Global Macro Trading Journal

D

Daal

In this journal I will write about my experiences making a living through global macro trading. I have been actively trading this style since late 2006. My returns have been as follows(These the type of returns that I consider the only ones worth talking about, that is returns 'on networth including primary residence')
2007 -9%
2008 +30%
2009 +20%
2010 +22%
2011 +7% YTD

They were made in highly liquid tradeable instruments, so this is scalable to the range of billions. I don't only trade this style(I have some shorter term strategies as well) nor its my only source of income but since 2008 it has been my main source of gains

By 'global macro trading' what do you mean?
I mean studying macro economic trends in order to create tradable ideas and extract returns from financial markets. Think shorting stocks when you predict a recession and things of that kind. Some might call it 'fundamental analysis'

What about technical analysis?
It depends how you define it but I'm not a big fan of chart patterns and indicators, it never made me any money. I do pay attention to statistical analysis and things like that. Most market tops in US stocks occur when the market as a whole(breath) is not making new highs while an index might, if you call this technical analysis(I dont) then yes I follow this but the classical TA of buying patterns and using stochastics I dont believe at all

What is your goal?
For the journal to have the discipline of having to write constantly why I'm in such and such trade, I believe that helps tremendously, my previous journal, helped me ton because you face opposite views and you need to have good arguments otherwise you will note its a weak trade. As you write about a trade you start to note things you didn't previously

For my account, is to return '10% to 40% a year on my networth including primary residence'
Eventually I plan to get in the fund management business and open either a Brazilian 'multimercado' fund or a global macro fund located in a tax haven. I dont feel ready yet to get into fund management

Whats the advantage of doing global macro?
Scalability, if you can do this properly, you can make big money whether you have $10K or $10B

Who are you and whats you background?
I'm a brazilian, living in Sao Paulo. I did a technical high school on IT(computer programming, databases,etc) then I got into online poker playing and casino online(taking advantage of deposit bonuses), which built a stake which I now trade. I never went to college(By choice) but after many years I decided to get in one just to have a degree this year. I study Financial Management(A combo of economics, accounting, business administration, marketing and other stuff)

What are your macro bets for 2011?
Currently I'm long Dec 2011 Fed Funds Futures(Betting the Fed wont raise rates), short the EUR plus I have a part of my networth(about 15%) in gold and silver. Plus a few other small bets but they are not significant. I believe risk assets are overvalued currently

What about longer term views?
I believe commodities are in a bull market(though I'm cautious near term). I'm currently studying an different way to profit from this that does not involve ETFs nor buying seats at exchanges(nor is it a farm). I will write about it when I finish studying this

I invite any student of economics, macro trading, investing and swing/position trading to participate on the journal and agree/disagree with any views exposed here
 
Rosenberg is still on deflationary camp
http://noir.bloomberg.com/avp/avp.h...//media2.bloomberg.com/cache/vkyvY.cXRECA.asf

He always struck me as someone who has a hard time admitting to clients he was wrong. It looks to me that the core CPI has bottomed and headline might get into uncomfortable territory soon. He is correct about the labor unions thing and how this is different from the 70's but there is an wild card here...the Fed's balance sheet.

That probably makes it more likely inflation expectations(iexpectations) will unanchor to the upside than normally. If iexpectations unanchor its bye bye Fed's easy money, they will move quite quickly. I dont believe this scenario is likely but it seems that Rosenberg seems too quick to dismiss the PONTENTIAL for US Stagflation, it certainly isn't a 'tail event' anymore nor its a baseline scenario(50% probability or more) but I wouldn't be quick to dismiss this chance
 
I too trade a global macro style, and my returns are similar to yours over that timeframe, however I would say my std.dev of returns are probably much more volatile than yours.

I am heavier on the TA side and lighter on the FA side but do use both in relatively equal weights along with retail sentiment and other means. Goals are to move to asset management or increase net worth to a point where I am semi retired.

