I am grappling with one of the psychological problems I identified last week: a propensity to rush into a market after missing a good buying opportunity. The problem today is London Sugar. The price broke above a long-term high yesterday, and this morning initially traded down. Supply is fairly tight and analysts are saying things like “price risks are to the upside” (which is a way of saying the price will go up without actually sticking your neck out). I decided to wait and see how things developed, and the price is now up strongly again. I need to remember a rule and a principle. Rule: in the short term, markets are mean-reverting. Principle: if you miss a trade, you have missed it.

My impression has always been that commodity markets are less fuzzy than, say, equity indices: a breakout is a stronger signal for a commodity, and you are less likely to get a second chance to get in. I will learn as time goes on whether this is really true, but today’s experience coheres with the idea.