Where does one find 'alpha?' Most likely within. Seeking to replicate someone else's trading results (as someone recently pointed out) is virtually impossible.
A strategy that delivers gains beyond a risk-adjusted benchmark is pretty hard to come by. Even when we 'find' one, success can be fleeting.
My wife and I are now about -10% below our combined portfolio high of September 2008. Recovery from the March '09 lows was basically a one-step process- pedal to the metal trading using leveraged 3x ETFs until mid-May 2009 surprised us with 70-80%+ returns over less than three months. That was followed by an endless series of fender benders as we shorted against the prevailing trend. Frustrating, but invaluable practice (wax on/wax off, jacket on/jacket off training, if you will) using the single most effective defensive maneuver available in trading- stop-loss selling. Day trading results were mostly minimal, treading water for the most part. Intuitive decisions to move both portfolios all-in several times on the long side in late August/early September gave us the only real gains we had for 2010, in the +7-8% range.
Does alpha even exist, or is it all just plain luck? There's an entire industry built on the premise that it's possible to 'beat' the market. Obviously, most funds don't deliver. Sometimes it's enough to have played the game and to have simply 'not lost.' I feel fortunate right now to be within 10% of any 2008 figure, and I'm thinking seriously of moving away from day trading. I can't retire (comfortably) on what I have right now, but I can in 13-14 years if the portfolio returns 6-7% a year until then (realistically, I think most of us Boomers should be thinking age 70).
tof- Even Bill's intuition says we move higher next week. I think 'long' is the only viable posture until we decisively reverse.
ReplyDelete2nd - i just don't see how we go lower man. valuation is cheap, earnings are going up, economy is gradually improving, people's sentiment about the economy is awful...
ReplyDeleteWell, if BC says he thinks we're going higher, that's got to be the clincher. I bet he was buying RBY above $4 too.
ReplyDeleteHilarious...Barton Biggs recommends buying because stocks should be going 10% higher. Wasn't he selling at the bottom in July? i remember reading several articles on Bloomberg about him recommending stocks in late 2007 all the way through mid 2008. How is it that a guy like this continues to manage people's money?
ReplyDeleteBiggs - Because even a stopped clock is occasionally correct? I wouldn't be buying just anything here, I'd be cautious with my selection.
ReplyDeleteHey, wasn't Bill just a few days ago claiming equities were about to be crushed along with a sudden rush to gold?
ReplyDeleteWhat happened to that?
Watch 3993.HK - It's moved up, see if it can maintain gains...
ReplyDelete3x normal volume already and the day has only just begun.
ReplyDeleteCBS.z Check this one out...
Sorry, I meant CBS.V
ReplyDeleteUSEG - Keep an eye on this one as well.
ReplyDeleteI'm going to put my remaining 10% cash into the International Index Fund in my mutual fund account, which has 25% of its holdings in the Nikkei. I believe the Nikkei will skyrocket higher soon.
ReplyDeleteDamn tough pitching for a kid. Man.
ReplyDeleteI haven't had the time yet to study the RBY fundamentals, but I'll trust cheapy for now and will try to trade it from the long side using TA. So I am placing a small buy stop limit order (1000 shares) just above the 5-day high at $3.76/$3.77, with the intent of placing a stop at $3.50 if the order gets triggered.
ReplyDeletetheres a bunch of drills, drill results, properties and cash. no debt, sales or production or recent reserves or resource estimates, prob not until Jan, maybe? mine build was est at under 150 mm, maybe it was 125, a yr ago, and cash cost sub 300. Loss to be announced on 11th i think. presentation this week in europe, might bring news, good or bad with it.
ReplyDeleteXCO off @ 20.41 on take over news lead by the CEO.
ReplyDelete+42%.
Mark - WOW!!!!!!! that's huge, congrats on a fantastic trade......now what are you looking at????
ReplyDeleteGMO honestly :)...But not to buy...In amazement.
ReplyDeleteGMO - $5.73, a penny away from my sell limit.
ReplyDeleteXCO Wow! That kicks, good going Markster!
Parked in the shade newSubmitted by 2nd_ave (4878 comments) on Mon, 11/01/2010 - 09:54 #73239
ReplyDeleteThis is an important week, no doubt about it. One of those you would underscore with a highlighter or something. I view it as a time to minimize capital at risk.
GMO - Partial sell
ReplyDeleteA penny away from your sell limit? I'm happy to hear you HAVE a sell limit. Personally, I would take the bid and consider the few pennies lost as 'dust in the wind.' Congrats, CP!
