I always knew stock traders had a screw loose. How else do you explain
participating in a market as crazy as todays? Anyone attempting to make money in
this environment ought to have their head examined. And a new study backs up
that sentiment. According to a German study, first reported by German weekly Der
Spiegel , traders are more ruthless than psychopaths . While traders might not
be violent, the massive egos required to play the stock market game are indeed
greater than those of criminally violent crazies. Anyone who knows a trader
probably isnt surprised by this revelation. Michael Lewis' book about Wall
Street, Liars Poker , portrayed traders as a bunch of self-interested maniacs.
Sit on the desk of any Wall Street firm, and you will find traders willing to
win at any cost. Some will cross the line and break laws. They crave risk like
children love candy. The psychological profile of traders is not pretty. But
thats the nature of the beast. Traders walk a fine line between healthy and
destructive behavior. And the article discussing the study says some traders
manage this line better than others. Winning traders know when to walk away. The
excerpt from The Rise and Fall of Bear Stearns about Ace Greenberg and his
mandate that traders at his firm jettison losing positions on Fridays is
insightful. When traders get involved in a position, they have to love the
story, but not too much. They expect to win every trade, but those that do best
understand that some trades will not work out. With that in mind, here are three
crazy trades you can fall in love with, but must know how to walk away from if
things go south: Sirius XM Radio Those committing capital to Sirius XM Radio
(NASDAQ: SIRI ) do so from a very innate belief that Sirius' business model
will explode in a wave of massive profits and stock gains. Bulls buy the story
hook, line and sinker. They will blindly buy the stock despite a valuation of
more than $5 billion and a business that is barely generating profits. A crazy
trader might look at this story and ignore the major issues. Sirius certainly
has the potential to clean up its currently a monopoly and recently announced
that it would be increasing prices. A market correction during the past few
months has crushed the bulls in Sirius. For now, the shorts are winning this
battle, but don't get too excited if you hold this position. The company could
be a big moneymaker if it can show increases in its subscriber base and growing
revenues. Its just hard to tell. Being on either side of Sirius is nuts for
sure. This stock is not for average investors.
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