Can't believe I haven't wrote anything for 3 years and came back to write something.... "Everyone should know how to invest" is still my belief though.
Ever heard of a logic game about "pirates distribute gem"? Five pirates would like to find a way to distribute 100 gems among them. Each pirate raises an idea about how to distribute in a randomly determined order. After one pirate raised his idea, the five of them can vote for or against the idea. This idea will only be accepted if the idea receives more vote for than against. If the idea is being rejected the pirate who suggests will be dumped to the sea for the sharks. The next pirate will suggests and they will go through the voting again, until a suggestion is accepted. Now, as the first pirate who is going to suggests, how would you suggest?
If you want to try to solve this yourself then sit back and enjoy the thinking before you read on. I'll try to go through the answer very quickly here. But my blog here is not about the answer, I will get to the point why I raise this topic later. Anyone who thinks they know the answer already can skip the answer part and read on.
Answer:
Think backward. Let's name the 5 pirates as A, B, C, D and E, with A as the first pirate to suggest, and E the last one in that alphabetical order. If you are D, you know regardless of how you suggest, you sure will get nothing because even a tie you lose, as E can always vote against you so you can never win. So if you are C, you know as long as you give D something he will vote for your suggestion. So C would suggest (99,1,0), or if D is scared E will vote against him and dump him into the sea, C can even suggest (100,0,0) and D will still vote for C's plan.
Let's assume the worst case for C so C will suggest (99,1,0). Now if you are B and you know if you got dumped into the sea, that will be what C is going to suggest, so E basically will get nothing and D at most will get 1. So if you are B you can simply suggest (97,0,2,1). So E will get 1, and D gets 1 more to 2, you should then have 3 votes to 1 and your plan will be accepted.
Finally if you are A, and you know if you got dumped into the sea, that will be what B is going to suggest. Now you know C will get nothing and as A you need only 3 votes. So A can suggest the following: (97,0,1,0,2)
so you can keep 97 gems. Not sure if this answer is very surprising to you.
Now you wonder why I tell this logic game in here, shouldn't this blog about investment?
Of course this is related to investment. Remember the financial tsunami? Financial institutions invested in too much highly-leveraged investment vehicles and when these vehicles defaulted, they got burned and the de-leveraging process brought the whole world's financial systems down with it. The US government, printed a lot of money by putting up tons of Treasury bonds as collateral with the Federal Reserve, tried to save the economy as many banks were simply insolvent.
What happened next was we saw many big investment banks (that still survived after the tsunami) paid historical high bonus to their employees as these banks made a lot of money by using the printed money from the government. These banks simply used the money the government printed to make those money. Can we say these people saved the financial system by using the government's money? Can we say these people made money by solving a problem that they created?
This made me thought of the logic game. These investment banks was the first pirate. They have the full control on how to distribute the gems, and they surely know very well how they should distribute. Since the government needed to inject the liquidity through these banks, these banks have the full control on how to distribute the money. And here you go, by going through similar logic, these banks for sure got the biggest chunk of the money and the people who could not have a say about how to distribute the money simply got almost nothing.
As you see, investment is not an easy game to play. As if you don't have a say about how to distribute the wealth, it's very difficult to play the game and earn a fortune.
Saturday, May 14, 2011
Sunday, April 27, 2008
the columnist who shorted BIDU again
Remember there is a columnist in a chinese newspaper in Toronto who (paper trade) and shorted Baidu at $180, held and saw BIDU hit $429, then only to cover the short at around $330? This same guy shorted BIDU again in his newspaper paper trading account at around $300 about 2 weeks ago, and now he covered at $360. He said there was an email kicked his ass by saying that he pretends he is a professional, but no real knowledge on investing/trading. He didn't post the whole email there, but he posted 2 other emails that paid high respect to his analysis.
I don't know how many emails this guy received, and it doesn't matter that the comments are good or bad. But it's funny that I found being a columnist is actually very easy. One of the email he posted said his analysis is good and meaningful, and losing money can happen to anyone anytime, so losing money is not an issue, who can say this columnist cannot make back all the money he lost in the future?
I assume this email is real, but sounds like it's somebody who take "money" as evil or garbage, so, it doesn't matter if we lose them. Yes, who cannot say he cannot make it back, but as well, who can guarantee he can definitely make it back??
He covered his position at $360, a loss of 20% in about 2 weeks. If you went back to the column when he said he will short BIDU at around $300, you'll see he didn't really give much strong reason or analysis to back his decision. He just said BIDU went up fiercely in 2 weeks from about $200 to $300, the sharp increase in a short time period can also serve as a reason to drop sharply very quickly. Well, what a reason. I totally don't know this can be consider as an "analysis".
This columnist from time to time will tell people that he already knew subprime could create a very big problem, however, didn't really see him do anything to take advantage of it. No wonder he can only write column in a newspaper but not a fund manager. This guy also will tease himself in the column, of course he is not really teasing himself, he just wants to separate himself from the general public to show that he is different than other people. This guy is too funny, not much more reliable than Jim Cramer.
I made mistake too. In the meantime I consider I didn't sell the SDD as a mistake. I should have sold it when it first rebounded or at least second rebound to $80. Now i'm sitting at about 13% loss, really need to think about what to do.
DGP as well, I should have sold like I talked about SDD above, then I should have limited my loss below 10%. Oil was going up so much so fast but gold was not moving and I should know that gold is relatively weak now.
So many bad news about oil, but I still think oil cannot just keep going up, it has to take a rest, and i think $120 is a good chance that it will retreat before it can go up further. But given my entry point of HOD.TO was not very good, probably I won't make much money on it.
Finally got some LOR, but since the market is still weak (stocks go up because bad news is not as bad as they originally thought, but not much good news), i better take a deeper look before i want to commit more money to ETFs like that.
I don't know how many emails this guy received, and it doesn't matter that the comments are good or bad. But it's funny that I found being a columnist is actually very easy. One of the email he posted said his analysis is good and meaningful, and losing money can happen to anyone anytime, so losing money is not an issue, who can say this columnist cannot make back all the money he lost in the future?
I assume this email is real, but sounds like it's somebody who take "money" as evil or garbage, so, it doesn't matter if we lose them. Yes, who cannot say he cannot make it back, but as well, who can guarantee he can definitely make it back??
He covered his position at $360, a loss of 20% in about 2 weeks. If you went back to the column when he said he will short BIDU at around $300, you'll see he didn't really give much strong reason or analysis to back his decision. He just said BIDU went up fiercely in 2 weeks from about $200 to $300, the sharp increase in a short time period can also serve as a reason to drop sharply very quickly. Well, what a reason. I totally don't know this can be consider as an "analysis".
This columnist from time to time will tell people that he already knew subprime could create a very big problem, however, didn't really see him do anything to take advantage of it. No wonder he can only write column in a newspaper but not a fund manager. This guy also will tease himself in the column, of course he is not really teasing himself, he just wants to separate himself from the general public to show that he is different than other people. This guy is too funny, not much more reliable than Jim Cramer.
