Once again there are a handful of open positions at the Commodities Futures Trading Commission (CFTC). First Jill Sommers, then Gary Gensler and now Bart Chilton are leaving. This agency’s mandate is to regulate commodity futures and options markets in the United States. Unfortunately, it is being run by people who have never traded commodities, run a clearinghouse for commodities or sat on an exchange board.
There is something inherently wrong with this thought process. It would be like me sitting on the medical practices board. Although I am sure that all the people on the CFTC have IRAs and other brokerage accounts, that doesn’t make them experts, just like having health issues doesn’t put me in a position to regulate doctors.
What does this mean when people with so little trading experience run an agency? Simply a replay of the past. Clearinghouses and financial services firms such as Refco, MGF and PFG have collapsed as a result of faulty oversight by the very agency pledged to oversee them. It will happen again.
On August 23, the Wall Street Journal wrote an article titled “Regulator Moves on Trading.” While it was very well written, it didn’t give any background information on why the CFTC is so behind on addressing electronic trading issues.
The CFTC has a long history of being late to the party on a majority of major issues, while being reactionary on issues that have cost hundreds of millions to the trading community. Unfortunately, in Washington many fingers are pointed and no one ever seems to be held accountable.
In 2012, CFTC Commissioner Scott O’Malia gave a speech at New York University’s Law School. He said that he was putting together a committee to learn about high frequency trading (HFT) and that until he had time to learn about it he could not comment on the good and bad points. He also acknowledged that commission oversight had not kept pace with electronic trading.
I gave him a ride up to Penn Station. During our trip, I told him that I was happy he was looking into this but asked why the CFTC was so late to the party, considering the flash crash had happened a few years before. He didn’t have an answer. This was also during the MF Global meltdown, which was another major failure of the CFTC. The commission did not handle this in an efficient way, and cost many traders their livelihood, which is an entirely different topic that I would be happy to speak about. Read more on “Is Washington Finally Addressing Electronic Trading?” »
Since June, we have all either seen them, had them or worked alongside them. Interns, fresh from college and looking to gain experience and networking connections in the big city. But what did they really learn this summer?
My son and stepdaughter both interned this summer. My son’s internship started a few months ago, when his employer sent him books to study. He ended up reading four books on finance and woke up early to read five newspapers before commuting on the 6:50 train to New York. His paid internship was in the financial markets.
On the other hand, my stepdaughter’s public relations internship was unpaid (yes, unpaid. This was an intriguing topic between the two of them at the dinner table). She worked every day from 9 to 6 for a firm that was energetic and interesting to say the least. Read more on “Interns: What Did They Really Learn this Summer?” »
Whether you are new to investing or have been doing it for years, it’s time to realize that all types of investing markets have changed. This means it’s time to either reevaluate or understand what your risk appetite is.
Many people say they only invest what they are comfortable with losing. Unfortunately, many of my clients come to me after they have had a loss and realized that saying it, meaning it, and living it are very different things.
In trading tip one at www.greenbergcapital.com, I explained how good traders and investors leave their ego at the door. Most people feel that their risk appetite is much higher then it really is. I teach all my clients to step back and think about what would happen if every penny of this investment were lost. How would it honestly affect your life?
At first the answer is always the same: “It won’t be a problem, I can handle it,” they say. Then I’ll ask my married clients how their spouses will handle it. Will this investment, either good or bad, put a strain in the relationship? Will it affect the way you live? Will it change your child’s future? And MOST of all, how will this investment affect your every day thinking? Read more on “Realizing Your Investment Risk Level” »
For years, we have all seen advertisements on TV and in the newspapers telling us to buy gold. We’ve been told that it is a safe investment. For the past 12 years, for the most part, it has been, depending on how deep your pockets are. However, we saw on Friday, April 12th, that gold, at any given moment, can turn and drop fast and hard – just like all markets.
From the 70’s up to until about 2000, futures in gold were traded in London on the LME and COMEX. These markets were physically settled and deliverable contracts, a true supply and demand contract. When Gold started trading electronically it made it exceptionally easy for anyone or any fund in the world to buy, hold or sell gold. Then came the GLD, the gold EFT-
The GLD change the gold market forever. It made it so that the average investor could own gold in their portfolio without going directly into the futures market. The supply and demand on the psychical side was changed, and we started seeing gold rise more steadily and faster than it had in the past 30 years. Read more on “This is Not Your Grandfathers Gold Market!” »
The Martin B Greenberg Trading Room at Hosfra University
How to Start a Trading Career While in College.
We have all head stories of the guy or girl who said how they made their first fortune while trading in college. I happened to know one of these traders and, like all super stars in any field, they are part of the very small group.
If you want to start your trading career while still in college, this is how I would tell my own children to do it. First, remember your main job in college is to be a college student. The cost of college is not getting any cheaper and you must stay focused on your schoolwork. Trading in college should be a hobby. With that being said, there are many colleges that have mock trading competitions. Taking part in this is a good way to get a general understand of the markets, the trading terms, and how to place orders correctly. This early experience can help you avoid mistakes in the future.
The most import thing to understand, as a novice trader, is that mistakes can cost you a lot of money, and very quickly.
The next step would be to open an online trading account. STAY AWAY from commodities for now. It takes time to really understand the risk that comes along with commodities. I know that it sounds sexy to say you bought gold, but in the long run making money is more important than how things sound when you talk to your friends. In commodities, the speed in which money can be made or lost is must faster, and most new traders do not have the reaction time fast enough to compete. Read more on “How to Start a Trading Career While in College” »
Former chairman and CEO of MF Global Jon Corzine testifies Dec. 15, 2011, during a Financial Services Committee hearing on Capitol Hill in Washington. The committee found that Corzine personally ordered the transfer of customer funds to cover company losses. (Alex Wong/Getty Images)
The trustee of bankrupt MF Global Inc. settled a dispute with J.P. Morgan March 19 that will see $546 million returned to customers. Some experts think the settlement helps to return client funds quickly while others think J.P. Morgan got off too easy.
James W. Giddens, Trustee for MF Global Inc. said, “This is a significant milestone in returning assets to former customers … ending what would have been a costly, protracted, and uncertain legal battle.” He also said that the settlement avoids yearlong delays in returning money to customers.
Why Are Gas Prices So High? Here Are A Few Reasons
As an oil trader, I would tell my friends when I get upset about how much it costs to fill up my car. You know prices are out of control. Over the years, I have heard and experienced every excuse in the book for high gas prices. During my career as a NYMEX crude oil Pit Trader, there have been many real issues for the spikes in gas prices – such as the Gulf War, strikes in volatile oil producing countries, natural disasters like hurricanes, refinery shut downs, and countless speculation issues. Read more on “Why Are Gas Prices So High? Here Are A Few Reasons” »