I won't lie, I have been seeing my ass trying to short this market.
Having said that it looks like I am in a short on the JSE Top40 (J200) which might have some legs.
I bailed on my AngloGold long position this morning as my stop of R320 was broken and so far it looks like the right decision with ANG looking to re-test the R300 mark.
I'm reading an excellent piece in The Privateer, which I'll post a piece from once I've absorbed it all but maybe if I can throw out some motivation for being short on the Top40 in the short-term.
A) Since the third of March 2009, J200 has rallied from 16400 to 23350 - the rate of appreciation was unsustainable
B) The South African Rand has strengthened heavily in the last few weeks as the US Dollar has weakened. If the appreciation is sustained or continues further then invariably you are going to have some earnings downgrades on the resource counters as the brokers adjust their forecasts.
C) The biggest short-term driver - there is a mountain of paper about to be issued by the likes of RBS in the coming weeks. There has to be questions asked about whether or not the market can adjust for this influx
D) The signs of economic powerhouses adopting protectionist policies are on the up and the decision by Obama to up the tariffs on the tyres imported from China is setting the wrong tone. Unemployment is rising, money in pocket decreasing ... and now you want the consumers to fork out higher prices for the imported goods? Protectionist policies will hurt export based economies hard.
E) Hows this for an interesting stat - for the month of August 2009 there are US$31 of insider stock sales for every US$1 of buys - can you say NO CONFIDENCE?
I am certainly not one of those Uber-Bears predicting the end of the world as we know it, but from every vantage point it would appear things have run too far, too fast. There might be a bit of window-dressing at the end of the September quarter but the enthusiasm to make a real assault on the Dow 10000 mark doesn't seem to be there.
We live in interesting times!
Monday, September 21, 2009
Thursday, September 17, 2009
Shorts, warrants and something in between
Do you ever get the sense that you're at the end of a grand ponzi scheme and suddenly you are the last guy holding out waiting for your money to come in?
I'm starting to get that creepy feeling and I started looking around for a bit of downside protection today. Started shifting away from a lot of my small-cap stocks into either cash or puts today.
Without question my "feelings" are very non-technical and would be thrown out the door by most traders - but having watched the market in the last few days (specifically the US), one can't help but get the sense that the market is running out of steam.
Thought this made for interesting reading - this is the volume traded on Put warrant TOPSBV which is a warrant issued by Standard Bank on the Top40.
Monday - 14 September - 13.5m warrants traded
Tuesday - 15 September - 1.3m warrants traded
Wednesday - 16 September - 6.4m warrants traded
Thursday - 17 September - 7.7m warrants traded
There is a lot of action around this warrant and I get the sense that people are starting to buy some protection against downside risk.
Looking at the US markets this evening I see that they seem to be bumping their heads around 9800 level on the Dow and people have stopped to ask themselves - what next?
I still have a long position on Anglo Gold which seems to be doing ok although I am watching it quite closely. If it doesn't kick on again tomorrow I might be tempted to exit it although I wouldn't be surprised to see gold move up going into the weekend. Looking at the ADR (AU:US) its off just under 2% but the JSE listed counter has not been helped by the dollar being so weak - a little slip in the rand and the gold shares could fly.
Warrants / spreads / products etc
An observation that I thought could be the opening for an interesting debate around linear and de-linear trading products in a market such as these.
I haven't traded warrants in ages, preferring to instead use things like the spread trading platforms offered by our favourite bucketshop. However I was finding myself getting stopped out at losses on that particular platform with some regularity even if the overall trend I was looking at was right.
While there has been this big move toward straight line products like spreads, knock-outs and binary options there is still an important place for a product such as warrants which can absorb some sideways volatilty (without hopefully being strangled by time decay).
The importance of picking the right product to work alongside your trade is often as important as picking the right trade - it means sweet bugger all if you can't execute on the right strategy.
I'm starting to get that creepy feeling and I started looking around for a bit of downside protection today. Started shifting away from a lot of my small-cap stocks into either cash or puts today.