ReplyDeleteCP / Mark - Awesome trades man! I wish I paid more attention to energy / commodities. I just can't get my head around those markets. Instead I'm watching REDF flounder. Arghh!
ReplyDeleteGMO - I no longer own any, sold it all @ $5.74
ReplyDeleteWaiting for a reload.
GMO - I predict will close the day with around a 5% gain.
ReplyDeleteNice CP!
ReplyDeleteDamn, I left a lot on the table!
ReplyDeleteRe: Parked in the shade newSubmitted by 2nd_ave (4879 comments) on Mon, 11/01/2010 - 10:04 #73242 (in reply to #73239)
ReplyDeleteI also like this perspective from the WIR-
'And, you know I am a cynic about these things, believing the latest move before a game changing event in the market is almost always a sucker play.'
Wouldn't the better play be to pick up the pieces later in the week?
Holy shit- The DJIA's up >100 points. Last I checked, most of the guest posts on SOH were being penned by BULLS.
ReplyDeleteThere's no volume behind it, but I wonder what's up with HEK this morning.
ReplyDeleteNow I crap my boots! This sucker better come back to me or I'm gonna kick some ass!
ReplyDeleteGreat job CP. You did the work on that one and had the balls to hold it.
ReplyDeleteSolid #'s from BHI this am.
ReplyDeleteXCO - Mark, you make it look too F__KIN easy!
ReplyDeleteRe: Shanghai newSubmitted by 2nd_ave (4880 comments) on Mon, 11/01/2010 - 10:20 #73244
ReplyDeleteAs you all know, one of my younger brothers works in Asia. He recently sold the house he purchased in Shanghai 5-6 years ago (lock-up period of some kind was involved, undoubtedly to discourage 'flipping'). In terms of the yuan, the price doubled- in terms of the USD, the gain was even more remarkable. Is it possible for real estate values to continue climbing- of course, we've all seen it happen here. But all of us (ie, parents and siblings) are quite relieved he's out.
David- Not one to tell others what to do, but you might want to take profits in SWN today.
ReplyDeleteRe: Kaimu to join CTAB team bloggers newSubmitted by 2nd_ave (4881 comments) on Mon, 11/01/2010 - 10:27 #73246 (in reply to #73243)
ReplyDeleteLook forward to it, kaimu.
When I heard that you had led attendees at the first convention on a chant, this is what I pictured:
http://tinyurl.com/29v6lxx
Keep up the good work!
GMO - Relative volume 20X, LOL!
ReplyDeleteChina real estate - I don't see how it can go down appreciably in the next 10 or more years. The government might see to it that it doesn't increase, though.
ReplyDeleteTook profits in V/PXP. Now down to little spec. positions in BTIM/UNG/REDF....
ReplyDeleteGO GIANTS!!!!!!!!
And BAC...
ReplyDeleteI had some kids come by my house the other night wearing what looked like baseball uniforms and paper bags over their heads.
ReplyDeleteWhen I asked them what costume they were wearing, they replied they were Giants fans!
Nice downdraft to shake out morning buyers.
ReplyDeleteYeah, I couldn't believe the number of Dads escorting kids last night while keeping up with the game via cellphones.
ReplyDeleteCADC - They're pulling the same old shenanigans again today, bet they take it back to ~$4.05 soon?
ReplyDeleteCP- Great sell limit on GMO- that's about as good as it gets.
ReplyDeleteDepending on your time frames, but i don't see how we cannot have a short term correction with the fed announcement of QE2. What is priced in? The question will be how much will Big Ben disappoint. Do you think he is going to crash the dollar? He is going to have some convoluted scale in plan and the market is going to have a hissy fit to show their dissappointment.
ReplyDeleteCP way to play the Gap.
RB
2nd - Thanks, and I'll be buying back in b/c this one's going much higher. POMO players taking their gains and moving on...
ReplyDeleteI hope to get back in ~$4.75 or slightly under.
Or, I might concentrate more on CADC if these fools ever sell it down hard...
BTW, thanks for the support guys!
ReplyDeleteI have a feeling that today's drop in NG is just a shakeout of the weak hands who climbed on board of the recent NG rally. I don't want to buy too much now, since NG might be going to new lows, but at least I decided to reload at $5.55 the 300 shares of UNG I sold last week at $5.63. This is just a "token" action so as to make me feel that I did *something* about today's drop.
ReplyDeleteREDF- Opened a position in two allocations @ 3.55/3.57.
ReplyDeleteCongratulations on XCO, Mark! That was a full position for you, right?