I made mistake too. In the meantime I consider I didn't sell the SDD as a mistake. I should have sold it when it first rebounded or at least second rebound to $80. Now i'm sitting at about 13% loss, really need to think about what to do.
DGP as well, I should have sold like I talked about SDD above, then I should have limited my loss below 10%. Oil was going up so much so fast but gold was not moving and I should know that gold is relatively weak now.
So many bad news about oil, but I still think oil cannot just keep going up, it has to take a rest, and i think $120 is a good chance that it will retreat before it can go up further. But given my entry point of HOD.TO was not very good, probably I won't make much money on it.
Finally got some LOR, but since the market is still weak (stocks go up because bad news is not as bad as they originally thought, but not much good news), i better take a deeper look before i want to commit more money to ETFs like that.
Thursday, April 24, 2008
Sold Nintendo and SKF, bought ultra short oil
finally sold my NTDOY.PK at $70.95, i'm not sure i ever received any dividend, or will be receiving, at least i sold at a price that is closed to breakeven.
At the same time I sold SKF at $109.08, not the best price but very good still, as I made a 6% since I bought last Friday, can't complain.
On the other hand I think the oil went up too fast, I am expecting a short term pull back to close to $100 before it can go up again. But I think i didn't get into it at a good price at $10.99, now it's at $10.77 so i'm down by 2% in the blink of my eye..... I bought in at before 10:30am, somehow I think i should not buy from there. If i at least wait until 11am i definitely should get a better price.
earnings report period cannot serve as the main gauge of the direction of market because there could be too much noise. as i always say i want to see the follow through trend and volume, which should only happen after the earnings season. If there are no news and people still keep buying and price at least does not drop, there could be something. In the meantime let's watch and learn.
At the same time I sold SKF at $109.08, not the best price but very good still, as I made a 6% since I bought last Friday, can't complain.
On the other hand I think the oil went up too fast, I am expecting a short term pull back to close to $100 before it can go up again. But I think i didn't get into it at a good price at $10.99, now it's at $10.77 so i'm down by 2% in the blink of my eye..... I bought in at before 10:30am, somehow I think i should not buy from there. If i at least wait until 11am i definitely should get a better price.
earnings report period cannot serve as the main gauge of the direction of market because there could be too much noise. as i always say i want to see the follow through trend and volume, which should only happen after the earnings season. If there are no news and people still keep buying and price at least does not drop, there could be something. In the meantime let's watch and learn.
Friday, April 18, 2008
why did market go up?
i forgot to say i bought HFU.TO at $13.75 on Tuesday, probably i was too busy on other stuffs and too tired.....
on the other hand i sold HFU.TO at $15.04 and URE at $36.37 today. i missed the best chance to sell URE in the morning (because i was in stupid and boring meeting in office), then i was a bit hesitate in the afternoon while URE was still trading around $37.50. i should have known that after a very bullish week we should trim back position on such a Friday. Well you know more every time you make a decision, right or wrong. At least i'm glad that i still made money on it, though both positions were a bit shy of 10% (in less than a week).
I was quite disappointed about SDD and DGP though. I should have sold SDD earlier when it went back to a bit below $80. I should sold it like I sold SRS and SKF to cut my loss. You wonder how did i come up with the decision to cut those ultra short position? that's because i saw the 20-day EMA of these ETFs (or on the other hand the 20-day EMA of the ultra long ETFs) made a lower high (a higher low). As well, the 20-day EMA has been diverged from the 200-day EMA by quite a lot. As i said, even if things will go down in a longer term, nothing will just go down in a straight line, specially a ETF, not individual stock.
DGP is another disappointment due to 2 problems. The first one, oil is making new high but gold is not moving. Sooner or later after I trim this position i will go for oil for US dollar-play instead of gold. i will still go for gold by a bit but won't be large position. The second problem, I don't see if this ETF is paying me interest/dividends, i wonder if this is priced in the ETF price or what. anyway, can't figure that out.
people are wondering how come market is going up with such big write-offs from financials? i don't think i have a very clear reason, I just tried to react to what I saw, and so far other than UYG I handled that pretty okay. Sometimes you need to get what market gives you before you ask too many questions, otherwise you will miss the chance.
Now that by end of the day I got back into SKF at $102.64, a small position. After a very good week of rally I guess the market needs to relax a bit. Anyway I still have my UYG so I'm actually hedged at this point, but UYG is an ultra long that I can always hold longer if you believe market eventually will go back up.
on the other hand i sold HFU.TO at $15.04 and URE at $36.37 today. i missed the best chance to sell URE in the morning (because i was in stupid and boring meeting in office), then i was a bit hesitate in the afternoon while URE was still trading around $37.50. i should have known that after a very bullish week we should trim back position on such a Friday. Well you know more every time you make a decision, right or wrong. At least i'm glad that i still made money on it, though both positions were a bit shy of 10% (in less than a week).
I was quite disappointed about SDD and DGP though. I should have sold SDD earlier when it went back to a bit below $80. I should sold it like I sold SRS and SKF to cut my loss. You wonder how did i come up with the decision to cut those ultra short position? that's because i saw the 20-day EMA of these ETFs (or on the other hand the 20-day EMA of the ultra long ETFs) made a lower high (a higher low). As well, the 20-day EMA has been diverged from the 200-day EMA by quite a lot. As i said, even if things will go down in a longer term, nothing will just go down in a straight line, specially a ETF, not individual stock.
DGP is another disappointment due to 2 problems. The first one, oil is making new high but gold is not moving. Sooner or later after I trim this position i will go for oil for US dollar-play instead of gold. i will still go for gold by a bit but won't be large position. The second problem, I don't see if this ETF is paying me interest/dividends, i wonder if this is priced in the ETF price or what. anyway, can't figure that out.
people are wondering how come market is going up with such big write-offs from financials? i don't think i have a very clear reason, I just tried to react to what I saw, and so far other than UYG I handled that pretty okay. Sometimes you need to get what market gives you before you ask too many questions, otherwise you will miss the chance.
Now that by end of the day I got back into SKF at $102.64, a small position. After a very good week of rally I guess the market needs to relax a bit. Anyway I still have my UYG so I'm actually hedged at this point, but UYG is an ultra long that I can always hold longer if you believe market eventually will go back up.
Tuesday, April 15, 2008
URE
so busy at work that don't even have time to write anything, but gotta update the status.
I sold my SKF at $117.06, loss on commission after 3 weeks. as you see sometimes even if you are right in the direction but got in at the wrong time, you will see your profit sinks.
On the other hand I just buy into URE this afternoon at $32.89, and again thinking about increasing a bit position in UYG and maybe some other dividend paying ETFs. In the past I had LOR, which is a dividend paying ETFs, mainly high dividend paying firm and currencies. It is managed by Lazard in US, and so far I didn't see they cut their dividends, so my thought is maybe they can get through this bear market with limited chance of cutting their dividends at all. In the meantime they are paying 8.4% as dividend (that breaks into capital gains, interest and dividends), given that boarder stock markets may stabilize at the last lowest range 8.4% is a pretty good bet. I'll think about it.