Without question my "feelings" are very non-technical and would be thrown out the door by most traders - but having watched the market in the last few days (specifically the US), one can't help but get the sense that the market is running out of steam.
Thought this made for interesting reading - this is the volume traded on Put warrant TOPSBV which is a warrant issued by Standard Bank on the Top40.
Monday - 14 September - 13.5m warrants traded
Tuesday - 15 September - 1.3m warrants traded
Wednesday - 16 September - 6.4m warrants traded
Thursday - 17 September - 7.7m warrants traded
There is a lot of action around this warrant and I get the sense that people are starting to buy some protection against downside risk.
Looking at the US markets this evening I see that they seem to be bumping their heads around 9800 level on the Dow and people have stopped to ask themselves - what next?
I still have a long position on Anglo Gold which seems to be doing ok although I am watching it quite closely. If it doesn't kick on again tomorrow I might be tempted to exit it although I wouldn't be surprised to see gold move up going into the weekend. Looking at the ADR (AU:US) its off just under 2% but the JSE listed counter has not been helped by the dollar being so weak - a little slip in the rand and the gold shares could fly.
Warrants / spreads / products etc
An observation that I thought could be the opening for an interesting debate around linear and de-linear trading products in a market such as these.
I haven't traded warrants in ages, preferring to instead use things like the spread trading platforms offered by our favourite bucketshop. However I was finding myself getting stopped out at losses on that particular platform with some regularity even if the overall trend I was looking at was right.
While there has been this big move toward straight line products like spreads, knock-outs and binary options there is still an important place for a product such as warrants which can absorb some sideways volatilty (without hopefully being strangled by time decay).
The importance of picking the right product to work alongside your trade is often as important as picking the right trade - it means sweet bugger all if you can't execute on the right strategy.
Saturday, September 5, 2009
Any ideas?
Does anybody know of any offshore Exchange Traded Funds (ETFs) that you can buy through an online broker and pay for on your credit card?
As a South African our locally-listed ETF options are relatively limited. It would be nice to access other markets like Brazil and China.
At the moment locally I have the following ETF's in my portfolio:
The Deutsche Bank X-Trackers - DBX Japan (DBXJP), DBX World MSCI Index (DBXWD) and DBX MSCI US (DBXUS) as well as the New Gold ETF (GLD) and the local government bond offering from investec ZSHARES GOVI (ZGOVI).
Obviously it would be nice to expand the universe a bit and be able to find ETF's that give exposure to other regions as well.
Zecco.com
Has anyone locally had a look at this Zecco.com offering?
It looks quite interesting in terms of a low-cost investment and trading platform. Would be nice to be able to use a credit card to transfer funds into an account though.
Thoughts on which online brokers allow you to transfer funds via your credit card?
As a South African our locally-listed ETF options are relatively limited. It would be nice to access other markets like Brazil and China.
At the moment locally I have the following ETF's in my portfolio:
The Deutsche Bank X-Trackers - DBX Japan (DBXJP), DBX World MSCI Index (DBXWD) and DBX MSCI US (DBXUS) as well as the New Gold ETF (GLD) and the local government bond offering from investec ZSHARES GOVI (ZGOVI).
Obviously it would be nice to expand the universe a bit and be able to find ETF's that give exposure to other regions as well.
Zecco.com
Has anyone locally had a look at this Zecco.com offering?
It looks quite interesting in terms of a low-cost investment and trading platform. Would be nice to be able to use a credit card to transfer funds into an account though.
Thoughts on which online brokers allow you to transfer funds via your credit card?
Saturday, August 29, 2009
Risk vs return
Out of sheer curiousity - if I asked you to put R500 down for a R50 return would you do it?
What if I could do it 8 out of 10 times?
I can't make those promises so I am not going to try but I think it is quite interesting exercise to conduct in terms of trader mentality.
Personally I get the sense that a lot of traders would far rather hit one or two spectacular trades but don't keep score of their smaller losses which add up very quickly.
