Revolution in the Air

Site Administrator | December 6, 2011

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We are going to take a step back from today's markets to focus on a topic that has been prevalent throughout the entire world starting first with the Arab Spring and the fall of Tunisia, to the fall of Egypt and then to the fall of Libya.  Surprisingly enough, when watching those types of protests, our first thoughts are, "Could that happen here?"  Regardless of your definition of "here" I would tell you that it can and most likely will at some point in the future.  Am I saying that I believe that all countries in the free world will face sweeping revolutions along the same likes as Egypt and Libya, absolutely not.  But, before you discount our last statement consider the following:

Occupy Wall Street spread to cities across the U.S.  From New York, to DC, to Chicago, to Oakland, to Atlanta and even to Birmingham, Al and many other smaller to mid size cities (although not as organized as the larger cities).  If you look outside the US, you might remember the London riots of a few months ago as well as demonstrations in Bahrain, Saudi Arabia, Italy, Greece and many more.  Each of these protests/riots started for different reasons and while we do not agree with them, it is important to understand the evolving world.  When it comes to political items, I typically try to keep the blinders on and focus on what's in front of me that I actually have some semblance of control over.  My thoughts are that I am better off to work hard and invest time and energy in a plan as opposed to protesting and demanding something from someone else.  I would imagine many of the Occupy Protesters would be better off doing the same, however it is also my guess that there are a select few that look at the overall problem and feel they really are seeking to be a voice to a future solution as opposed to just stirring up trouble.  After all, in a country like America, the first ammendment right is something we hold sacred so more power to them (just do it in a respectful manner).

Having said that, I had a conversation with a good friend of mine from Russia yesterday that I continue to think about.  For purposes of this conversation, we will simply refer to him as Mish.  Just to give you a little background, this friend is someone I met in Russia in 2003 and has remained a close friend throughout the past 8 years.  Mish even came to live with my family for 6 months back in 2004.  This friend of mine is not your typical  revolutionary.  He is college educated, very bright, kind, compassionate and the type of person that would get along with just about anyone.  He lives in a small city along the Volga river that is about a 14 hour train ride from Moscow.

After reading about the sharp decline in Russia's elections for Putin's party as well as allegations of fraud, I was immediately curious what my friend on the ground thought.  Here is a bit of our conversation:

[12/5/2011 9:07:13 AM] mish: we had "elections" yesterday
[12/5/2011 9:10:27 AM] TradingPub: yea i saw
[12/5/2011 9:10:36 AM] TradingPub: putin gov't did not do as well huh
[12/5/2011 9:11:13 AM] mish:: you dont know how he did this time
[12/5/2011 9:11:39 AM] mish:: official result is 49 percents
[12/5/2011 9:11:59 AM] mish:: real  is smth around 30-35
[12/5/2011 9:12:05 AM] TradingPub: wow
[12/5/2011 9:13:21 AM] mish:: there is a channel on youtube we people upload all the facts of addding votes to the United Russia (his party)
[12/5/2011 9:13:54 AM] mish:: 72 videos so far and counting
[12/5/2011 9:14:48 AM] mish:: at this moment people are gathering in moscow
[12/5/2011 9:15:10 AM] mish:: but police wont let them gather
[12/5/2011 9:15:13 AM] TradingPub: good thing u don't live in Moscow
[12/5/2011 9:15:16 AM] mish: i am followin it online
[12/5/2011 9:15:29 AM] mish: well, i would go there
[12/5/2011 9:15:53 AM] TradingPub: I am glad you are not in moscow 🙂
[12/5/2011 9:15:59 AM] TradingPub: those gatherings will be dangerous
[12/5/2011 9:16:39 AM] mish: well, i am ready to fight for my freedom
[12/5/2011 9:17:10 AM] mish: otherwise, i am not happy

That last statement really struck a chord with me as my main concern was for my friend's safety yet his was for his freedom.  For most of us, revolutions are something we read about in the history books.  I feel extremely blessed to have the freedom, safety and opportunities that are provided to me.  I do not think twice about typing a message, making a statement or following through on an idea without worry that the government will come after me.  This is a freedom that unfortunately does not transcend across every country and in our opinion, the emergence of social media has made this apparent and brought several countries to the boiling point.

The question we have to step back and ask is this:  Is the world really worse than it has ever been for nations around the globe to protest?  The answer in our opinion is no.  The difference is the accessibility of information.  Anyone who has traded in the markets the past few years has probably been stung by a shocking development, rumor or news release.  Having your pules on the overall global economy is something that any trader and investor needs to be aware of in order to succeed.  We have preached about the importance of understanding the global markets several times in our Daily Report videos as we highlight the significance of the EUR/USD to the price action in the S&P Futures.  If you have not looked at this, simply pull up a daily chart of the two and it is clear to see what the driver for the current market is.

The important takeaway from a trading perspective is to realize that the stroke of a key, a text from a phone, a tweet or an uploaded video can throw things into complete dissarray.  Had the event in Russia happened 5 years ago, a major paper might have taken weeks if not months to break it and that only coming with a few anonymous sources.  In today's world of social media, fires can be ignited with a simple post and then continue to spread with a # (hashtag). With that, we feel it is extremely important to not only protect all positions at any time (whether with stop orders or options) but also to become familiar with different methods of taking advantage of rising volatility in the VIX, rising prices in Bond Futures or safe haven currencies.  A great place to stay up to date on different developments regarding the market is via twitter on StockTwits as traders from around the globe share trading ideas in the market on stocks, futures, forex and options.  Lastly, we are not attempting to be a dark cloud saying the market is going to crash, but we are attempting to be a lighthouse saying caution and be aware because in this type of a volatile environment, things can turn on a tweet.


The TradingPub

The TradingPub
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