Global Macro Trading Journal

Random thought: People don't seem to realize the fragility of pessmistic mindsets in the stock market because they don't mark their nonsense/crap to market. TSLA IPO'ed at $17. Now its at $300 and people continue to talk shit about as if that behavior made sense. Eventually they will be right and say 'see, I told you TSLA was a short'. What they don't say is how exponentially wrong they were and for how long
 
Daal said:
Did a quick monte on excel to check out the system comparrison idea

Series 1 is 2-1 system is a 0.66% win rate system that pays +1% 33% of the time, +2% 33% of the time and loses -1% 33% of the time
The other system is the same system, except is loses -0.20% per period but 2% of the time it gets a bonus return of anywhere between +1% to +40% (to simulate a multibagger in the portfolio)

View attachment 175210

Series 2 is more convex
Of course, you got to have positive expectation in that option (or equity, or whatever is being purchased) but even this might understate results given that in real life, sometimes even bigger returns happen (AMZN was a 600x from its IPO) and the return has no real limit
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But this implies that you buy and hold forever. I don't think people actually do that unless they are involved in the company.
 
baggerlord said:
But this implies that you buy and hold forever. I don't think people actually do that unless they are involved in the company.
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Good investors are known to hold multi-baggers stocks for a long-time. Buffett has many in his portfolio that he bought decades ago. Ackman held General Growth for a 20x gain (IIRC). I believe Peter Lynch described some 10x gains in his book. Even Hempton bragged to me via email that he bought FNMA preffereds at pennies on the dollar and I believe he is still long.
It can be done. It just ain't easy, especially because the NY influenced media and other people are almost in a conspiracy to get people out of certain stocks. They will constantly bring out nonsense and say that these stocks are too high (perhaps due to the influence from the NY brokers, paid by commissions, in the overall NY culture). That's why I bring up psychology and the fragility of negative mindsets. There is a balance between positivity and negativity that seems to be a fine art. I believe the balance is around 70-75% positivity and 25-30% negativity but even these numbers don't mean much because the whole thing seems more of an art then precise math. I believe balance/lack of balance in the mindsets its like pornography, you know it when you see it
 
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S&P500 total return index since 2009, that I mentioned the other day. Maybe the US was lucky but the idea is that stock bears/pessimists are not aware that when their move to cash/shorts is right, they are right logarithmically (decelerating benefits), when they are wrong, they are wrong exponentially
 
Daal said:
Decided to check my exposures to see if I want to make any changes one way or the other

View attachment 175260

I was actually running a bit of less risk that I thought. Under method 2 (where I separate low risk equity like OAK/NYRT/BR REITs from the others) I'm long 52% stocks (and there are dozens of companies behind BRKB, PSH and EWZ, so highly diversified), if I remove non-US exposures, I'm only long 28%
I think I will just trimm a bit of BRKB to prepare for Trump's volatility but that's it
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I forgot to include GM and GM calls. I still got 1% there
 
Daal said:
-Read everything in finance/economics/statistics that Taleb says its shit, because odds are, it has some applications that are not shit
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Here is a good example of that, although outside finance
https://www.inc.com/glenn-leibowitz/the-single-reason-why-people-cant-write-according-.html

"a difficulty in imagining what it is like for someone else not to know something that you know. The curse of knowledge is the single best explanation I know of why good people write bad prose."

I'm a big sufferer of that. I think I will buy that Pinker book
 
Daal said:
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My EWZ moving average stop is closing to being triggered but even if it does, I will try to stick around with the full position for a little longer (perhaps use the $33 level as a short-term stop). There is a mini coup going on in Brazil, the house president is trying to take down President Temer according to some reports. If he suceeds, markets are likely to soar as political capital will be reset and the economic team will not change. There will be a better chance that reforms will be passed. There is a criminal indictment against Temer set to be voted by congress and if approved, will lead to a trial in Supreme Court, and the coup would involve getting congress to accept the indictment.Temer has turned into Dilma and Maia (the house president) is the new Temer
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EWZ ripping hard on Lula's conviction. I think this hybrid approach then to blindly following a Moving Average stop, the idea is, when the stop is about to be triggered, check to see if the current situation has room for a more inteligent stop placement. if it doesnt, stick with it, otherwise, override the stop (but still put a emergency stop somewhere, in this case it was a $33-$32.50)
 
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