A lot of people have all of these questions about trading vs gambling - my personal opinion - trading is about building wealth. You build wealth by having a score card which reads more wins than losses and you preserve the capital that you generate.
Gambling involves going out and partying it up when you win well and complaining when you lose.
What if I could do it 8 out of 10 times?
I can't make those promises so I am not going to try but I think it is quite interesting exercise to conduct in terms of trader mentality.
Personally I get the sense that a lot of traders would far rather hit one or two spectacular trades but don't keep score of their smaller losses which add up very quickly.
A lot of people have all of these questions about trading vs gambling - my personal opinion - trading is about building wealth. You build wealth by having a score card which reads more wins than losses and you preserve the capital that you generate.
Gambling involves going out and partying it up when you win well and complaining when you lose.
Saturday, August 22, 2009
I like this!
Courtesy of PSG Online - I like this as it gives some interesting insight into what it takes to be a good trader...
Winning traders execute and monitor their trades in a peak performance state. They are not worried about past mistakes or future profits. All their attention is focused resolutely on the ongoing trade. But it is hard to focus on your ongoing experience when you are worrying about losses, or some other trading problem. It may sound easy to take losses in stride, and avoid letting them interfere with your ongoing experience, but when you are in a severe drawdown, and worried about how you will get out of it, it is hard to avoid letting it get to you. You may become consumed with guilt and anxiety. It is natural. Your future may actually be at stake. But you cannot trade at your best when you are worried. Somehow you must train your mind to put the losses out of your awareness. One way to train your mind to temporarily forget about losses is to schedule worry time.
The natural human tendency to worry about problems protects us. If we did not worry, we might take dangerous risks, and pay a steep price. But worrying can be a problem for successful trading. If you are the kind of person who worries uncontrollably, it may interfere with your ability to pay attention to executing your trading plan. Not only can it distract you when you try to execute a trade, excessive worrying can prevent you from getting a restful sleep at night, or keep you so uptight that you cannot relax. Without proper rest and relaxation, you will find it difficult to mobilise your psychological resources for optimal trading performance.
Worrying becomes a problem when you do it too often and for no good reason. For example, if you have mounted losses and worry about it, you tend to think the same thoughts over and over again. It does not help much. You are likely to just let it interfere with your ability to make back the money you have lost. You need to put such thoughts out of your mind while you trade. When you worry too much, you feel out of control. One way to regain control is to schedule worry time. The basic idea is to set aside a certain part of the day, say seven o'clock, for example, and only worry for 30 minutes during that time. The goal is to worry only at a specific time for a fixed length of time. When you catch yourself worrying during the day, you can tell yourself to stop with the knowledge that you can worry about whatever is bothering you later. Knowing that you can worry during the "worry session" will help you control your worrying.
It may sound a little simplified, but it works for many people who have trouble controlling their worrying. Try it. See if it works. If you are like most people, you will find that you worry less, and can control it. So do not let worrying interfere with your ability to trade successfully. Worrying seems like a natural response to a setback, but it usually gets you nowhere. Rather than hopelessly worry, it is vital that you take an active problem solving approach. If you can control your worrying by scheduling regular worry sessions, you will be able to recover from a setback fast and return to profitability.
"In a crisis, don't hide behind anything or anybody. They're going to find you anyway." - Bear Bryant
Winning traders execute and monitor their trades in a peak performance state. They are not worried about past mistakes or future profits. All their attention is focused resolutely on the ongoing trade. But it is hard to focus on your ongoing experience when you are worrying about losses, or some other trading problem. It may sound easy to take losses in stride, and avoid letting them interfere with your ongoing experience, but when you are in a severe drawdown, and worried about how you will get out of it, it is hard to avoid letting it get to you. You may become consumed with guilt and anxiety. It is natural. Your future may actually be at stake. But you cannot trade at your best when you are worried. Somehow you must train your mind to put the losses out of your awareness. One way to train your mind to temporarily forget about losses is to schedule worry time.
