Global Macro Trading Journal

Anyone caught Howard Marks on CNBC today? This guy is great. His book was a major reason why I limited my risk to 30-40% in risk assets (instead of 70-100% as some advocated) at the top. He is now saying you got to buy some, that the market might bottom here or not. He just doesnt' know so he buys some value as he sees it but not with 100% of his cash. I'm doing the same, I still got my dry powder. I'm hoping we will gap down tomorrow but I'm suspecting it will not happen. Because if we do gap 5% lower, that's just a HUGE buying opportunity

In 2008 the VIX stayed at 30 for most of the year and then soared in Sep/Oct
big.chart


Now we are crashing right away, its a quick bear market, so I bet there is a quick buyable bottom. Maybe not THE bottom but a damn good price. Ex: If I can get good stocks at SPX 2200, and then the market bounces to 2600 and tanks to 2000, who cares. I still got in at an excellent price for the long-term (and for the short-term in my day/swing trading account). I highly recommend his interview. Its very easy to get paralyzed by fear now but if dont deploy cash in big crashes like this, when will you?
 
The market initially rallied some on the Schumer proposal of $750B of stimulus to deal with coronavirus but then it sold off. I think this bill might turn into a TARP like authorization with bipartisan support. If that happens, that's the buy signal for a long trade on ES. The commercial paper facility would help but it would have limitations as well. A TARP like bill would do the trick. The market needs to be certain that companies wont go bk due a temporary disruption, a TARP bill would give the Treasury and Fed the authority they need to ensure that. When that hits the tape I plan to buy with a 30 point or so stop. SPX might just run 200 points on something like this
 
CNBC saying fed might do CP facility today. and WAPO reporting Mnuchin is asking for TARP 2 $850b package. Buy stocks and put a stop at 239-240 IMO
 
So I was wrong about the stop level and got choped a bit but I got back in when SPX regained its green level. Index trading is so hard, lots of moves make no sense. It was such an huge obvious buy but yet some idiots were selling everything at the open
 
I did well on this CPP+Tarp government move. Last time I was able to call shit like this was back in 2008-2011 period where I was primarely a macro trader. In 2012/2013 I started to day trade and swing trade, so I didnt had that much time for macro trading. As a result I took more of a passive approach of buy and holding assets, while at the same time having hedges on in case things went bad (similar to Dalio's all weather fund but without margin leverage).

But that left me vulnerable to a black swan like this because I wasn't up to speed on all the news, fundamentals, articles, analysis, etc (after I'm done daytrading, I dont want to do anything related to finance because it just drains me out). So I failed to properly add hedges during the decline. I almost shorted ES at 3112 during a nighly session, but lacked conviction so passed. Then in the surprise Fed cut, markets again ripped to 3120, I failed to short there as well. I finally shorted some at 3030 but was out in the 2780 are as the position was too small to matter.
As the declined occured I realized that I was going to have to spent more time doing analysis to avoid mistakes. So I signed up for the WSJ, CNBC pro (TV feed) and I'm spending more time doing analysis. It paid off as it was clear by reading articles that the Fed and Treasury would have to come out and markets would pop. So lets see how long I can do this for because I'm spending over 12 hours a day, trading or analysing stuff. Its pretty brutal. Its been profitable trading wise (but not so investing wise) but mentally its difficult to keep things up.

Right now I dont have a strong view other than that gold is a buy here. I'm long May GLD 160 calls but I just want sell them to a greater fool. I dont think gold is going there that soon
 
A significant mistake that I did was not going long SPY puts when the Fed popped markets to 3120 on the .50 cut. I do have an aversion to getting involved in options but I'm forcing myself to do it more and more. Had I done that I would have decreased my investing drawdown nicely
 
What are you day trading and swing trading? You could create some sort of systematic rules to hedge exposure so that you don't have to work so hard. It's easy to make mistakes when overworked.
 
traider said:
What are you day trading and swing trading? You could create some sort of systematic rules to hedge exposure so that you don't have to work so hard. It's easy to make mistakes when overworked.
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Today mainly SPY, BA and FNMA. Everyday it changes. The corona names have been great but today I decided to focus on SPY and screwed up a short on CODX. I agree with the systematic rules. I probably need some kind of rule to buy way OTM SPX puts. In Dec/Jan I felt that markets were a little too hot and sold some BRKB, PSH and EWZ to raise some cash, and also to be able to buy China ETFs. I should also have bought some 3m way OTM SPX puts.
 
I recalculated my dry power and it looks like I still got 40% left. I'm long BRL contracts in order to keep my BRL exposure at 40% (since I live in Brazil). But because the BRL has been falling off a cliff I have been having USD losses in these contracts and they have decreased my total assets (In USD). So my cash+gold as a % of total assets increased. I dont consider these BRL futures losses real losses because FX changes to me dont matter much. I keep the % in each currency that I consider appropriate. I should even have more BRL because 70-80% of my costs are in that currency. So one could argue (I wouldn't) that I'm actually making money there
That's the nice thing about having USD assets and USD income (from day and swing trading), the worse Brazil does the richer I get locally.
Its one of the reasons I tend to buy EWZ and BR risk assets, its sort of a hedge in case Brazil takes off and my costs go up. But if Brazil falls off the face of the earth, I will probably repatriate capital, buy all the real estate I can and retire
 
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