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Global Macro Trading Journal
- Thread starter Daal
- Start date
The reason I'm willing to take some heat in terms of stock market drawdown is because the biggest mistake I ever made in terms of investing/macro was not being long any stocks from 2009 to 2012. One of my flaws is my anti-equity bias, I just hate the idea of losing a lot in equities along with the investing public. But its a flaw that needs to be fixed, equities go up, thats what they do. If you are a pretty good timer, you can catch a short in indexes and make some money here and there but overall you are likely to suffer a lot to make very little. I think Soros wrote in one of his books how shorting stocks never made him much money. Of course, I'm referring to investing here. Intraday and swing wise, I love shorting and I believe there is a lot of money to be made there. But in a multi-month multi-year basis its hard. Its much easier to be on the long sideSPX is off almost 10% from Dec 31 close. If you believe there is no recession, yes now is looking very attractive. Problem is, SPX doesn't need a recession to close say -10-15% for the year. We could see SPX off 20% before we make a multi year rally, the question is: what's your drawdown tolerance?
I'm with the camp of ST we are oversold in SPX, but if we ironically can't stage a rally to '15 highs, SPX could see sub 1800 or even 1700 1st. I'm not keen on those drawdown numbers.
So I'm forcing myself to do it. From 2013 to the middle of 2015 I stayed out to avoid distractions to my day trading. But now I'm starting to notice some benefits as well as some good opportunities. So I will force myself to get long some things that I like with a time frame of 1-2 years
The reason I'm willing to take some heat in terms of stock market drawdown is because the biggest mistake I ever made in terms of investing/macro was not being long any stocks from 2009 to 2012. One of my flaws is my anti-equity bias, I just hate the idea of losing a lot in equities along with the investing public. But its a flaw that needs to be fixed, equities go up, thats what they do. If you are a pretty good timer, you can catch a short in indexes and make some money here and there but overall you are likely to suffer a lot to make very little. I think Soros wrote in one of his books how shorting stocks never made him much money. Of course, I'm referring to investing here. Intraday and swing wise, I love shorting and I believe there is a lot of money to be made there. But in a multi-month multi-year basis its hard. Its much easier to be on the long side
So I'm forcing myself to do it. From 2013 to the middle of 2015 I stayed out to avoid distractions to my day trading. But now I'm starting to notice some benefits as well as some good opportunities. So I will force myself to get long some things that I like with a time frame of 1-2 years
Being long equities for the long term is a good strategy. However, you have to be okay with graham style risk measures (permanent loss of capital) vs path dependent ones.
So I applied the bond idea (overweight duration in stable periods, underweight in panics) by going into 0 duration (cash). I will gradually add it back as the bounce goes on. Overnight session should give a clue on whether this has true legs or if just tanks back down like the last time
Today was a very frustrating day, day trading wise. There were three catalysts for a significant bounce, the Draghi comments (which in October lifted US equities for days), the oil reversal and into the close Kocherlakota tweeted an article saying that it was time for a U-Turn in Fed policy (nobody picked up on it though, not CNBC not bloomberg and not ZH)
Usually those would be very strong catalysts for a huge bounce in equities, given how equities are oversold. Somehow today that didn't work. I'm not quite sure what is going on but I still think equities will act on these elements with a lag. I can't fight it though so I dumped my SPY longs. But it still feels like things will reverse from here. I mean the Draghi comments were so meant to push assets higher you would think it would work (i mean, the guy was screaming buy equities), he's even got the support from the Bundesbank now. But somehow the usual setup of oversold + CB support failed. Even with additional 2 catalysts (although the last one seems to have been missed by most)
Usually those would be very strong catalysts for a huge bounce in equities, given how equities are oversold. Somehow today that didn't work. I'm not quite sure what is going on but I still think equities will act on these elements with a lag. I can't fight it though so I dumped my SPY longs. But it still feels like things will reverse from here. I mean the Draghi comments were so meant to push assets higher you would think it would work (i mean, the guy was screaming buy equities), he's even got the support from the Bundesbank now. But somehow the usual setup of oversold + CB support failed. Even with additional 2 catalysts (although the last one seems to have been missed by most)
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