China the Invisible Monster

“The only way to find true happiness is to risk being completely cut open.”
― Chuck Palahniuk, Invisible Monsters

Without risk, there is no reward.

I always loved this idea. I came in to sports with the understanding that, to be great. You will get hurt. You will be in pain. You will suffer. I will get hurt. I will probably have surgeries and I will have to work tirelessly.

Why is that different for people who come in to trading?

As a trader on day one most people think they know everything. That this is a magic money machine. That they understand the world because “I live here” so they understand trading. Others that think they know about trading because they understand economics or politics to some degree.

Trading is a very different thing. The phrase…

”The market can stay irrational longer than you can stay solvent.” John Maynard Keynes

Not my favorite economist, but this was a great quote.

Price is the most important piece of all of our models because of this simple fact. More importantly and this is not exciting but it is worth more than anything else is… the models and thoughts on risk management.

Understand that making money and being right are two different things.

If you find this content valuable, please consider liking, sharing, and subscribing to help the channel grow. We only keep what we have by giving it away.

Feel free to pass it along if you think it can benefit others.

---

China

I always say that China and commodities usually move together. Why?

Demand: China is one of the largest consumers of many primary commodities in the world, including metals, energy, and agricultural products. The country's demand significantly influences global commodity prices. For instance, China is the world's top consumer of copper and iron ore, which are critical for its extensive manufacturing and construction sectors.

Growth: As China's economy grows, it requires more raw materials to fuel its development. When China's economy is strong, it often results in higher demand for commodities. Conversely, signs of economic slowing in China can lead to fears of reduced demand for commodities, impacting their prices.

Inventory: China sometimes stockpiles large quantities of commodities for future use or as a hedge against price increases or supply disruptions. Changes in the levels of these stockpiles can influence commodity prices.

Policy: Chinese government policies can have significant impacts on commodity markets. For example, infrastructure spending, environmental regulations, and trade policies can all affect how much of a commodity China consumes.

Trade: China is a major player in global trade, and changes in trade relations, such as tariffs or trade agreements, can affect commodity prices. For instance, any disruptions in the trade of commodities due to policy changes or geopolitical tensions can lead to price volatility.