Nintendo drops again, 4.6%, there is not much news i can find. This is the bad things about individual stocks. Sometimes you just cannot get enough news to do any meaningful analysis. I'm still looking for a close to break even price to cut this pos.
I sold my SKF at $117.06, loss on commission after 3 weeks. as you see sometimes even if you are right in the direction but got in at the wrong time, you will see your profit sinks.
On the other hand I just buy into URE this afternoon at $32.89, and again thinking about increasing a bit position in UYG and maybe some other dividend paying ETFs. In the past I had LOR, which is a dividend paying ETFs, mainly high dividend paying firm and currencies. It is managed by Lazard in US, and so far I didn't see they cut their dividends, so my thought is maybe they can get through this bear market with limited chance of cutting their dividends at all. In the meantime they are paying 8.4% as dividend (that breaks into capital gains, interest and dividends), given that boarder stock markets may stabilize at the last lowest range 8.4% is a pretty good bet. I'll think about it.
Nintendo drops again, 4.6%, there is not much news i can find. This is the bad things about individual stocks. Sometimes you just cannot get enough news to do any meaningful analysis. I'm still looking for a close to break even price to cut this pos.
Thursday, April 3, 2008
SRS
I was very tired and sleepy over these few days so I haven't updated in here that I sold my SRS on Monday at $99.24 already. It's a loss of about 6%. I did try to quickly revise to buy URE at $33.50, however I cancelled my order later on Monday, and now you know it's $37.39....., how unlucky.
While on today I initiated a small position on UYG at $34. And yes, I'm still keeping my SKF. That means I ultra long financials and at the same time ultra short financials.
I initiate ultra long position in financials (and almost in real estate) because I think in the short term, they are going up. I know in a longer run it may not be the case but I saw their 20-day EMA made a higher low recently. Even better for URE its 20-day EMA crossed over the 50-day EMA from below.
They were still all below their 200-day EMA. I don't believe the stocks can just blast through all moving averages and it's a bull market again. But I'm not surprised in the short term it's a little bull market.
I may try to find chance to sell my SKF first, but I still want to keep my SDD.
My Nintendo is coming back, so for now I'll keep it for a while as I expect it will see $70 or above in this quarter.
Finally DGP, gold and other commodities are facing pressure in the short term, but I still want to keep DGP for now, but not thinking to add to the position until I see a clear trend.
While on today I initiated a small position on UYG at $34. And yes, I'm still keeping my SKF. That means I ultra long financials and at the same time ultra short financials.
I initiate ultra long position in financials (and almost in real estate) because I think in the short term, they are going up. I know in a longer run it may not be the case but I saw their 20-day EMA made a higher low recently. Even better for URE its 20-day EMA crossed over the 50-day EMA from below.
They were still all below their 200-day EMA. I don't believe the stocks can just blast through all moving averages and it's a bull market again. But I'm not surprised in the short term it's a little bull market.
I may try to find chance to sell my SKF first, but I still want to keep my SDD.
My Nintendo is coming back, so for now I'll keep it for a while as I expect it will see $70 or above in this quarter.
Finally DGP, gold and other commodities are facing pressure in the short term, but I still want to keep DGP for now, but not thinking to add to the position until I see a clear trend.
Friday, March 28, 2008
Sold my HFU.TO at $14.39
I guess I was pretty lucky. I don't want to be a Jim Cramer type of stupid head, so I'll not just attribute all the gains to my skill. I couldn't believe I could get out at the daily high of HFU.TO. Anyway it's a gain of about 16% over 10 days, I'm pretty satisfied.
Also glad that my SKF is now at the money, just a bit disappointed that my SDD is still under the water. SRS I kind of know it's getting weak, guess I'll try to sell it next week in case market rallies back up.
Citigroup upgraded LEH, well I can't say they are wrong, but just that these days who will believe these analysts. Be careful because LEH and MER continued yesterday's downward move, specially MER had an accelerating volume with the downward price movement. I guess it's still too early to say US financials are bottomed.
Also glad that my SKF is now at the money, just a bit disappointed that my SDD is still under the water. SRS I kind of know it's getting weak, guess I'll try to sell it next week in case market rallies back up.
Citigroup upgraded LEH, well I can't say they are wrong, but just that these days who will believe these analysts. Be careful because LEH and MER continued yesterday's downward move, specially MER had an accelerating volume with the downward price movement. I guess it's still too early to say US financials are bottomed.
Thursday, March 27, 2008
LEH and MER the next?
I am not sure about if they follow BSC. I'm just a chart reader, as I don't have insider information. Even if I read many news I don't think I can come up with an exact and correct answer.
So what my does chart say? Well it's very simple. Just look at the daily candlestick of LEH and MER. If you ignore the strong come back last Monday and Tuesday (assume it did not happen), LEH and MER are actually below the closing prices of March 14, Friday.
There are many other stocks and ETFs are at a similar situation. Although not lower than their March 14 closing prices, but pretty closed. Given that there are rumors that LEH and MER may the next shoes to fall, maybe the charts are saying something. We'll see.
So what my does chart say? Well it's very simple. Just look at the daily candlestick of LEH and MER. If you ignore the strong come back last Monday and Tuesday (assume it did not happen), LEH and MER are actually below the closing prices of March 14, Friday.
There are many other stocks and ETFs are at a similar situation. Although not lower than their March 14 closing prices, but pretty closed. Given that there are rumors that LEH and MER may the next shoes to fall, maybe the charts are saying something. We'll see.
Sunday, March 23, 2008
Gold price down, market up, then what?
My DGP dived. It went to as high as above $28, then went all the way down to $22.44. Many people believe the rate cut is closed to an end and therefore gold price stopped to go up. Well maybe they are right but I guess the story is still not close to the end. But in the meantime I acknowledge that people may be shifting out money from commodities, at least for a while (look at SLV and DBA as well). Commodity ETFs dropped pretty fast over the last few trading days, I think at least there should be a little rebound before it heads a bit more lower. I'll think about closing my DGP position, even for a little loss.
On the other hand, my SKF, SRS and SDD are now all in the red. I just read the charts myself, somehow I found that SRS is even weaker than the others (based on relative strength). I guess I'll try to find chance to close my SRS position, and maybe as a hedge to start a URE position, but keep my SKF and SDD position. As well, I may add more SDD if I see fit. I still like EEV, I'll see how it approaches the 50-day EMA (if it will) and may start a small position there.
Finally agricultural commodity ETF. The ultra long and short agricultural commodity ETF in Canada finally arrived, but with very little volume. DBA went down with other commodity ETFs over the last few days and actually made a double top, definitely a short term top. I'll see how it retreats back to the 200-day EMA and may start a small position in HAU.TO.
