Tharp's Thoughts Weekly Newsletter (View On-Line)

• Article The Miracle of Inner Guidance by Francisco Cabrera
• Trading Education Peak Performance Workshops in Cary, NC and Berlin, Germany
• Trading Tip The Market Tends to Repeat Itself: Part 2 by D. R. Barton, Jr.

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The Miracle of Inner Guidance

by Francisco Cabrera

View On-line

The last year has been fabulous for me and my family with so many small and not-so-small "miracles".   It started in October, 2012 at a Van Tharp Institute Oneness weekend where so many of the Oneness concepts I learned felt wonderful inside. That same weekend, I started reading Trading Beyond the Matrix and I was particularly taken by Chapter 10.  With full sincerity from his heart, Van shared his experiences discovering his internal guidance. Van’s story touched a fiber deep in me and awakened a desire to explore that path and maybe discover my own inner guidance.

I decided to visit with my nanny in Caracas, Doña Carmen Paz. She practices "Santería". I had seen her cure my mom from culebrilla (a skin illness) by spitting tobacco, smoking and saying some prayers on her. As a kid, I overheard her telling my Mom, with a sense of urgency that she wanted to liberate me from a "mal de ojo" that someone had put on me, and did some similar rituals on me.

During my visit, Doña Carmen explained to me, in very raw but beautiful terms, that we all needed to be balanced in the different regions of the body in order to be able to connect to God, and she pointed to seven places in the body. I asked myself internally, “Could these be the Chakras the Indian guys talk about?”

Continuing to look for confirmation, I read books about Shamanism. I was shocked to discover the similarities between Shamanism and the Oneness teachings. The Inca language used the exact same word for "chakra" (pronounced the same way) and they referred to the same 7 in the body and with the same functions (they also thought of an 8th chakra where the 7 chakras go to at death, and a 9th chakra which is basically God). This was the confirmation I was looking for about the universal truths that I heard from “the bunch on Indians from Oneness” (I had first heard the word Chakra from them).

I checked on my Catholic beliefs and found that some of them were very troubling. For example, “Jesus is the only son of God”. We all are sons and daughters of God and the best, pure essence within each of us IS God. I also found that some early Christians were looking inward instead of outward (Gnostics), and that many Christians still did, somewhat outside the canons.

Although this next series of events may not sound like a part of a spiritual journey initially, it truly was.  During the week of the ST Summit in 2012, I was arrested in Cary for a DUI.  For 3 weeks, I was not allowed to drive a car.  The experience helped me realize how I create my own reality and how much I appreciate my freedom.

As a consequence of the DUI arrest, I had to attend 12 group therapy sessions.  In that program, I met a lot of folks in severe trouble. At the end of the 5th session, I asked the facilitator if I could say a prayer.  After that, people opened up in a wonderful way that made the second half of the therapy unforgettable.

In the following sessions, I found myself very much enjoying helping others discover:

• The stories we tell ourselves and how we try to live up to them.
• How everything starts with a thought.
• What we put out there to the universe is what we receive.
• That being happy is when we love purely, with animosity toward none.

I was putting my Big I, the Divine part of me, my Divine, up in front. For the first time I understood what my grandmother always said: "pon siempre a Jesús por delante" (always put Jesus up in front). It seemed to put people at ease and allowed them to open up in formidable ways. I decided to continue to put Jesus up in front and asked God to be in front of me as often as possible; always asking Him to make me an instrument of His peace (one Christian/Catholic teaching that always felt good inside me). Jesus naturally came up as the representation of my internal guidance.

In deciding to be loving, I had to turn as many stones in my life as I could. My goal is to leave not a single one unturned:

• I started with my father, with whom I had no relationship at that point.  Our relationship continues to be strained and I continue to ask my Divine for guidance about it, but it is greatly improved from where it was a year ago.

• I had felt my brother was given more than my sister and I were given. He had received the proceeds from the sale of my Mom’s home along with 2 apartments while my sister and I didn't receive anything — even though I had supported my mother for several years and he hadn't. I love my brother very much and I came to understand that he had just been a poor financial manager and that he truly wanted to help. My brother proposed to live with my Mom and sister and my Divine told me that was the right way to go.  That arrangement has worked out very well.  The relationship amongst my Mom, sister, brother and me has become much, much stronger.

• I had separated with a business partner because of a disagreement over what amount of money we should each receive from the partnership.  He thought I took more money than him but in my view, he took more than me.  I wanted to set things straight so my Divine told me to offer him a particular dollar amount, which I did via a check.  But then, he never answered my attempts to communicate with him by phone, email, and text so my wife felt it would be prudent that we cancel the check.

• I forgave a former boss and his employee.  They had denied me a large bonus when the multinational firm I worked for in the late 1990s was sold. I now believe that I could not have started my own business as well as if I had been given that money. Also, that amount of money came back to me, several times over, at a more appropriate time in my life.

• I also asked for forgiveness from several former girlfriends from my bachelor days. They had felt more of a compromise than I did since the relationships had ended.  I called the ones I could physically contact, and the ones I could not contact, I asked for forgiveness from them in my mind. All were wonderful experiences where I felt a cycle had closed a healthy way. I also forgave myself for not doing it sooner.
  

Those are the big stones, and now I am working on the smaller ones.

• One day I was having dinner with my wife and a couple of our friends. One is a lawyer and he told the story about how a client had been sued and lost everything but his house - in Florida the home cannot be taken in a lawsuit. My wife and I discussed the fact that I never had wanted to pay the house off because I felt that I could get more returns from that money in my business. Now, however, it made sense to pay the mortgage. I asked my internal guidance to help me. Within a couple of weeks I found myself in a situation where I had sold corn and soymeal July futures and was long July but had to give September futures (basically long the Jul/Sep spread). By applying the concept of market's money to increase the size of my position by 5 times, I found my account growing exactly to the amount to allow us to pay off the mortgage and my wife's old student loans.

