Don't want to clutter but had to do this:
@justrading Trying to PM, would appreciate a shout to the inbox from yourself.
@justrading Trying to PM, would appreciate a shout to the inbox from yourself.
Global Macro Trading Journal
- Thread starter Daal
- Start date
"The European Central Bank is expected to say on Thursday that it will buy large quantities of government bonds and other assets for longer than initially planned, an attempt to protect the eurozone economy from an increasingly unpredictable political landscape."
http://www.nytimes.com/2016/12/07/b...e-interest-rates-bonds-italy.html?ref=economy
http://www.nytimes.com/2016/12/07/b...e-interest-rates-bonds-italy.html?ref=economy
Paul Singer from Elliott goes from saying Trump will lead to a depression to being optimistic in his administration. When will other folks who consider themselves so smart will realize that they missed something with Trump? Probably within a couple years but by then it will be too late
But I get it, its an easy mistake to make, specially for market folks who love to say 'this will lead to disaster'
But I get it, its an easy mistake to make, specially for market folks who love to say 'this will lead to disaster'
Looking back this year, my biggest mistake have been not stepping in and buying when it looked scary to buy. I bought and sold a good chunk of BRKB right at the lows of $125. It seems like forever ago but back then it was starting to get to a consensus that the US was going to face a recession. US stocks usually drop 30% on average in those. So I thought ES could go as low as 1500 and I wanted to avoid an extra drawdown given that I was just starting out at being deeply invested while at the same time managing capital as a day/swing trader.
Of course, I ended up paying for it very much. I had to watch it rip all the way to $150, and I owned just a little. Then I had to hold my nose and buy at $146 (and watch it drop to $142). Now the stock sits at $164 and its probably going to $175+
But what made this mistake so bad was the Buffett buyback, that would limit the downside a lot. If ES went to 1500 that was nothing to be afraid about, it was going to be a good opportunity to buy BRKB right along with Buffett as the stock collapsed to the buyback price
That's a huge lesson, its a mistake that I made in the past many times but I have gotten better at overtime. I almost made it with GREK recently, I didnt want to buy it at 7.40, I forced myself to buy. Then when it dropped to $7.20 I felt all regretful, of course, now at $8.30+ I feel rewarded for the discipline
When you find something cheap, buy, dont wait for it to get cheaper. Buy a chunk, and own some cash so you can add more if it goes lower (up to a certain portfolio risk management allocation limit, thats a very important limit if you are using fundamental analisys), but you got to buy some. Some amount that will hurt if it drops. If you dont learn how to live with that pain, you will miss out HUGE profits. That will cost you a lot more than a temporary pain/loss
Call it investing shock therapy
Of course, I ended up paying for it very much. I had to watch it rip all the way to $150, and I owned just a little. Then I had to hold my nose and buy at $146 (and watch it drop to $142). Now the stock sits at $164 and its probably going to $175+
But what made this mistake so bad was the Buffett buyback, that would limit the downside a lot. If ES went to 1500 that was nothing to be afraid about, it was going to be a good opportunity to buy BRKB right along with Buffett as the stock collapsed to the buyback price
That's a huge lesson, its a mistake that I made in the past many times but I have gotten better at overtime. I almost made it with GREK recently, I didnt want to buy it at 7.40, I forced myself to buy. Then when it dropped to $7.20 I felt all regretful, of course, now at $8.30+ I feel rewarded for the discipline
When you find something cheap, buy, dont wait for it to get cheaper. Buy a chunk, and own some cash so you can add more if it goes lower (up to a certain portfolio risk management allocation limit, thats a very important limit if you are using fundamental analisys), but you got to buy some. Some amount that will hurt if it drops. If you dont learn how to live with that pain, you will miss out HUGE profits. That will cost you a lot more than a temporary pain/loss
Call it investing shock therapy
Ackman raises a possibility about VRX that the shorts didnt seem to have considered. That Pearson went "crazy" starting in 2015. He talks about how he overpaid for Salix and the whole Philidor thing happened. So now there is one more way the shorts can be wrong and face a huge loss. That the Pearson pre-2015 buys were solid but his post 2015 were not. The shorts seem to think it is all black and white, either Pearson overpaid for everything or he didnt think. Ackman is saying that only happened post 2015. He was handpicked by Value Act after all, and he walked away from AGN in 2014. How come he didnt want to overpay in that AGN deal? It doesnt take that many solid pre 2015 buys to make the stock worth a lot, specially given that the loss from Salix appears quite limited.
Who is in a better position to tell what happened, folks sitting in a basement in Australia or people with inside info and who worked with him for years?
Man, I really fucking hate short selling. I'm trying to become more of a swing/position trader these days as opposed to a short based daytrader, which I have done for 4 years. For swings and position trades I will take a short here and there but most of the time its a long based game (its a bull market after all) and the shorts tend to be only no brainers. This week I did that for 4 days, it was a very relaxing week, then yesterday I decided to take a short overnight, one that wasn't of one those no brainers (IDXG). Of course, the stock gaps up big, that early loss on the day just drags you into daytrading it the whole day trying to make it back. I had 10x the stress, had to put trades that were way harder and had 10x as much pain as compared to the other days of the week.