Watch the clips on Youtube about Jim Cramer incident on Bear Stearns. I think he is done, he lost all his credibility. I think people should learn something:
1. do not just believe what you see and hear from any media about investing
2. it is okay to be wrong, but not okay to lie
3. even former professional can be deadly wrong in this area because this area is dynamic
4. current professional can be deadly wrong too
5. that's why I say individual stocks are dangerous and may leave you no time to cash out and that's why I want to move my strategy mainly on ETFs but not individual stock
6. you should take care of your own money, not Jim Cramer
Bye bye Jim, I bought two of your books and I think they are well written. People may accept your wrong call but not your lies. I guess you are at least wealthy enough to live on your money (hopefully not all US dollar) till you die. I guess nobody wants to hear your comment on any stock anymore because you are proved not reliable. Just accept you don't know much about all stocks and you made wrong calls.
I understand I don't know much about individual stocks, that's why I'm making changes.
On the other hand, my SKF, SRS and SDD are now all in the red. I just read the charts myself, somehow I found that SRS is even weaker than the others (based on relative strength). I guess I'll try to find chance to close my SRS position, and maybe as a hedge to start a URE position, but keep my SKF and SDD position. As well, I may add more SDD if I see fit. I still like EEV, I'll see how it approaches the 50-day EMA (if it will) and may start a small position there.
Finally agricultural commodity ETF. The ultra long and short agricultural commodity ETF in Canada finally arrived, but with very little volume. DBA went down with other commodity ETFs over the last few days and actually made a double top, definitely a short term top. I'll see how it retreats back to the 200-day EMA and may start a small position in HAU.TO.
Watch the clips on Youtube about Jim Cramer incident on Bear Stearns. I think he is done, he lost all his credibility. I think people should learn something:
1. do not just believe what you see and hear from any media about investing
2. it is okay to be wrong, but not okay to lie
3. even former professional can be deadly wrong in this area because this area is dynamic
4. current professional can be deadly wrong too
5. that's why I say individual stocks are dangerous and may leave you no time to cash out and that's why I want to move my strategy mainly on ETFs but not individual stock
6. you should take care of your own money, not Jim Cramer
Bye bye Jim, I bought two of your books and I think they are well written. People may accept your wrong call but not your lies. I guess you are at least wealthy enough to live on your money (hopefully not all US dollar) till you die. I guess nobody wants to hear your comment on any stock anymore because you are proved not reliable. Just accept you don't know much about all stocks and you made wrong calls.
I understand I don't know much about individual stocks, that's why I'm making changes.
Tuesday, March 18, 2008
Big increase today
But as I always say we need to see follow through, namely, steady normal volume, white candlestick and not making lower low.
I should have got into SSO in Monday morning or so, well too late to get in. In fact, I got into SKF at $117, SRS at $105.25, SDD at $81.50 and HFU.TO at $12.37. I guess I made two mistakes here (although I still think in general, what I was doing is rational, though may not be profitable).
The first mistake is, my 3 short positions are 3 times bigger than the long one. I think there maybe still a bit upside before the market may go down again, so I should at least initiate the long position almost as big as my short one. The little relief is, I already have some money in two mutual funds and Nintendo, so not as bad as it could be. In fact, Nintendo went up by 3.7% today, I am considering liquidating it because I said I'll try to focus on ETFs in the future but not individual stock, at least not individual stock before I confirm bull market myself.
The second mistake is I used market order for my long position and limit order on my short position. Although eventually it turned out okay because the market up big anyway. But I think I should enter all orders in one way instead of different. Otherwise I may enter into one position but not all position which made my portfolio skews to certain way that I don't want.
Anyway, the 3 short ETFs I entered almost at the lowest price as of today. As I said there maybe still a bit more upside, so in the meantime I will not increase my short position. Even if I want to do so I may want to go SDD or EEV. FXP, SKF or SRS is only a second choice.
All 4 major US indices ETFs (SPY, DIA, IWM, QQQQ) were more or less about the same place as beginning of March. Market dropped and then there was the $200 billion liquidity program. Market dropped again due to Bear Stearns and Lehman Brothers and there was the rate cut. Will all these plans solve the problem? I don't know, I guess the follow through will tell me more.
On the other hand, DGP dropped all the way back to slightly below my entry price, quite disappointed. In the meantime I'll still adhere to my original idea that to add some more if gold back down to $950. I guess in the meantime gold will not trade exactly as the opposite direction of US dollar. So gotta to be very careful to consider adding or selling it.
I should have got into SSO in Monday morning or so, well too late to get in. In fact, I got into SKF at $117, SRS at $105.25, SDD at $81.50 and HFU.TO at $12.37. I guess I made two mistakes here (although I still think in general, what I was doing is rational, though may not be profitable).
The first mistake is, my 3 short positions are 3 times bigger than the long one. I think there maybe still a bit upside before the market may go down again, so I should at least initiate the long position almost as big as my short one. The little relief is, I already have some money in two mutual funds and Nintendo, so not as bad as it could be. In fact, Nintendo went up by 3.7% today, I am considering liquidating it because I said I'll try to focus on ETFs in the future but not individual stock, at least not individual stock before I confirm bull market myself.
The second mistake is I used market order for my long position and limit order on my short position. Although eventually it turned out okay because the market up big anyway. But I think I should enter all orders in one way instead of different. Otherwise I may enter into one position but not all position which made my portfolio skews to certain way that I don't want.
Anyway, the 3 short ETFs I entered almost at the lowest price as of today. As I said there maybe still a bit more upside, so in the meantime I will not increase my short position. Even if I want to do so I may want to go SDD or EEV. FXP, SKF or SRS is only a second choice.
All 4 major US indices ETFs (SPY, DIA, IWM, QQQQ) were more or less about the same place as beginning of March. Market dropped and then there was the $200 billion liquidity program. Market dropped again due to Bear Stearns and Lehman Brothers and there was the rate cut. Will all these plans solve the problem? I don't know, I guess the follow through will tell me more.
On the other hand, DGP dropped all the way back to slightly below my entry price, quite disappointed. In the meantime I'll still adhere to my original idea that to add some more if gold back down to $950. I guess in the meantime gold will not trade exactly as the opposite direction of US dollar. So gotta to be very careful to consider adding or selling it.
Monday, March 17, 2008
BSC worth $2? Your guess
I don't know if it worths $2 or more or less, that's not the point here. The point is, betting on one single stock, either up or down is dangerous for individual investor. Since we are not insiders, have no non-public information, no way you can play this game smarter than the big boys.
BSC may shoot back up to the teens, LEH may strike back by a lot tomorrow as well (in fact, it did strike back by a lot from $20.50 to close above $30 already, quite a come back). I don't know the answer. I only know I'm not smarter than other people, particularly not the big boys, so I'll try to avoid BSC and LEH, and many other financials.
I'm not surprised that many ultra short ETFs today exhibited red candlesticks, that is, opened high and closed lower. Some indices/ETFs are now again sitting at January's low and some are sitting at below January's low. Unless there will be more bad news coming into the pipeline, otherwise, in a short term, I think the market will take a rest here. I don't think it will shoot up very high, nor I think it will tank by a lot.
Still holding my DGP. I guess people started to think gold went up too fast over the last few months. Oil started to come down and it comes down fast. It's expected as it went up too fast from $100 to $111. Gold probably dragged down by the oil trend too. So in the meantime gold will hove around $950 and $1,000 I think.
