge thanks for all the effort during the years. Good luck with your future endeavours.

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Eddie
admin
March 12, 2014 at 7:44 AM ×

So long and thanks for the fish (although MoreLiver beat me on that one... see you over there at NP, mate !).

Polemic, you did a terrific job in brightening up otherwise dull days and made me chuckle and roar more than once. All the best for your future and enjoy the sea side (and of course the fish).

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Anonymous
admin
March 12, 2014 at 8:00 AM ×

Farewell and thanks for the insights from an equity buyside readers group.

We've broked your blog to anyone that would listen and it was used as the basis of an argument that sell side research would go the way of journalism - ie. ppl will do free what others are paid for.

You've just sunk that thesis...

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Polemic
admin
March 12, 2014 at 10:09 AM ×

Folks, this is heartwarming stuff and I am truly grateful for your kind words. However 'C', I still don't have a mail from you in my inbox offering a time and place for that beer. My life i going to slow down a bit so meeting you all for those beers would be a delight... .. nope still nothing in the inbox.

And I am not gone completely, I, like "the original", will be lurking, commenting and generally being a sneaky pain in the butt to the inheritors of TMM, like some grumpy old grandfather (No I'm not THAT old) telling these whippersnappers how it was done in my day.

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Anonymous
admin
March 12, 2014 at 12:19 PM ×

You will be dearly missed! Enjoy the next chapter of your journey

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GP macro
admin
March 12, 2014 at 12:22 PM ×

you can check out anytime you like, but you can never leeeaaave...

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72bat
admin
March 12, 2014 at 7:07 PM ×

Aaaah, Polemic, we knew him not well enough!
But for all that we knew him, grateful are we all, as evidenced by all the above.
I am with Whammer in "didn't always understand it ;-)", but despite your demurrer, the main reason, along with the insights and the humor for religiously checking every day for a new post, was that they were such pleasurable reads. You and your confreres did your predecessor proud.
I garner that same satisfaction from only one other (also irregular) blogger, that being The Epicurean Dealmaker.
Please do indulge yourself and the rest of us by guest posting on MM whenever you have the urge.
- 72bat

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Anonymous
admin
March 12, 2014 at 7:37 PM ×

You provided a lot of laughs and lots of color. Sad to see you go

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Perko
admin
March 13, 2014 at 1:23 AM ×

Pol - an awful lot of blogs out there - this one is literally on top of the list. Congratulations on such a high level of volume and quality, and for being, as I saw once on an old-timer's bloomy strap - "A light house of integrity amidst a sea of sharks"
I'm back in Oz these days so a pint will be difficult, but RWC2015 beckons...

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VandalsStoleMyHandle
admin
March 13, 2014 at 12:55 PM ×

Thanks for everything; I've always enjoyed your work (and I'm sure it really is a lot of work); always entertaining and thought-provoking.

Here's to fulfilment and success in the next stage of your working life.

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Anonymous
admin
March 13, 2014 at 3:16 PM ×

troubling for RUT

http://ryandetrick.tumblr.com/post/79460109397/a-major-small-cap-warning

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Anonymous
admin
March 13, 2014 at 6:58 PM ×

Long time lurker here. Just really wanted to say thanks for all of your efforts. I came on to this blog when I was a whip snapper and it helped me realise how much I didn't know about the world and then proceeded to shovel information into the chasm of youthful ignorance.

I think it's important that you all to know that this blog helps a lot of people as well as entertaining them. It's all very much appreciated.

Good luck and all the best, Polemic, and I hope to read your musings again someday.

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Anonymous
admin
March 14, 2014 at 10:59 AM ×

Wow.
Let me belatedly join everyone in saying this was very much one of the top top markets blogs out there.
You will be missed, although I am sure the next Macro Man will pick this up as brilliantly as you did from the Original(this is starting to look a bit like the Doctor, innit? "Who is your favourite MM?")