The natural human tendency to worry about problems protects us. If we did not worry, we might take dangerous risks, and pay a steep price. But worrying can be a problem for successful trading. If you are the kind of person who worries uncontrollably, it may interfere with your ability to pay attention to executing your trading plan. Not only can it distract you when you try to execute a trade, excessive worrying can prevent you from getting a restful sleep at night, or keep you so uptight that you cannot relax. Without proper rest and relaxation, you will find it difficult to mobilise your psychological resources for optimal trading performance.
Worrying becomes a problem when you do it too often and for no good reason. For example, if you have mounted losses and worry about it, you tend to think the same thoughts over and over again. It does not help much. You are likely to just let it interfere with your ability to make back the money you have lost. You need to put such thoughts out of your mind while you trade. When you worry too much, you feel out of control. One way to regain control is to schedule worry time. The basic idea is to set aside a certain part of the day, say seven o'clock, for example, and only worry for 30 minutes during that time. The goal is to worry only at a specific time for a fixed length of time. When you catch yourself worrying during the day, you can tell yourself to stop with the knowledge that you can worry about whatever is bothering you later. Knowing that you can worry during the "worry session" will help you control your worrying.
It may sound a little simplified, but it works for many people who have trouble controlling their worrying. Try it. See if it works. If you are like most people, you will find that you worry less, and can control it. So do not let worrying interfere with your ability to trade successfully. Worrying seems like a natural response to a setback, but it usually gets you nowhere. Rather than hopelessly worry, it is vital that you take an active problem solving approach. If you can control your worrying by scheduling regular worry sessions, you will be able to recover from a setback fast and return to profitability.
"In a crisis, don't hide behind anything or anybody. They're going to find you anyway." - Bear Bryant
Sunday, August 9, 2009
Interesting market to be in
It is a tough market to be in at the moment. Every sense is screaming that equity prices are looking increasingly expensive but the market seems to be disagreeing and there is more green in Asia today after increasingly "bullish" economic data out of the US on the jobs front.... I have no comment on this data beyond saying that you cannot have an economic recovery while the number of unemployed continue to rise.
In terms of open trading positions I have a long on Gold from US$955 and Platinum from US$1250. Also taken a bit of a dirty little punt on sugar having read that there is a global shortage which is likely to fuel prices in the coming months.
The sugar one I can't comment on - it really was just a flutter and having looked around the reality of of sugar supply-side shortfall seems to be credible.
Platinum I think will see some increased demand going into the second half of 2009 with some re-stocking in the auto sector (the so called "cash-for-clunkers" programme) and maybe some jewellery demand as the economy stabilises. My guess is we could see platinum testing $1285 again this week.
Gold - The yellow metal has worked hard to get back above the $950 an ounce mark. There have been a couple of stomach curdling $10 - $15 drops on action in the dollar market - which have hurt me on stop losses a couple of times - but the metal seems to be behaving a little better after the sell-off last week. I think we could realistically see gold test $980 this week and I would be tempted to take some part profits at $975 if it gets a bit of wind under its sails.
On the equity front I've continued the habit of accumulating a mixture of ALSI constituents and the exchange traded funds (ETFs) that have been mentioned on this blog before.
In terms of open trading positions I have a long on Gold from US$955 and Platinum from US$1250. Also taken a bit of a dirty little punt on sugar having read that there is a global shortage which is likely to fuel prices in the coming months.
The sugar one I can't comment on - it really was just a flutter and having looked around the reality of of sugar supply-side shortfall seems to be credible.
Platinum I think will see some increased demand going into the second half of 2009 with some re-stocking in the auto sector (the so called "cash-for-clunkers" programme) and maybe some jewellery demand as the economy stabilises. My guess is we could see platinum testing $1285 again this week.
Gold - The yellow metal has worked hard to get back above the $950 an ounce mark. There have been a couple of stomach curdling $10 - $15 drops on action in the dollar market - which have hurt me on stop losses a couple of times - but the metal seems to be behaving a little better after the sell-off last week. I think we could realistically see gold test $980 this week and I would be tempted to take some part profits at $975 if it gets a bit of wind under its sails.