Okay back to financials. I guess in the meantime it's too much on the attention that it will totally collapse, I'll try to avoid ultra long or short financials here. Ultra short real estate I may think about that but will only put very little money.
What about China or emerging market? Well I may want to shift to ultra short emerging market than China, because shorting China at this time maybe a bit too much.
On the other hand, I start to think about ultra short mid cap and small cap, MZZ and SDD. Since some indices may be forming a W-bottom (at least for a short term), I may put a little money in the ultra long S&P 500, SSO. I still think this is just a bear rally so don't want to be aggressive.
BSC may shoot back up to the teens, LEH may strike back by a lot tomorrow as well (in fact, it did strike back by a lot from $20.50 to close above $30 already, quite a come back). I don't know the answer. I only know I'm not smarter than other people, particularly not the big boys, so I'll try to avoid BSC and LEH, and many other financials.
I'm not surprised that many ultra short ETFs today exhibited red candlesticks, that is, opened high and closed lower. Some indices/ETFs are now again sitting at January's low and some are sitting at below January's low. Unless there will be more bad news coming into the pipeline, otherwise, in a short term, I think the market will take a rest here. I don't think it will shoot up very high, nor I think it will tank by a lot.
Still holding my DGP. I guess people started to think gold went up too fast over the last few months. Oil started to come down and it comes down fast. It's expected as it went up too fast from $100 to $111. Gold probably dragged down by the oil trend too. So in the meantime gold will hove around $950 and $1,000 I think.
Okay back to financials. I guess in the meantime it's too much on the attention that it will totally collapse, I'll try to avoid ultra long or short financials here. Ultra short real estate I may think about that but will only put very little money.
What about China or emerging market? Well I may want to shift to ultra short emerging market than China, because shorting China at this time maybe a bit too much.
On the other hand, I start to think about ultra short mid cap and small cap, MZZ and SDD. Since some indices may be forming a W-bottom (at least for a short term), I may put a little money in the ultra long S&P 500, SSO. I still think this is just a bear rally so don't want to be aggressive.
Saturday, March 15, 2008
Market confidence, what confidence?
So BSC collapsed. Well it's not a surprise that the Fed stepped up and provide helping hand again. There is a very good lesson to learn technical analysis here.
If you look back on Tuesday, market went up big, but BSC did not go up by much. In fact, its candlestick was red, meaning it went up to start with, only to go down to end. Look closer, it has been once dipped even below its Monday's low. Many stocks showed a white candlestick (although many eventually went back down to lower than Monday's low) with at least average 3-month volume. BSC showed a red candlestick with higher than normal volume. Then you saw the follow collapse on Wed, Thurs and Friday.
When market up big and a stock doesn't move, something must be wrong with that stock. You don't even need to know why, just avoid it or run if you are holding it.
Some news and columns are now saying that after these panic selling, market must be very close to a bottom. Well those are not panic selling at the first place, and I don't know if the selling is over. I guess the selling will only be over when all the di-leveraging completes.
Another piece of news I find very funny (and a bit stupid) is that, it says certain companies (in this case particularly banks) can go down to zero due to market loses confidence. Well, what's confidence??? I don't get it. Or you tell me as a bank, somebody borrowed money from me and now telling me he does not have money to repay me and I still have to trust that guy that he can pay me back in full? Be rational, if you are the bankers, what would you do? Trust that guy and extend the loan? No way, unless he puts up some collateral, which of course that guy has none.
If the bank sticks to its policy of lending, it definitely will call you for the money back, and stops lending money to suspicious customers. That is logic and rational. The bottom line is, you don't have collateral to put up, no proof of income, namely no credibility, why should I trust you?
Therefore, it's not about confidence, it's about no hard asset being put up as collateral. Otherwise, what about you go to casino to gamble with no money, but tell the casino that you will pay them back when you win, as you believe at some point, you will win. See what the casino will tell you.
If you look back on Tuesday, market went up big, but BSC did not go up by much. In fact, its candlestick was red, meaning it went up to start with, only to go down to end. Look closer, it has been once dipped even below its Monday's low. Many stocks showed a white candlestick (although many eventually went back down to lower than Monday's low) with at least average 3-month volume. BSC showed a red candlestick with higher than normal volume. Then you saw the follow collapse on Wed, Thurs and Friday.
When market up big and a stock doesn't move, something must be wrong with that stock. You don't even need to know why, just avoid it or run if you are holding it.
Some news and columns are now saying that after these panic selling, market must be very close to a bottom. Well those are not panic selling at the first place, and I don't know if the selling is over. I guess the selling will only be over when all the di-leveraging completes.
Another piece of news I find very funny (and a bit stupid) is that, it says certain companies (in this case particularly banks) can go down to zero due to market loses confidence. Well, what's confidence??? I don't get it. Or you tell me as a bank, somebody borrowed money from me and now telling me he does not have money to repay me and I still have to trust that guy that he can pay me back in full? Be rational, if you are the bankers, what would you do? Trust that guy and extend the loan? No way, unless he puts up some collateral, which of course that guy has none.
If the bank sticks to its policy of lending, it definitely will call you for the money back, and stops lending money to suspicious customers. That is logic and rational. The bottom line is, you don't have collateral to put up, no proof of income, namely no credibility, why should I trust you?
Therefore, it's not about confidence, it's about no hard asset being put up as collateral. Otherwise, what about you go to casino to gamble with no money, but tell the casino that you will pay them back when you win, as you believe at some point, you will win. See what the casino will tell you.
Tuesday, March 11, 2008
Big rally, so familiar
A big rally today. The news said it's one of the biggest one day point gains of DJIA since July 2002. Looks like people are happy about it. I think the rally is more on the news regarding the group of several central banks will lend banks about $200 billion to provide them some credit relief. US government (the Fed actually) initiate a new plan which will lend treasuries securities to the investment banks, take mortgage-backed securities as collateral, and let the banks to make money on the borrowed capital, and only to repay them in 28 days, instead of next day.
Will this method better than reducing the fed fund rate and discount rate I'm not sure, as the economic consequences can be very complicated and unpredictable. I'll first go back to my charts and check the reaction today.
Yes all indices went up by a lot today. The rally is pretty broad base too. However, I checked many US sectors ETFs and country ETFs, as well as the major 4 (DIA, QQQQ, SPY and IWM), none of them has blast through any meaningful resistance. I then checked some large cap names like all the banks, brokerage firms, some tech stocks and some other big names. Only a few of them has tested the 20-day EMA or the lowest EMA out of the 4 I usually use. As well, on some of the ETFs and large names, I don't see significant abnormal volume.
Given that kind of graphical result, I guess only if there is follow-through rallies and the rallies are strong enough to push those ETFs and stocks to test more major resistance (that is, the highest EMA and as well, at least bring the 20-day EMA to test the next closest EMA), otherwise, I cannot conclude and convince myself that market changes direction.