DD

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Anonymous
admin
March 14, 2014 at 2:42 PM ×

Well said TMM. A likelihood of a scenario that might seem simple and obvious at first (especially involving the mysterious Mr. Market), is eventually going to be diluted into oblivion after accounting all the prerequisite events, however likely they might be. It's just the sheer number of these "required" events transforming to a machine with unlimited moving parts. A billion simple and personal opinions are going to result in even a most neatly and logically layed out scenario settings getting very, very distorted.

Of course, if you could form all these opinions into one single collective one (like the Borg, or lemmings), then the result might be much more predictable as many of the moving parts will be integrated into each other. Fear-manic factors are even better, as the media attempts to do. Ooh, look at that debt ceiling, tapering 10yr yield, crappy NFP and imminent World War 3. The world is coming to an end so sell all your fixed income, equities and real estate now before it's too late!

Just can't express my gratitude enough for upkeeping the blog... Coffee spilling had become part of the daily routine. So many pints owed that it might be best fulfilled through a donation to rent a brewing factory.

So thanks for everything lads. May you encounter many middle-aged, bearded wise men with big boats during your new venture.

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Leftback
admin
March 14, 2014 at 8:16 PM ×

LB was 3 years old for the Cuban missile crisis and LB's Dad really thought the world might be coming to an end, but LB waved his rattle and yelled from his pram "this is the time to go balls out long US stocks, Dad". This Ukraine business doesn't seem as important but it is certainly being hyped.

Kabuki sanctions are likely, and lots of rhetoric from Kerry, but it will be all sound and fury signifying nothing. Putin has The Great Orator and Mutti by the balls here, or at least he has Eastern and Central Europe at the end of the gas pipeline.

Merkel has already been hearing it from the big German industrialists about where the US can stick its new puppet regime in Kiev. If the Crimea votes to join Russia, how does the US plan to oppose the "democratic" will of its people?

The obvious trade for next week seems to be long Russian equities and short US Treasuries and other havens. With global economies still sputtering, a major confrontation that disrupts Europe's energy supplies seems like the last thing anyone needs.

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amplitudeinthehouse
admin
March 15, 2014 at 3:04 AM ×

Geez..going by the comments, TMM,its seems there was an invisible hand following you after all. :)

Ps.You just never know!

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Anonymous
admin
March 15, 2014 at 8:04 AM ×

LB, opposing the democratic will of another nation is no problem for the US as we even oppose our own, not that we have one. The question is will our fearless leaders want to pick a fight in that neighborhood. I can't see the point but what does anybody really know? I just wish more Americans (i.e. our media)would see there's nothing to gain ruling this miserable world.

Pol, thanks and it seems we hardly knew ye, but now we do much better, I think. You're obviously doing the right thing IMO.

Rossmorguy

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Anonymous
admin
March 15, 2014 at 8:25 AM ×

C says
Did I really offer "free beer"? My personal stock pick must be ALZ ,it comes to us all if we live long enough.
No, it was a cunning plan to to ignite what was a torrent of such offers which will seen our Pol, bleary-eyed off into the twilight of his dotage. On that note what is the science of using a rocker chair on a boat. If you align it the wrong way does it cease to rock? What does this mean in terms of threatening a man with a water pistol when he is holding a machine gun. Does it cease to be a valid threat. Mr Putins lack of vociferous reply to that question is all the answer we need.

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REIT
admin
March 16, 2014 at 11:39 AM ×

Polemic, your wit will be missed and you lived up to the original Macro Man admirably.


last week's action foreshadowing more to come? DAX is looking ugly at these levels.

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Leftback
admin
March 16, 2014 at 9:50 PM ×

79% turnout in Crimea and 95% want to join Russia. Clear evidence of an UNDEMOCRATIC election in a country yearning for true western-style democracy and McDonald's happy meals. Obama will declare war at once and the US will invade Ukraine immediately in a futile search for WMDs and hanging chads.

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Anonymous
admin
March 17, 2014 at 8:49 AM ×

Thanks Pol and good luck.

Northshore

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Anonymous
admin
March 18, 2014 at 4:10 PM ×

"With one bound he was free"-all the best Jonny G

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