ReplyDeleteWhy did you suggest taking profits in SWN today? Do you think today's drop in NG is a start of a new leg down?
man, CP, what a great trade! Reminds me of REDF...speaking of which, did I really recommend buying this at $4.1?
ReplyDeletewell, with 95 million registered users, they're now trading at $1 per registered user. so i think it's very undervalued.
REDF- In that case, I consider my entry a bargain, and may hold for an extended period.
ReplyDeleteDuring the drop in ECU.TO early last week, I finally decided to trade it a little as opposed to just holding my core position. So I purchased 5000 shares of ECUXF at $0.67 and then 5000 more at $0.65, and then set sell limit orders for them at $0.70 and $0.72. On Friday, 5000 shares were sold at $0.7 and then 2800 more at $0.72. Today, the remaining 2200 shares were sold at $0.73, for a total profit of $480 after transaction fees. At least now I can say that I have outperformed the "buy-and-hold" strategy in ECU with respect to my long-term core position, which I will start gradually selling after ECU rises above $1.
ReplyDeleteDavid- SWN, Today's reaction is obviously to the news the XCO CEO has the backing to take the co. private @ a 40% premium. I'm not worried about natty and will try to re-enter the space if we get a pull back.
ReplyDeleteYes, I had 3,600 shares with a basis of 14.20.
As for the overall market, I'm leaning in the direction of a downside move. If you pressed me, I'd have to say a whopper of a downside move. Followed, of course, by a resumption of the bull.
ReplyDeleteCADC- Damn, I would have bought that dip. Friggin day job!!
ReplyDeleteDamn, you squeezed very penny out of GMO CP. Way to go. Now you wont have to do those Geico commercials anymore :)
ReplyDelete2nd - I'm planning on holding REDF for a long time too. I consider it a long term call option on the growth in India internet usage. We know there are only like 80 million internet users and 9 million broadband internet users in India versus a population of 1.2 Billion. And with the huge amount of money going into building out broadband ($30 Billion I believe was the total amount committed back in June) those usage figures are bound to rise exponentially. So the potential is inherently there. www.rediff.com is the 9th most visited site in India so if usage goes up then traffic to their site will go up.
ReplyDeleteAt some point that traffic will be valued correctly in terms of REDF's share price. People just assume because they haven't been able to consistently make money on the traffic that they are therefore not worth anything. But what people are missing is that Indians view of the internet will be forced to change as usage grows. Businesses will rely more and more on the internet to grow their businesses and to advertise to customers. It's basically where the internet was in the U.S. back in 1996. Why hasn't it happened already? It has just taken a while to get growing because not enough money has been spent on building out the broadband infrastructure in India. That major roadblock was removed through the Broadband Auction back in June. As money pours into getting broadband access to people, businesses will rely much more on the internet. Its the same rationale as what happened here in the US.
I'm not investing in REDF because I think it will be a Baidu or Google (i.e., the leader in the market). I'm investing in it because I think they can be a SOHU/SINA/YHOO type peripheral player that still ends up making a ton of money for investors. India never had a catalyst for internet growth like it has gotten in the past 6 months.
Marc Faber: Fed's QE2 Could Trigger Market Correction
ReplyDeleteSubmitted by Dave M (225 comments) on Mon, 11/01/2010 - 13:56 #73258
Also sees short term pullback in precious metals, but overall he's bullish on equities over next decade...
http://tinyurl.com/3438jyv
reply Contact the author Bookmark this Ignore thread Ignore user
Re: Marc Faber: Fed's QE2 Could Trigger Market Correction newSubmitted by 2nd_ave (4882 comments) on Mon, 11/01/2010 - 14:14 #73259 (in reply to #73258)
I like Faber's take on QE2- that Bernanke might intentionally disappoint in order to gauge market reaction, and then proceed from there, perhaps with QE3, etc. I'm definitely leaning in the direction of a downside reaction, maybe even a whopper of a downside reaction, but one I would likely buy into.
REDF - I'm becoming increasingly compelled...
ReplyDelete2nd_ave -- don't forget that at the end of September Farber was calling for a big sell-off in October, and so right now he might be just trying to "prove himself right" with his call for a big sell-off after QE2 announcement.
ReplyDeleteRe: Stocks Turn Negative/ VXX @ 13.19 newSubmitted by 2nd_ave (4883 comments) on Mon, 11/01/2010 - 14:56 #73261 (in reply to #73260)
ReplyDeleteI think we see a little flight-to-safety heading into the elections.
Adding to REDF @ 3.43.