Funny gold and oil didn't drop due to this "good news". Oil went up by about 10% as I expected earlier since it broke $100. I would expect gold is the same kind of situation. If gold breaks $1,000, it will go up by about 10% very quickly. It may then go back down to below $1,000 before it will go up again. I think oil is doing this now. So in short term I think $110 is the top, as most of the short position around or below $100 should have been covered.
Still have my little position in DGP, the ultra long gold. I guess sooner I'll buy a bit more if gold dips to closer to $950, it that happens.
Will this method better than reducing the fed fund rate and discount rate I'm not sure, as the economic consequences can be very complicated and unpredictable. I'll first go back to my charts and check the reaction today.
Yes all indices went up by a lot today. The rally is pretty broad base too. However, I checked many US sectors ETFs and country ETFs, as well as the major 4 (DIA, QQQQ, SPY and IWM), none of them has blast through any meaningful resistance. I then checked some large cap names like all the banks, brokerage firms, some tech stocks and some other big names. Only a few of them has tested the 20-day EMA or the lowest EMA out of the 4 I usually use. As well, on some of the ETFs and large names, I don't see significant abnormal volume.
Given that kind of graphical result, I guess only if there is follow-through rallies and the rallies are strong enough to push those ETFs and stocks to test more major resistance (that is, the highest EMA and as well, at least bring the 20-day EMA to test the next closest EMA), otherwise, I cannot conclude and convince myself that market changes direction.
Funny gold and oil didn't drop due to this "good news". Oil went up by about 10% as I expected earlier since it broke $100. I would expect gold is the same kind of situation. If gold breaks $1,000, it will go up by about 10% very quickly. It may then go back down to below $1,000 before it will go up again. I think oil is doing this now. So in short term I think $110 is the top, as most of the short position around or below $100 should have been covered.
Still have my little position in DGP, the ultra long gold. I guess sooner I'll buy a bit more if gold dips to closer to $950, it that happens.
Thursday, March 6, 2008
Ultra Long Gold and take advantage of bottoming
Just got into DGP by a small amount of money to test the water. That is ultra long gold. It is a new ETF issues by Deutsche Bank. Got in about $26.
Today mark another big down day. And where does it come from? REITs. You look at them, they all dropped 20% or more today. There are two pieces of news about mortgage-back securities management firm (Carlyle Capital and Thornburg) could not meet margin requirement.
This is again one of the domino effect. I still hear that the global economy is okay, just slower growth, not recession. Well I don't have more data to prove it right or wrong, probably it's not my biggest concern anyway.
Again I want to say, focus on how the news affect your investment, not the news itself. Anyone has the right to interpret the news the way he likes, but the market is the final place that reflect how he thinks. How many times since last November I heard people said the economy is okay but only to see the market dropped again and again?
I understand there must be a bottom. I do not know where is it, I can only express my opinion on how to take advantage of bottoming.
In a commercial world there are two sides, price-setters and price-takers. If you have the bigger bargaining power you are a price-setter. To make the money at a higher chance and highest profit, there comes in the distressed debt funds.
The story is very simple. A company is now in a distressed situation, take something as an example, CFC, as this is a good example these days. In this case, DON'T BUY THEIR SHARES BECAUSE IT DROPPED BY A LOT. It may go back up in value but that's not how you should play, particularly when you are very wealthy, like an institutional fund. In fact, you should purchase most of its debts, approximately 2/3, decline their restructure plan, force the company to liquidate itself, wipe off the stockholders. Now you become the shareholders of this new company and you have better control to move this company back up.
Under this scenario, you act more like a price-setter than a price-taker. You have better control on what price to pay to the debt holders. The worst case is you couldn't purchase enough to wipe off the original shareholders, but your potential loss is already calculated and estimated. Anyone who is interested in this topic I suggest them to read books about distressed debt.
The lesson is very simple, in the long run you definitely earn much more as price-setters and price-takers. Same idea as you can never earn more money by gambling than the casino.
Today mark another big down day. And where does it come from? REITs. You look at them, they all dropped 20% or more today. There are two pieces of news about mortgage-back securities management firm (Carlyle Capital and Thornburg) could not meet margin requirement.
This is again one of the domino effect. I still hear that the global economy is okay, just slower growth, not recession. Well I don't have more data to prove it right or wrong, probably it's not my biggest concern anyway.
Again I want to say, focus on how the news affect your investment, not the news itself. Anyone has the right to interpret the news the way he likes, but the market is the final place that reflect how he thinks. How many times since last November I heard people said the economy is okay but only to see the market dropped again and again?
I understand there must be a bottom. I do not know where is it, I can only express my opinion on how to take advantage of bottoming.
In a commercial world there are two sides, price-setters and price-takers. If you have the bigger bargaining power you are a price-setter. To make the money at a higher chance and highest profit, there comes in the distressed debt funds.
The story is very simple. A company is now in a distressed situation, take something as an example, CFC, as this is a good example these days. In this case, DON'T BUY THEIR SHARES BECAUSE IT DROPPED BY A LOT. It may go back up in value but that's not how you should play, particularly when you are very wealthy, like an institutional fund. In fact, you should purchase most of its debts, approximately 2/3, decline their restructure plan, force the company to liquidate itself, wipe off the stockholders. Now you become the shareholders of this new company and you have better control to move this company back up.
Under this scenario, you act more like a price-setter than a price-taker. You have better control on what price to pay to the debt holders. The worst case is you couldn't purchase enough to wipe off the original shareholders, but your potential loss is already calculated and estimated. Anyone who is interested in this topic I suggest them to read books about distressed debt.
The lesson is very simple, in the long run you definitely earn much more as price-setters and price-takers. Same idea as you can never earn more money by gambling than the casino.
Tuesday, March 4, 2008
Lost on HXD gain on FXP
because I sold both today. Sold HXD.TO at $20.59 and FXP at $96.62. So I lost about 7% on HXD.TO and gain about 8% on FXP.
Markets went down 2.5 days in a row, not surprise to see it came back a bit before end of today. I always like to see which stocks didn't go with the market. Those stocks may go up later, but usually not by much. As well, by the time they go up, they probably couldn't lift the market to go with them. Then when they resume to go down, they will go down faster than the market.
Financials again is one of the worst. XLF by itself is okay, but some individual financial companies are not. Even there is rumour (or bet) that the Fed is going to lower the rate by 75 basis points, doesn't seem the market reacts positively to it. So far we got quite an amount of good news but seems like it only slowed down the slide but not stopping it.
Markets went down 2.5 days in a row, not surprise to see it came back a bit before end of today. I always like to see which stocks didn't go with the market. Those stocks may go up later, but usually not by much. As well, by the time they go up, they probably couldn't lift the market to go with them. Then when they resume to go down, they will go down faster than the market.
Financials again is one of the worst. XLF by itself is okay, but some individual financial companies are not. Even there is rumour (or bet) that the Fed is going to lower the rate by 75 basis points, doesn't seem the market reacts positively to it. So far we got quite an amount of good news but seems like it only slowed down the slide but not stopping it.