On the equity front I've continued the habit of accumulating a mixture of ALSI constituents and the exchange traded funds (ETFs) that have been mentioned on this blog before.
Saturday, July 25, 2009
Saturday mumblings
I haven't posted in a while but I've got a couple of observations around trading, wealth management and strategy that have occurred to me which I thought I would stick up here on the blog and see if others had some thoughts.
Trade vs. buy-and-hold
I know many traders turn up their noses at old fashioned buy and hold strategies (not "hold and hope" stuff - quality buy and hold). I was looking at the performance of my two respective portfolios since September 2008 and interestingly my buy and hold (wealth) portfolio has outperformed my day-trading portfolio.
I found that quite interesting considering the volatility in the market at the moment.
Does it mean I am a kak trader? The record says I've made consistent money day-trading so I'd like to think I have some skills but I think it does show that a consistent system aimed at wealth and money management will trump short term trading gains.
Trading personality
Have you ever done a personality test? Do you think there is room for one in your trading strategy?
A mate of mine took this What's Stopping You test run by Global Trader and it came out with some interesting results.
The evaluation basically tests some of your knowledge about financial products and your risk profile which is all good and well. Most interestingly for me - the test looked at his personality and it discovered something of an impulsive streak in him. It's something I agree with and something I've also seen in my own trading. Sometimes you find yourself constantly looking for positions to trade or you find yourself picking out a quick and easy "punt".
In his case, I have regularly seen him drop money when it wasn't necessary to take a position and the test actually highlighted for him a problem with his trading personality. If he wants to punt, he can do it on the horses.
Point being that he was made to think about what he was doing and hopefully it improves his trading strategy.
Nothing wrong with asking an expert
I think there are quite a few traders who want to "do it their way".
By following advice from other traders they feel like they are cheating a bit. I haven't traded much recently and when I have it has been very haphazardly and not been good for the wallet.
I stepped back and took one of the recommended "house" views from one of my service providers and BOOM I was back on the scoreboard within 6 hours.
Sometimes you don't have to go against the grain to pick good positions.
Just some thoughts - use 'em don't use 'em....
Trade vs. buy-and-hold
I know many traders turn up their noses at old fashioned buy and hold strategies (not "hold and hope" stuff - quality buy and hold). I was looking at the performance of my two respective portfolios since September 2008 and interestingly my buy and hold (wealth) portfolio has outperformed my day-trading portfolio.
I found that quite interesting considering the volatility in the market at the moment.
Does it mean I am a kak trader? The record says I've made consistent money day-trading so I'd like to think I have some skills but I think it does show that a consistent system aimed at wealth and money management will trump short term trading gains.
Trading personality
Have you ever done a personality test? Do you think there is room for one in your trading strategy?
A mate of mine took this What's Stopping You test run by Global Trader and it came out with some interesting results.
The evaluation basically tests some of your knowledge about financial products and your risk profile which is all good and well. Most interestingly for me - the test looked at his personality and it discovered something of an impulsive streak in him. It's something I agree with and something I've also seen in my own trading. Sometimes you find yourself constantly looking for positions to trade or you find yourself picking out a quick and easy "punt".
In his case, I have regularly seen him drop money when it wasn't necessary to take a position and the test actually highlighted for him a problem with his trading personality. If he wants to punt, he can do it on the horses.
Point being that he was made to think about what he was doing and hopefully it improves his trading strategy.
Nothing wrong with asking an expert
I think there are quite a few traders who want to "do it their way".
By following advice from other traders they feel like they are cheating a bit. I haven't traded much recently and when I have it has been very haphazardly and not been good for the wallet.
I stepped back and took one of the recommended "house" views from one of my service providers and BOOM I was back on the scoreboard within 6 hours.
Sometimes you don't have to go against the grain to pick good positions.
Just some thoughts - use 'em don't use 'em....
Subscribe to:
Posts (Atom)
Posts