• Over the summer when we were in Oregon visiting my wife's family, we found that my wife's mom was stretched to pay her monthly bills. Further, if she or her husband passed, the surviving spouse could not make ends meet financially. We thought it would be a good idea to buy them a home. I asked my Divine to help us in this situation. Within a week I found myself long physical soymeal (a cancellation) and the basis had gone up. The position was worth exactly the value of the house she needed. So, we bought my mother in law a home.

• On my price risk management (PRM) / physical grain trader work, I realized that I have wanted to be recognized as a great grain trader in Latin America. I asked my Divine to take that desire away from me, that I renounced needing to be such. Well, not too long after, a large Colombian company bought a small company in Panama for which I had handled the grain purchasing and PRM. The owner of the Colombian company saw the way I managed the purchasing and PRM at the acquired company and was very impressed.  Long story short, I am now part of his company's purchasing team. Then I introduced him to a large Guatemalan customer for whom I do purchasing plans and technical analysis for PRM of physicals and futures. That introduction went so well that the largest Latin American purchasing group was put together informally and I am guiding it.
  

• Also, for years I have wanted to separate myself from the daily operations of the physical grain business, but it has been really difficult to find someone with the knowledge and personal attributes required. I asked my Divine to help me with that. Well, the general manager for Bunge (a large grain multinational) in Central America shared with me his desire to evolve the business closer to the buying side (instead of the selling side). I mentioned to him that he was the perfect person to manage a group that could be formed by medium sized Guatemalan companies led by the second largest one in the market (for whom I do PRM). That such group could act together with the Panama group that I handle; this partnership between him and myself is now being formed, and he has agreed to oversee employees who will do the daily hedging work so I can dedicate more time to designing purchasing plans for hedging and systems for speculation. This is quite a blessing and I feel very grateful.

So, it's been a wonderful year for me and my family. I am fortunate to have read Trading Beyond The Matrix and very grateful to Van and all the co-authors. The book ignited this wonderful process that I am lucky to be living. I am infinitely grateful to my Divine for taking charge, for being up in front, and I continue to ask Him to make me always an instrument of His peace.

About the Author: Francisco Cabrera helps his corporate clients manage their grain sales and purchases. He’s currently enrolled in the Super Trader program and lives with his family in Florida.

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The Market Tends to Repeat Itself —
Should We Care?

Part 2

by D. R. Barton, Jr.

“…the vintage of history is forever repeating ~ same old vines, same old wines” — E. A. Bucchianeri, author

Last week, we dug into the market analog chart that was designed to show similarities between current markets and the price activity that lead to the 1929 crash.  Since then, the broader market (S&P 500) has made a new all-time high, but the Dow Industrials are the lagging major U.S. index and are the best it could do on Monday (2/25) was get to within 233 points of its all-time high.

When we dug into those 1929 parallels based on the recently popularized chart, we put them in the interesting-but-a-bit-too-contrived category.  This week, we’ll take a look at four other market analog charts and see if they can help us draw some conclusions about the state of our current bull run in U.S. equities.

Market Year Analogs — A Useful Approach

When discussing market analogs in our last article, I mentioned that there were both good and bad representations of that analysis approach.  As I said last week, “The biggest problem with market analogs is that you can use any price scale and any starting point to make two curves fit each other.  Put a couple of clever people in a room for a day, and they can come up with dozens.” So that gives us the prescription for the wrong way of creating market analogs.  Let’s instead look at some analogs that follow a more useful approach.

These analogs are excellent resources from the folks at Thechartstore.com.  You’ll notice that they use very consistent protocols — they connect market lows and index both time periods 100 at the starting point.  The first analog compares the run we’ve had from the market bottom in March 2009 to the explosive move made coming out of the 1932 market low culminating with a top in 1937:

The up move in the 1930’s was more volatile and much stronger than today’s current drive up, however, the current move is already 10 weeks longer than the analog.  Another similarity in these two markets is the state of economic activity — the 1930’s had a very troubled recovery economically while the markets plowed ahead only to drop precipitously.  Many would claim that similar recovery problems exist during our current bull market… 

Now, let’s contrast the current market with the early 1960s:

Note that this chart is drawn from the low that occurred in October 2011 after the S&P debt downgrade of the U.S. and the concurrent European debt crisis.  Based on this analog (which is strikingly similar in the rate and magnitude of price movement to date), our current run could carry on much longer. 

Now we’ll look at the analog that Paul Tudor Jones used in 1987:

This is another analog that has some meaningful information in the duration and magnitude of price movement.  A major difference in 1987 was the blow-off top the market made heading into its drop.  Of course we could still get that kind of market pressure from here as well. 

Lastly, let’s compare the current market to the action after the internet bubble burst:

The recent nature of the 2002—2007 bull market makes it a good one to study.  We can see that the current market rise has been much steeper and more volatile that the quiet steady bull run that ended in 2007. Duration-wise, we’ve almost run the course relative to the last big bull market.

So what can we conclude from these market analogs?  First of all, by most accounts this bull market has had a long run and we are certainly due for a more serious correction.  The market effects of Quantitative Easing, however, are a wildcard in almost any sort of analysis.  While we should be on guard for an inevitable pullback, taking money out of the market prematurely has not worked for several years.  Continue to honor your stop loss points  and stay the course until price tells you otherwise.

As always, your thoughts and comments are always welcome - please send them to drbarton “at” vantharp.com

Great Trading,
D. R.

About the Author: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at "vantharp.com".

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