What's tough is even though I absolute hate short selling, I believe I'm a pretty good shorter. In the small caps that I tend to trade a lot of shorts blow up because they dont manage risk, I'm never that guy, I ALWAYS bail out at some point, I dont care what the fundamentals are. In fact, one of my rules is, the worst the fundamentals, the higher the stock can go (because the margin calls of the sturborn shorts). So when I see a stock doing something ridiculous, I know that if I stick around, I will make some money. It gets very tempting to get involved, when you lose money, then its really hard not to get involved. I really need to stop getting involved in these, except maybe 3-4 times a year where something is just a huge opportunity
It just feels like the pain is not worth the money. There are just too many players shorting these stocks these days, the second you do a trade that is obvious, its crowded and you are dead
What's tough is even though I absolute hate short selling, I believe I'm a pretty good shorter. In the small caps that I tend to trade a lot of shorts blow up because they dont manage risk, I'm never that guy, I ALWAYS bail out at some point, I dont care what the fundamentals are. In fact, one of my rules is, the worst the fundamentals, the higher the stock can go (because the margin calls of the sturborn shorts). So when I see a stock doing something ridiculous, I know that if I stick around, I will make some money. It gets very tempting to get involved, when you lose money, then its really hard not to get involved. I really need to stop getting involved in these, except maybe 3-4 times a year where something is just a huge opportunity
It just feels like the pain is not worth the money. There are just too many players shorting these stocks these days, the second you do a trade that is obvious, its crowded and you are dead
http://www.wsj.com/articles/the-american-dream-is-fading-and-may-be-very-hard-to-revive-1481218911
Here is the risk to the 'Trump will be good for stocks' trade
Capital (corporations) share of GDP pie is at record highs (as seen through profits as % of GDP). While labor has not done as well. Probably not as bad as that chart shows (it only has one age range in it) but still, they have not done all that well relative to Capital.
Trump run saying he will protect the white collar worker, to the extend that he achieves that by sacrificing Big Capital (corporations), profits will have to decline as a share of GDP
But if he achieves that by making the pie larger (higher GDP growth), then it wont be a big deal as both labor and capital can benefit. Especially if that extra growth goes more to labor than to capital, that will give him the ammo he needs to defend his policies
Here is the risk to the 'Trump will be good for stocks' trade
Capital (corporations) share of GDP pie is at record highs (as seen through profits as % of GDP). While labor has not done as well. Probably not as bad as that chart shows (it only has one age range in it) but still, they have not done all that well relative to Capital.
Trump run saying he will protect the white collar worker, to the extend that he achieves that by sacrificing Big Capital (corporations), profits will have to decline as a share of GDP
But if he achieves that by making the pie larger (higher GDP growth), then it wont be a big deal as both labor and capital can benefit. Especially if that extra growth goes more to labor than to capital, that will give him the ammo he needs to defend his policies
I'm running the numbers in my Brazil study and the results have been quite surprising
Here are some finds (numbers might change in the future, if I detect problems in the data)
-The real returns of simply holding USD during Brazil's hyperinflation were negative. You had to buy assets (stocks, bonds) with it or you consistently lost money (in real terms, taking into account Brazil's inflation rate). 1989 and 1990 were particularly interesting years, Brazil's inflation was 1972.91% and 1620.97%, yet the USD exchange rate "only" appreciated 1401.29% and 1397.27%, so sitting on USD funds (a popular strategy used by people here) is flawled, specially if you consider an asset management fee of 1-2% as the banks usually charge in these funds (these days anyway, back in the day it would probably cost a lot more). Meanwhile they pay you nothing in terms of interest. Its just a bad place to put money in and I guess it also shows that the FX market is not dumb
-The Bovespa beat the S&P500 (entire sample, but not by a big margin)
-Savings accounts returned 2% a year (real). tax free. 1968-2016
-Real estate (and I got less data on that, only 1975 to today, as compared to 1968 for everything else), produced 1.56% a year (real). But whats more amazing, it did that even WITHOUT taking into account rents. I dont have data (yet) on cap rates but still. To almost match savings accounts without rents I thought was pretty good
-Gold returned over 5% a year (real)
Pretty soon I'm going to run numbers taking into account relabancing. I'm sure gold's benefit there will be significant
Here are some finds (numbers might change in the future, if I detect problems in the data)
-The real returns of simply holding USD during Brazil's hyperinflation were negative. You had to buy assets (stocks, bonds) with it or you consistently lost money (in real terms, taking into account Brazil's inflation rate). 1989 and 1990 were particularly interesting years, Brazil's inflation was 1972.91% and 1620.97%, yet the USD exchange rate "only" appreciated 1401.29% and 1397.27%, so sitting on USD funds (a popular strategy used by people here) is flawled, specially if you consider an asset management fee of 1-2% as the banks usually charge in these funds (these days anyway, back in the day it would probably cost a lot more). Meanwhile they pay you nothing in terms of interest. Its just a bad place to put money in and I guess it also shows that the FX market is not dumb
-The Bovespa beat the S&P500 (entire sample, but not by a big margin)
-Savings accounts returned 2% a year (real). tax free. 1968-2016
-Real estate (and I got less data on that, only 1975 to today, as compared to 1968 for everything else), produced 1.56% a year (real). But whats more amazing, it did that even WITHOUT taking into account rents. I dont have data (yet) on cap rates but still. To almost match savings accounts without rents I thought was pretty good
-Gold returned over 5% a year (real)
Pretty soon I'm going to run numbers taking into account relabancing. I'm sure gold's benefit there will be significant
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Goes to show, even though the BR currencies were free falling in the FX market almost every day, they were STILL undervalued if you took into account the extra returns you could achieve in some asset classes (stocks, real estate and perhaps some bonds). I wonder if that is not the case right now in Venezuela. Owning a good property in Caracas probably will pay off big time, when at some point in the next 20 years, the socialist dictatorship falls apart. But in the mean time, its likely to keep up with inflation plus provide a real return
Of course, one has to consider property rights risks and things like that
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