"It Feels Like Something Can Break At Any Time"
Submitted by QTR's Fringe Finance
Jack Boroudjian is a legendary former floor trader and now Chairman of SmartXData. Aside from over 30 years of industry experience, Jack is a published author "Secrets of the Trading", Wiley 2007 and has countless articles published in industry periodicals and websites. Jack appears regularly as a paid, guest contributor for CNBC, both domestic and Asia, and has done over 5000 global guest Television appearances. Jack graduated with honors and distinctions from Loyola University of Chicago and is happily married with two adult children.
Jack and I discussed monetary policy, fiscal policy, the move in gold, politics and why the bond market may take the spending keys away from the Biden administration for more than an hour last weekend.
"People have been conditioned to buy dips, and quite frankly, it was almost forced upon us," Jack explains. He points to several factors that shaped this behavior: "The Fed keeping money very loose, the lack of alternative investment avenues, and no real competition for capital—all of these elements contributed to creating a market condition that was, if you think about it, almost obscene."
Boroudjian draws on his experiences from the trading floors to illustrate his point: "It almost feels like what we used to call on the floor of the exchange, the big sucking noise. You'd hear people getting sucked into positions, all chasing the same strategy, and then, suddenly, the market would correct."
He reflects on the impact of such corrections: "I've seen the market correct by 20%, 30% numerous times in my life. But consider this: a 30% correction now equates to 1,500 S&P points. That's more than most people have ever witnessed in their lifetimes."
"Because there are still way too many people convinced that this little 5% pullback is a blip—it's nothing more than a hiccup. I've had at least half a dozen people tell me it's an election year; there's no way they'll let the market break. But the reality is this: if anybody really wants to know what's going on, I would suggest reading Nassim Taleb's book, 'Black Swan.' It talks about it.”
Jack continues: “Nassim was a trader at First Boston—many don't know his story, but I used to handle him on the floor. He was an options trader in the pit and he went broke. This is one of the most brilliant minds on Wall Street, and he went broke as a floor trader. He got off the floor and ended up making billions of dollars. What took him down was a black swan, something that came out of nowhere that he did not expect, and that's exactly what we could see happening now. Could it be something that we've already seen the beginnings of?"
Talking about gold, Jack said: "So fundamentally, something has shifted in the last few months in the gold market. If you've noticed...(Listen to or read my full interview with Jack at this link).
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