ReplyDeleteI honestly wouldn't be surprised if we rally hard into the close.
ReplyDeleteRe: Stocks Turn Negative/ VXX @ 13.19> Closed 13.40 newSubmitted by 2nd_ave (4884 comments) on Mon, 11/01/2010 - 15:18 #73265 (in reply to #73261)
ReplyDeleteA -50 point drop in the DJIA within 20 minutes dissipates much of the anxiety, IMO. May hop back in on a bounce to flatline.
All right, I'll start scaling into REDF as well. Placed a buy limit order for 500 shares at $3.45
ReplyDeleteThe buy limit order was hit -- now I have 500 shares of REDF at $3.45 as a long-term investment. Will add more either at $3.00 or if REDF makes a technical bottom before that.
ReplyDeleteHere is a good article about RBY, for those who are interested:
ReplyDeletehttp://seekingalpha.com/article/229349-rubicon-minerals-tipping-point?source=yahoo
It explains well that RBY is a "faith-based" play for now, since they have no clue as to how much gold they really have in the ground. The resource estimates *might* come out in Q1 2011. For now the stock is trading based on pure guesses and investor mood. When the resource estimates do come out, the article suggests that the stock price will undergo a rapid adjustment either way up or way down, with the author favoring the "way up" possibility.
I have removed my buy stop order on RBY at $3.76 and will instead focus on REDF, where as TOF suggests, it is just a matter of time before good things start to happen.
Re: Marc Faber: Fed's QE2 Could Trigger Market Correction newSubmitted by 2nd_ave (4885 comments) on Mon, 11/01/2010 - 15:32 #73268 (in reply to #73264)
ReplyDeletedave- Exactly. I sort of see Bernanke saying to the banks, 'Look son, I know I promised you a trillion. But I've thought it over, and I'm only going to make it 500 mil- you're almost 35 and still living at home. You need to man up and start supporting yourself. You're welcome to stay here until you find a job, but then I expect you to move out.'
REDF - This looks like capitulation to me...
ReplyDeleteREDF - My lame broker won't allow me to buy without first enrolling in safepass@ b/c it's too risky!
ReplyDeleteThey're saving me from myself!!!
CP - Sounds like your broker is one savvy outfit! I for one ain't capitulating but it does sure seem like it to me. Now down 46% in one month.
ReplyDeleteGlad my BYD is holding in here. Maybe they'll save me from my REDF misery.
ReplyDeleteMoving 50% of remaining cash into the International Index fund in my mutual fund account.
ReplyDeleteREDF: Looks like it hit 1st support here. Next stop if it doesn't hold is $3.00.
ReplyDeleteI'm in at $3.38.....WTF. Small position to add to ala David if it breaks to $3.
FF
I never knew it was possible for someone to victimize themselves until I signed up with this broker! The thought had never crossed my mind.
ReplyDeleteI bet X+3B was buying BAC today...I'll find out for fun:)
ReplyDeleteBears can't win any battles.
ReplyDeleteWTF broker is it??? Walmart?? :)
ReplyDeleteIs that "Preschool Brokers"? LOL.
ReplyDeleteFF
POMO players have the perfect excuse to sell off GMO now...
ReplyDeleteBet it doesn't happen, that's the way my luck runs.
Imbalances....
ReplyDeleteBUY- BAC/C/JPM/SWN/XCO.
BACML, they've got to be the worst from my perspective, who would want an account with them? Anyone think BAC can go bk?
ReplyDeleteCP - If BAC goes bankrupt our economy goes bankrupt. Ain't happening in my mind. They truly are too big to fail. Only reason they bought out ML in the first place was because Paulson/Fed forced them. If you recall they bought them at like $50 Billion and at the time they were probably going to be out of business within a week.
ReplyDeleteYes, I know the BAC story well and I used to have confidence but judging from some of the stuff I have to deal with as a customer, gives me visibility to both sides of the coin.
ReplyDeleteThat's what folks mean by voting for change, the worse these companies are, the better their chance of coming out a winner and people are fed up with it.
GBCI/ATNI - Check 'em out..
ReplyDeleteAKS - 12 held so far...
ReplyDeleteTOO Fing FUNNY!!! Rick Santelli just pronounced Bill Fleckenstein as Fecalstein... I kid you not..
ReplyDeleteThat is a good one, LOL!
ReplyDeleteSGEN goes back on the watch list. Had a downgrade today that seemed to come out of no where compared to other analysts.
ReplyDeleteWord is, Charlie sheen spent $14k this weekend on powdered Halloween candy.
ReplyDelete