Now to the part where anyone actually cares, my views which I have been reluctant to share ever (crowded trades and paranoia etc) are that commodities are in a bull mkt. Traders whose views I respects are all basically long but retail has not quite participated yet. I agree with you on the CPI stance but disagree on how the Fed is going to play inflation out. The rhetoric from them have suggested that they will keep rates low as long as job #'s are low and unemployment %'s are high, but their hand might be forced if we get hard ticks up in inflation pressures. Contrary to belief it's my view that if the Fed is forced to do that, the USD will go down not up as the view has shifted to debasement and the rate increases are them hitting the panic button trying to keep things in control. If that scenario doesn't play out and the current one does, then my view is the same as yours, that the up moves in comms will be more gradual.

I really don't see any potential for deflation and thus for the comm. bull mkt to end until we've had several rounds of rate increases by the majority of the world's central banks.
 
Look forward to reading your journal as I could use a good schooling in the whys behind position trading and IMHO,
you are definitely a great candidate to be the teacher:D
 
When you look at last century, you only had to choose one particular asset class every 10 or 20 years and ride it to achieve maximal return. Precious metals in the seventies, stocks from the early 80's to the late 90's, commodities from 00 till today...

When you analyze these runs you can clearly distinguish the different phases each of them going through from disbelieve to mania.

So, if you believe this to be true you need to determine which asset to own today and how far it is in it's run.

I believe it is precious metals.

How far are we in the run?

Not in the beginning obviously.

Previous bull markets in the commodity sector (not solely the precious metals) suggest they last somewhere between 15 to 20 years. The first part of the cycle the metals lag to the industrials and oil, as the business cycle turns protection is seeked giving the metals the advantage.

Then after the run new supply (which takes a long time) comes online, other asset classes get so beaten down they become attractive, there is too much speculation etc so you need to get out or you get burned.

Where are we today?

I believe we are entering the phase or are in the phase preceding the mania phase so I have positioned myself accordingly.

I had the luck of my biggest play (outside of my gold itself) outperforming the entire sector (Novagold) which I sold about a month ago to spread the gains in some more speculative plays you could say to get the most when and if we reach the mania part.

I currently own

MDW
SLX
SPM
AVR

as the high risk plays I mentioned before and also own

GBG
HL
AUY

as the more estabished companies of which I am at least relatively sure they actually have some gold and silver in the ground. :D

I'm sure there is a lot of assumption here and bias given my stake in this.

I get it why gold bulls or bugs get frowned upon at times and their tendentious vision on anything related economics or marketwise can be iritating at times.

Many have infact fallen in love with their investment and will have a hard time parting from it should the perfect occasion presents itself.

Whether I myself will have the vision to act at such a time remains as much of a question as whether this run in the metals has any more legs but I am willing to take a chance on both.

Anyway, I will follow this topic as I followed the previous one.

Cheers.
 
Quote from Debaser82:

When you look at last century, you only had to choose one particular asset class every 10 or 20 years and ride it to achieve maximal return. Precious metals in the seventies, stocks from the early 80's to the late 90's, commodities from 00 till today...
More...

Yes, I've been missing out on some of these gains because since 2008 I've been reluctant to buy back commodity ETFs. First I wasn't much bullish in the US economy then I started to be worried about China. And I'm still worried, but I made a mistake, I should have gone back in with a much reduced, maybe 1/5 of the normal position size to reflect the China uncertainty. If they correct by 10% or more I plan to go back to be more long of commodities than just gold and silver and exposure to commodities currencies
 
Quote from granville:

Good luck! I'll be following your progress. I also agree w/y on the FF rates. When did you enter that trade?
More...

Since late 2008 they have been my bread and butter in my portfolio(I was actually betting on that since 2007, but I used the stock NLY, which didn't go too well when the GSEs went into trouble)
 
Quote from Daal:

Since late 2008 they have been my bread and butter in my portfolio(I was actually betting on that since 2007, but I used the stock NLY, which didn't go too well when the GSEs went into trouble)
More...

Should have bought more. Unless the Fed tightens significantly (which may not happen in our lifetimes), you'll never see NLY that cheap again. Stock has been producing IRR's of around 20% annually for its owners for the last 13 or 14 years (assume dividends are reinvested).
 
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