Last Night I posted that Fear and Greed were Upon us, specifically:
I would love a big gap down, but the market rarely makes it easy. Probably an up open, and a woosh. If that happens, I have my buy list that I will try with a fixed amount of capital.
I was watching the market from my iPhone in Silicon Valley all day in meetings and there were a ton of fast selloffs from the highs but it looks like we closed at the highs for the most part. Oil and Gold were also down big. The banks have written off everything but their kids at this point.
Leaning too hard on the negative side after this massive financial selloff can get you crushed. If you are extremely bearish, be patient and don’t rush it. There are lot’s of good setups to ease into.
There were some great long trades this morning. I only doubled down in VMW and added some SPYDERS (SPY). Both stormed higher off their lows. I was ecstatic to see my Hansen’s medical finally show some strength.
The most ardent bulls have been caving. That had to happen. You also have some pretty good points to stop out as were have banged these lows hard for a few days.
Any deeper price selloff in the indexes will be trouble, BUT, really step up the fear meter which will be good as well. That’s why if I was a betting man I think this is a tradeable bottom.
A plan does not always work out so well, but over time, plans make you a better more focused trader and operator.
If you invest, you should keep a journal or start a blog. It does not matter if anyone reads it, but I guarantee it will improve your thinking at the very least and likely, your trading.
Posted on August 16th, 2007 | Category: Trading | Comments Off
What an important time to turn off the television if you own or want to own stocks or even short them.
Idiots are in charge.
They will freak you out at exactly the wrong time.
Every ass in the world is now pulling shit out of their archives about how they predicted this subprime disaster. Everyone was right…ya right! The inmates are running things.
Personally, I would replace the whole shebang with PRICE. You could have been on MARS, returned two months ago and blindly seen the subprime and homebuilder runs were over and still made a fortune. They were already down 50 percent. We are talking two weeks ago.
Screw calling tops and bottoms and being early. Like Eddie said in his reaction – ‘Sometimes smart people do things that aren’t so smart’. Like my idiotic trade in homebuilders a few weeks back. I thought they were overdone. Key word – ‘THOUGHT’. That’s for assholes. I took my loss – thank goodness.
Be late and be right and manage your money. Enter strong trends and don’t stand in front of them. Go with them.
For nearly 20 years, he left Wall Street trailing in his wake as he racked up huge profits for his clients and himself. Henry’s managed futures firm used, and even pioneered, quantitative chart-based trading strategies to beat the market.
He also helped pioneer the infamous “two and twenty” fee schedule now used by every hedge fund boss worldwide, where they charge 2 percent just to handle your money and then rake off 20% of any profits.
Henry became a legend. He made so much money he was able to buy the Florida Marlins out of his own pocket and take them to a World Series victory. And then, most famously of all, he did the same with the Boston Red Sox.
Not sure about all the finger pointing and, but a 36 percent drawdown (estimate from the story) in a Trend Following Fund is not the exception. What is the rule though, is how people/money pile in at the top and pile out at the bottom.
I follow the monthly numbers of many trend following funds and for many, the last two years have been tough. These types of stories perk my ears to a potential bottom in the funds in general.
It is not just John Henry’s funds that have suffered asset losses. The industry has had major monies pulled. I like to see that. Investor neglect and disdain are good roots for future growth. Timing is difficult, but if I was allocating money, I would be starting to put money with trend follwers.
Trading Places was such a great movie. It was pulled together because of ‘The Bet’:
There was a real life bet as well, back in the early 80’s. Trading guru Richard Dennis bet his friend that great traders were made, not born.
Only nineteen years old at the time-the youngest Turtle by far- Curtis Faith traded the largest account, making more than $30 million in just over four years. He takes you behind the scenes of the Turtle selection process and behind closed doors where the Turtles learned the lucrative trading strategies that enabled them to earn an average return of over 80 percent per year and profits of more than $100 million.
Curtis Faith is someone I have looked forward to meeting from the trading world. He is enjoying life in Argentina. When he told me he would be here to promote his new book , I asked him to answer some questions for us.
It is hard to squeeze 20 plus years of trading into a Wallstrip interview, but the point is to get you started. We will post a longer version in the near future.
Keep it simple and diverse and above all else, be consistent.
I am no Turtle, but I aspire to be because I don’t have access to ‘Insider Information’, the only surefire way to make money.
Great interview and a real good guy. It was fun spending a few hours with him discussing his trading past and his entrepreneurial spirit over some Sushi.
We were not willing to strip for Dow 12,000 , but 13,000 is another story. Due to a small clause in Lindsay’s contract – one her agent missed – The Dow 13,000 clause kicked in and ‘Broker’s Gone Wild’ has become a reality.
Stick around for the ending…trust me. I though she had just changed her hair style.
Lindsay will be firing her agent for sure.
All kidding aside, do not treat these fantastic market gains lightly. I am not bearish, and it is not my style to be negative. Furthermore, price action in stocks has me feeling giddy, but being a hog will get you slaughtered.
I hate giving back gains, but I will be doing so when the market goes down becase I try and do as little market timing as possible. As a trend follower I have no alternative but to wait for a clear sell signal and right now I am 100 plus percent long in my stock portfolio. There are no sell signals in my portfolio.
If I was trading on feel and smarts, I would have sold all my stocks a while ago. I make for bad stock market conversation at cocktail parties but my lack of brains have been good for profits. That said, there is a lot of good priced into stock prices. I don’t know about cheap versus expensive, but stock prices on a global basis have been trending up for a long time now and volatility has been very low. My experience tells me that things change, so don’t be a hog.
Brian agrees with me that picking tops is just plain difficult, but that a lot of good is baked into stock prices at the moment. A great technical look at the Dow:
I hope to do Wallstrip 14,000 and 15,000 before seeing 12,000. What do you think?
I passed on the stock with my accompanying blogpost . I thought it was one I would revisit lower. Today’s my chance. Other than American Express and now Fremont, I do not own financial stocks. A few weeks ago, I felt First Marblehead could get caught up in the sub prime, guilt by association meltdown, and thought it would make a good short candidate . It did meltdown this morning – 22 percent meltage – but it may be due to the potential loss of two of it’s biggest customers – JP Morgan and Bank Of America.
To me all it proves is that investing is dangerous and don’t let bull markets lull you into thinking you are smart.
It also proves that the banks are out of control and have so many conflicts that you just have to close your eyes and live with the stench.
Life is so good for banks and private equity that all I can do as a small investor and blogger is stand in awe.
I hoep that none of my readers were harmed by the drop.
One guy that has been clusterbombed by SubPrime and NOW First Marblehead is Tom Brown . He picked a bad year to quit sniffing glue. I feel his pain. Have been there. He is not stupid so i will be looking for his insight here.
Down more than 50 percent from recent highs, First Marblehead may be an interesting opportunity for those inclined to buy broken stocks.
