Sunday, June 28, 2015

6/28/15 Just Another Grexit

There's nothing esoteric about trading.  Trading is a job, in some cases a business, like any other.  Sports analogies work well, not only because of the competitive environment but because players drive to jobs, and teams are run as businesses.  The daily grind is the same.  The bread and butter of trading is consistent execution of the same (offensive or defensive) plays over and over again.  The blocked shot.  The fat pitch.  The line drive.  Three yards and a cloud of dust.

A Grexit looms on Monday.  That makes it another manic Monday, one of the 52 that occur each year.  Look over your playbook.

Monday may be a non-event.  If it's an event, we don't know how markets will react.  It's unnecessary to know what will happen if we prepare for the most likely scenarios.  In general, Treasurys/Utilities +/- downside bets such as VXX or inverse funds work well should markets break lower.  Cash is generally considered defensive, but it's really in the Special Teams category-> preserving capital as markets decline, transitioning to heavy artillery as traders retreat/capitulate.

Sunday, June 21, 2015

6/21/15 Dylan's Guide to Trading

(a) 'Just Like Tom Thumb's Blues.'  https://www.youtube.com/watch?v=JKrpDLJB_38

'When you’re lost in the rain in Juarez
And it’s Eastertime too
And your gravity fails
And negativity won’t pull you through'

When even contrarians (including you!) give up and sell-> sleep on it, and reopen all positions the next morning.

(b) 'Desolation Row.'  https://www.youtube.com/watch?v=AL1HUsJJCzU

'And the only sound that’s left
After the ambulances go
Is Cinderella sweeping up
On Desolation Row'

Begin scaling in.

(c) 'Silvio.'  https://www.youtube.com/watch?v=_2tCGRdZ5d8

'I can snap my fingers and require the rain
From a clear blue sky and turn it off again
I can stroke your body and relieve your pain
And charm the whistle off an evening train'

Sell.

'Silvio, I gotta go
Find out something only dead men know'

Trap.

'I can tell you fancy, I can tell you plain
You give something up for everything you gain
Since every pleasure's got an edge of pain
Pay for your ticket and don't complain'

Respect and manage your losses.

(d) 'All Along the Watchtower.'  https://www.youtube.com/watch?v=TLV4_xaYynY

'Outside in the cold distance
A wild cat did growl
Two riders were approaching
And the wind began to howl'

Move to cash.

Tuesday, June 16, 2015

Thursday, June 4, 2015

6/4/15 Skying




Here's the latest media incantation of Bogle/Buffett quotes, invoking their presence amidst this week's selloff in global bonds:  http://www.marketwatch.com/story/why-bogle-and-buffett-tell-investors-to-ignore-market-noise-2015-06-04?mod=MW_story_latest_news.  Remain fully invested at all times, right?  Great advice most of the time, and markets do in fact trend up most of the time.  What John Bogle fails to appreciate is the wide range of pain thresholds among homo sapiens.  How many of them were able to endure a drawdown of -50% in 2009?  What about the -75% correction in the NDQ nine years earlier in 2000?  Many investors experienced both.  That's really not my thing.

How inflated are global asset prices right now?  Sylvia Plath might say they're skying, a term I first encountered when Harry Chapin embedded a few lines of her poetry into the lyrics for 'Taxi.'

'Baby's so high, that she's skying
Yes she's flying, afraid to fall
I'll tell you why baby's crying
Cause she's dying, aren't we all'

When global central banks reverse current policies, allowing interest rates and currency valuations to rise free of intervention, how will asset prices react?  I don't think anyone knows.

Tuesday, June 2, 2015

6/2/15 The Eagle Dives

The Euro is soaring +2% against the dollar.  Speculators are buying today's drop in the $USD> I'm inclined to think they're wrong.

Opened place bets 'across the board' this morning: PBR (Petrobras), Brazilian miner VALE, RYWVX (Rydex 2x Emerging Markets), RYTNX (Rydex 2x SPX), even EXAS (Exact Sciences).  All on strength (seemingly not my  usual style).  Note, however, that all assets sold off relentlessly over the past two weeks, making them trades on 'the right hand side.'  Rather than buy capitulation, I'm trying to catch the ebb and flow of prices away from the turns.  EXAS?  That's a bet on a squeeze.  Any shorts caught sleeping during the -8% drop to 25 two weeks ago are about to be tested (in my opinion).


Collateral bets on RYPMX (Rydex Precious Metals) + RYMBX (Rydex Commodities) at the close.

Friday, May 29, 2015

5/29/15 Sidelined Still

Since 'hanging it up' May 19:

(a) EEM (Emerging Markets) has slid from a closing price of 42.78 to its current bid of 41.12 (-4%).
(b) GDX (miners) from 20 to 19.60 (-2%).
(c) SPY (SPX) from 213.03 to 211.22 (-0.85%).
(d) EWZ (Brazil) from 35.54 to 32.29 (-9.1%).  VALE now 6.38.  PBR (Petrobras) 8.38.

The Shanghai Composite tumbled -6% Wednesday night, then an additional -5% last night before recovering to finish with a small loss.

I'm tempted to play a bounce, but lack a good reason to do so.

Tuesday, May 19, 2015

5/19/15 Becky

I met Becky Hedler in August 1974, during a trip to Delaware to attend a summer camp sponsored by the OCA (Organization of Chinese Americans).  Three of us started out in Ann Arbor, stopping briefly in Toledo where Becky (who was half-Chinese) joined us.  She was a music student, and we bonded immediately.  Becky apparently developed multiple sclerosis later in life, and passed away in 2006.  The clipping below describes the person I remember to a 'T,' probably the most inspiring 'obit' I've ever read.

http://www.legacy.com/obituaries/toledoblade/obituary.aspx?n=becky-hedler&pid=19950174&

I was a fledgling (still fledgling!) solo pianist, and played a half-finished composition on 'Talent Night' at the camp with her encouragement.  Highly characteristic of her that I'm only now discovering she could have played circles around me.  In an era of self-absorbed Boomers, it's a privilege to have crossed paths with someone who put others first.