Monday, March 3, 2008
weakness continues
I am not here to try to scare people who hold stocks, just check continuously what I saw on market.
In the meantime, the weakness continues. Even I checked on weekly EMAs, it doesn't make me believes the tide changes.
I still hear people fooling around with numbers and wordings. For example, refuse to use the word recession. I wonder how important it is. Sometimes government acts like your mutual fund advisor; try to make up a better word to make you feel better.
Or on the other hand, only if market drops 20% from its top is consider as bear market. Heck, but my friend, when you realized you are losing more than 20%, probably it's too late to sell. So why not just sit back and wait till the market to recover? At the end of the day, you hold whatever you hold and have not done anything. You may be smart (as market does bottom when people sell), but I can tell you that you are not smart, you are just lazy to do anything.
About a month ago I said we'll see if January marked the bottom of the market, well if you check enough charts you will see probably it's not the case. At least you should not expect a V-shaped rebound from here again. A few stocks, which are large in size, already made a lower low compared to January.
Some stocks performed a bit better, but still, couldn't pass my criteria that they changed direction. For example, XHB, it came back up from about $16 to more than $23 in less than a month of time. Quite impressive and a lot. It hasn't lost all the upside it made yet, sitting at around $19.50. However, check the EMAs, a better measure than daily price candlestick, you'll see its 20-day EMA didn't surpass the 100-day EMA. It just sat tangent to the 100-day EMA and started to trend down late last week. The hint, it is probably still not the right time for it to resume longer term uptrend.
Though not a perfect match, but if you originally expected the 20-day EMA would not surpass 100-day EMA in one try, utilizing SRS with a small amount could work. It's like last Tuesday I tried to put in order to buy TWM at $77.50 (unfortunately couldn't get filled.....) because i expected IWM probably couldn't break the 50-day EMA in its third try in a month.
You are right, it's based on my expectation. It may work out the way I want or it may not. You need to ask yourself if it doesn't work out at your first position, where is the next stop of the stock? Can you take that risk of losing more and not to sell too quickly?
A more mental challenge than a quantitative one.
Still holding FXP and HXD.TO and Nintendo
In the meantime, the weakness continues. Even I checked on weekly EMAs, it doesn't make me believes the tide changes.
I still hear people fooling around with numbers and wordings. For example, refuse to use the word recession. I wonder how important it is. Sometimes government acts like your mutual fund advisor; try to make up a better word to make you feel better.
Or on the other hand, only if market drops 20% from its top is consider as bear market. Heck, but my friend, when you realized you are losing more than 20%, probably it's too late to sell. So why not just sit back and wait till the market to recover? At the end of the day, you hold whatever you hold and have not done anything. You may be smart (as market does bottom when people sell), but I can tell you that you are not smart, you are just lazy to do anything.
About a month ago I said we'll see if January marked the bottom of the market, well if you check enough charts you will see probably it's not the case. At least you should not expect a V-shaped rebound from here again. A few stocks, which are large in size, already made a lower low compared to January.
Some stocks performed a bit better, but still, couldn't pass my criteria that they changed direction. For example, XHB, it came back up from about $16 to more than $23 in less than a month of time. Quite impressive and a lot. It hasn't lost all the upside it made yet, sitting at around $19.50. However, check the EMAs, a better measure than daily price candlestick, you'll see its 20-day EMA didn't surpass the 100-day EMA. It just sat tangent to the 100-day EMA and started to trend down late last week. The hint, it is probably still not the right time for it to resume longer term uptrend.
Though not a perfect match, but if you originally expected the 20-day EMA would not surpass 100-day EMA in one try, utilizing SRS with a small amount could work. It's like last Tuesday I tried to put in order to buy TWM at $77.50 (unfortunately couldn't get filled.....) because i expected IWM probably couldn't break the 50-day EMA in its third try in a month.
You are right, it's based on my expectation. It may work out the way I want or it may not. You need to ask yourself if it doesn't work out at your first position, where is the next stop of the stock? Can you take that risk of losing more and not to sell too quickly?
A more mental challenge than a quantitative one.
Still holding FXP and HXD.TO and Nintendo
Tuesday, February 26, 2008
Worst time in history?
I read another article today which I think it's very misleading.
I am not going to go through all the content of that article here. My belief is, the author thinks, considering the current credit situation and market crash as the "worst" in history is stupid because market always recover.
Market always recover, it is true, but this idea does not connect to each individual. Imagine if you buy a house and it's very expensive, eventually economy cools down and you don't have enough to pay for mortgage. Your house is foreclosed and you are done. Years later the market recovers and your original house now worth more than the time you bought it. But will that benefit you? Of course not! Because you were foreclosed.
If I need this author to tell me "the market will eventually cover", I AM NO SMARTER THAN A GRADE 5! I bet this author doesn't really know what he wants to say. In his article he quoted Legg Mason's CEO's statement that "it's the worst credit state he has ever seen in 47 years of business", and then the author said 30 years of experience is a blink of history. WHAT THE FUCK, if you take a look at the author's picture, I bet he doesn't live 47 years in his life. But he is criticizing about other people's 47-years of experience based on his bull-shit.
The current market may recover in 3 months or in 3 years, I don't know. Writing an article telling people that market will eventually recover is bullshit. As well, look at Nikkei 225 in Japan, look at Nasdaq Composite. Have they recovered??? I bet there might be some people in the past that thought Nikkei dropped 50% from almost 40,000 to 20,000 was a good buy (because market eventually will recover), only to see that it dropped more, and they have only limited time to sell above 20,000 around 1997. Then they went under water again and it's now sitting at about 13,500 after probably 18 years.
How many 18 years can you live? I bet not many. This article shows you how stupid and naive some people are, even people who write articles. Markets can exist forever, but you don't. Markets may recover, you may not live long enough to see it. Markets may recover, but it may not benefit you. Market recovers is an objective fact. What you own is your subjective measure.
I can bet you that if market starts to recover from here, this author will think he is a genius, he predicted the market correctly. Makes me throw. Based on the article he wrote, I believe this guy is inexperience and stupid.
I am not going to go through all the content of that article here. My belief is, the author thinks, considering the current credit situation and market crash as the "worst" in history is stupid because market always recover.
Market always recover, it is true, but this idea does not connect to each individual. Imagine if you buy a house and it's very expensive, eventually economy cools down and you don't have enough to pay for mortgage. Your house is foreclosed and you are done. Years later the market recovers and your original house now worth more than the time you bought it. But will that benefit you? Of course not! Because you were foreclosed.
If I need this author to tell me "the market will eventually cover", I AM NO SMARTER THAN A GRADE 5! I bet this author doesn't really know what he wants to say. In his article he quoted Legg Mason's CEO's statement that "it's the worst credit state he has ever seen in 47 years of business", and then the author said 30 years of experience is a blink of history. WHAT THE FUCK, if you take a look at the author's picture, I bet he doesn't live 47 years in his life. But he is criticizing about other people's 47-years of experience based on his bull-shit.
