Another One Question Interview, this time from Bruce Brotnov. Bruce is an investor (not a trader) who runs Poormans Investment Strategies. I did a full interview with Bruce several weeks back.

Here’s the question for the first round of One Question Interviews:

What trading lesson(s) have you learned from the downtrend that started in May?

Bruce:

It was another reminder of how fast the market can turn and I probably needed to have a few more sell stops in place since I was in Vegas the week the market started dropping (Money Show and Poormans presentation). All profits for 2006 (22% at the time) were wiped out and having to start over. It was also a reminder of how the FED can cause recessions by hiking the rates too high like they did in 2000 as it appears they contribute to inflation by chasing inflation. The cost of borrowing goes up as does the cost of goods and historically the inflation doesn’t stop going up until after the FED finally stops raising rates. In the meanwhile the market learned the new Chairman was hawkish and quickly sold off the gains from anticipating that Greenspan’s replacement would put a halt to smothering the economy.

Related posts:

1. One Question Interview with…You!
2. Interview with Bruce Brotnov (Poormans)
3. One Question Interview with Charles Kirk
4. One Question Interview with David Hannan
5. One Question Interview with Smita Sadana