The current market may recover in 3 months or in 3 years, I don't know. Writing an article telling people that market will eventually recover is bullshit. As well, look at Nikkei 225 in Japan, look at Nasdaq Composite. Have they recovered??? I bet there might be some people in the past that thought Nikkei dropped 50% from almost 40,000 to 20,000 was a good buy (because market eventually will recover), only to see that it dropped more, and they have only limited time to sell above 20,000 around 1997. Then they went under water again and it's now sitting at about 13,500 after probably 18 years.
How many 18 years can you live? I bet not many. This article shows you how stupid and naive some people are, even people who write articles. Markets can exist forever, but you don't. Markets may recover, you may not live long enough to see it. Markets may recover, but it may not benefit you. Market recovers is an objective fact. What you own is your subjective measure.
I can bet you that if market starts to recover from here, this author will think he is a genius, he predicted the market correctly. Makes me throw. Based on the article he wrote, I believe this guy is inexperience and stupid.
Sane or insane?
I got a bit more FXP at $87, maybe I'm stupid, maybe I'm not.
I tried TWM as well but couldn't get filled, maybe I'm unlucky, maybe I'm not.
Market looks a bit funny. Anyway, funny may not be the good way, as market will go to where it is going, not where you want it to go, unless you have unlimited capacity to drive the market. I don't.
Market rallied with "good" news, if you consider injecting $3billion into Ambac is good news, if you consider IBM using $15 billion to repurchase its own shares is good news, if you consider banks freezed the foreclosures is good news. If you even consider the Fed will lower the rate during the next meeting then it's even better.
Well I read several articles about the Ambac news and I'm kind of agree with 3 points:
1. How can $3 billion help if their positions in credit default swap is as much as $60 billion?
2. Why would the insurance policyholder inject cash into the insurance company so that the insurance company can pay their insurance benefit is good news?
3. How can a company needs external cash injection to save itself can maintain AAA rating?
I need somebody to tell me if I'm wrong or the market is wrong. Or maybe it's just too much shorting since October so it's a mere short covering?
I tried TWM as well but couldn't get filled, maybe I'm unlucky, maybe I'm not.
Market looks a bit funny. Anyway, funny may not be the good way, as market will go to where it is going, not where you want it to go, unless you have unlimited capacity to drive the market. I don't.
Market rallied with "good" news, if you consider injecting $3billion into Ambac is good news, if you consider IBM using $15 billion to repurchase its own shares is good news, if you consider banks freezed the foreclosures is good news. If you even consider the Fed will lower the rate during the next meeting then it's even better.
Well I read several articles about the Ambac news and I'm kind of agree with 3 points:
1. How can $3 billion help if their positions in credit default swap is as much as $60 billion?
2. Why would the insurance policyholder inject cash into the insurance company so that the insurance company can pay their insurance benefit is good news?
3. How can a company needs external cash injection to save itself can maintain AAA rating?
I need somebody to tell me if I'm wrong or the market is wrong. Or maybe it's just too much shorting since October so it's a mere short covering?
Sunday, February 24, 2008
Ambac
Sold my TWM on Friday at $85.71. Haven't sold my FXP and only saw it plummeted back to $88 decimal......
The rumours about bailout of Ambac hit the market late Friday, causing my FXP to decline sharply and fast. Will the insurer be saved I don't know, but market took it as good news and rally. Will this rally last? Still need to check. So far what I saw is the following after market closed on Friday:
1. Many other banks and brokerages reacted to the news as well, but not any one I saw did really break any significant moving average resistents.
2. Ambac itself's volume was not very high. Given the rumours came out on a Friday afternnoon and if that made the shorts very nervous, I expected more volume than that. As well, it didn't push the price above the 20-day EMA.
3. Some stocks are already at or below their January lows. For example, FRE, FNM, LEH. Even worse were among tech stocks like AAPL, GOOG, AMZN, DELL and EBAY.
The bailout of an insurer may help, but I doubt it will help the whole economy. By Monday we should have a better idea of how people react to the news. People believe gap up in Ambac and up in global market are already in the pocket. A more detail analysis should be needed before you think the market is now clear.
The rumours about bailout of Ambac hit the market late Friday, causing my FXP to decline sharply and fast. Will the insurer be saved I don't know, but market took it as good news and rally. Will this rally last? Still need to check. So far what I saw is the following after market closed on Friday:
1. Many other banks and brokerages reacted to the news as well, but not any one I saw did really break any significant moving average resistents.
2. Ambac itself's volume was not very high. Given the rumours came out on a Friday afternnoon and if that made the shorts very nervous, I expected more volume than that. As well, it didn't push the price above the 20-day EMA.
3. Some stocks are already at or below their January lows. For example, FRE, FNM, LEH. Even worse were among tech stocks like AAPL, GOOG, AMZN, DELL and EBAY.
The bailout of an insurer may help, but I doubt it will help the whole economy. By Monday we should have a better idea of how people react to the news. People believe gap up in Ambac and up in global market are already in the pocket. A more detail analysis should be needed before you think the market is now clear.
Saturday, February 16, 2008
Long weekend
This is the first time we in Canada have a long weekend in February, suppose to be nice, just that I have too much work in office that I couldn't take advantage of it..... Anyway....
I bought a bit more FXP at $90.38. As you saw it quickly turned into a loss as of ending of Friday. We still hear positive tune in the market. I couldn't remember where the tune comes from. But I want to say if the tune comes from Wall Street you better second guess again. If Wall Street brokerage firms mainly make money by underwriting old and new issues, they probably would need to make you believe the market will be turning around quickly. Otherwise, how can they make money if you are not buying stocks???
To gain myself more flexibility and control over my own money I would like to sell a bit more mutual funds I have on hand to raise cash for further usage. I think I should manage my own money, not someone else. It means I will have to sell one fund in a loss and one in a gain.
Well but I want to say, it's not about selling at a gain or a loss. It's about take back the control, as well, sell when you should, before it's too late. Even selling 2 more mutual funds I still have long positions, so I'm not totally out from market.
I would like to brainstorm a bit more about the upcoming US president election. I think I have some questions to myself that I couldn't make it clear for now. Maybe I should post those thinking later.
I bought a bit more FXP at $90.38. As you saw it quickly turned into a loss as of ending of Friday. We still hear positive tune in the market. I couldn't remember where the tune comes from. But I want to say if the tune comes from Wall Street you better second guess again. If Wall Street brokerage firms mainly make money by underwriting old and new issues, they probably would need to make you believe the market will be turning around quickly. Otherwise, how can they make money if you are not buying stocks???
To gain myself more flexibility and control over my own money I would like to sell a bit more mutual funds I have on hand to raise cash for further usage. I think I should manage my own money, not someone else. It means I will have to sell one fund in a loss and one in a gain.
Well but I want to say, it's not about selling at a gain or a loss. It's about take back the control, as well, sell when you should, before it's too late. Even selling 2 more mutual funds I still have long positions, so I'm not totally out from market.
I would like to brainstorm a bit more about the upcoming US president election. I think I have some questions to myself that I couldn't make it clear for now. Maybe I should post those thinking later.
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