Wednesday, June 19, 2013

06/19/13 It Just Ain't Easy

RYWVX closed down -5.19%, ouch! My total position size in EEM/RYWVX was identical to the one taken on the +5% move in miners/RYPMX on May 8, and my portfolio value is now more or less back to where it was May 7! Days like this really do remind me of Vegas. I spend more time commenting about losses than I do about gains for the simple reason that it's impossible to learn anything from traders who only talk about their wins. A loss is fine as long as I exit the position immediately. It's not uncommon for the position to then wave at me as it reverses the following day, but it's also not uncommon for the position to dive further. John Hussman likes to point out (with good reason) that most investors are unlikely/simple unable to exit positions in time to avoid serious hits during bear markets. A -4% loss can be made up with a +4.2% gain. A -20% loss will require a +25% gain. And a -40-50% loss (think miners), a +67-100% gain. I don't know about you, but I don't have the stomach for double-digit losses. I thought long and hard about taking gains on Emerging Markets near Tuesday's close, but I made a carefully considered bet to hold into today's Fed decision (which Marketwatch only half-jokingly referred to as the 'latest and most important Fed meeting of all time (since the previous one).' Even so, the violent global reaction surprised me. The Mexican peso, the Brazilian real, the Russian ruble, and the South African rand all slid 1-2% against the dollar as investors threw Emerging Markets under the bus. We'll find out in a few hours whether Asian markets fare any better.

36 comments:

  1. Here's the thing. Yesterday EEM closed up +0.4%, and RYWVX closed DOWN -0.3%. Whereas TODAY EEM closes down -3.08%, and RYWVX closes down -5.19%. If we didn't already know that investors get ----ed on a daily basis, we would think that investors get ----ed on a daily basis.

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  2. I admit to feeling better knowing the average index fund lost -1.3x% today.

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    1. I could have posted 'Black Wednesday' and been right!

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    2. crazy stuff. hey - at least you didn't buy WLT when we all did...and held. down 35% in the past month.

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    3. Thanks, TOF, for sharing your intuition about coal stocks being ready for another leg down. I exited my call options on BTU and ANR after your suggestion, and I am glad that I did. Too bad that I recycled the money into GDX calls when it was trading at $29. :)

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    4. Even more nuts, we probably gain 30pts on SPX tomorrow...

      Pleased to meet you, hope you guessed my name.

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    5. It wouldn't surprise me at all to see a massive global rally on Thursday.

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    6. I agree. Sold the short kept the longs. However, didn;t have enough conviction to Press the bet with leverage.

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  3. NLY - Announces dividend cut to $0.40 from $0.45, an 11% reduction.

    I'm not sure if this is why the share price closed under $13 today, perhaps some learned this prior to close?

    AGNC cut theirs by 16% yesterday and was green until the 14:00 hammer dropped.

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    1. For the answer to your question, refer to the first comment under this post.

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  4. Just like that, the Nikkei is back under 13k.

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  5. Never mind WLT, what about TCK? We all thought about it several weeks ago.

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    1. I've been keeping my eye on the chart, it's right on the lower trend line going back to October and the formation looks like an H&S. Has China begun obtaining their resources from Mongolia these days?

      BACML just downgraded some aluminum manufacturers but I haven't looked to see if they updated TCK.

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  6. Remember this guy?

    http://truecontrarian-sjk.blogspot.com/

    I actually have a great deal of respect for him as a trader. But he has to be holding the worst hand in the game right now.

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    1. I remember him. But aren't we climbing our way out of an balance sheet recession?

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    2. Let me put it this way. It's unfair to be dissing Hussman while giving guys like him a pass. There are many, many traders with good track records taking a beating in this market.

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    3. Hussman has been a permabear since 2007, or 2008? That tells me he's not someone who understands markets.

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  7. 2nd you have a day job now in the morning? LOL Not much for posts till post close these days.

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    Replies
    1. There just hasn't been much to say.

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    2. Surely you're not void of thought or observation? Feel free to share.

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  8. this market is no joke man. the rally in the beginning of the year was probably the best rally i have seen across the board since 2009. so many stocks had relentless rallies. we're not clearly in consolidation / reversal mode.

    i remember thinking to myself yet again after i sold YRCW at $14 or $15 that I should just cash it in for the year. happens so many times after big gains. i've done this about 5 times over the past 2+ years yet went on to give back 10 to 20% of the gains each time. i'm exactly where i was then thanks to gains in CECO and NOK and losses in WLT, REDF and FMD (unrealized). funny the market is exactly where it was in the beginning of May as well. I still think we trade sideways for a while as we digest the gains and come to grips with slightly higher yields. i still think europe is the place to be, particularly in greece, but that's a bumpy ride as well. i also think the really broken areas of credit in the us that have recently rebounded will continue to improve. thus my conviction on FMD. but i think it will take some time.

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    1. correction..."were NOW clearly in consolidation/reversal mode."

      also, i meant to say that this rally has been the best rally i have seen since the rally right off the bottom in 2009. that rally was obviously no joke as well. i still vividly remember just randomly picking four $2 to $3 stocks in the S&P and doubling to tripling my money in like 2 weeks. i think they were XL, WYN, CBS and one other one...can't remember. the recent moves in the ones i traded - SNE, OWW, BYD, YRCW - are very reminiscent of those early 2009 moves...initial moves off bottoms that never really looked back. this is part of the reason i think the market has more room to go higher...mainly because all of these are still holding in very well and yet you can make a fundamental case for much higher prices. i think this is all part of the process of the economic recovery. i think people underestimate just how well the economy is doing and how much this is a business cycle recovery. everyone pins the "blame" on the fed for anything good that happens so when we see moves like today they feel vindicated. i continue to think this lays the groundwork for higher prices.

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    2. "i think this is all part of the process of the economic recovery."

      I'm willing to accept the theory, it seems plausible.

      That doesn't mean the market won't absorb a 20% hit though, for no good reason.

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    3. yep good point. we have either seen the bottom or we see much lower lows. most people are expecting a drop to the 200 DMA after today.

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    4. I'm unprepared to bet on a drop at the moment, considering we're still in spitting distance of the channel, barely fell out of it. Maybe if we reach 1710 top of channel, or a few more down sessions.

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  9. good post:
    http://schaefferstradingfloor.com/why-it-pays-to-bet-against-pension-funds/id=4997

    detrick has been spot on for a while.

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  10. DJIA continues to put in higher lows in this correction. there have been seven (7) 100+ moves up or down in a row.

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  11. I think it's interesting that three publishing stocks made the stockcharts volume gainer scan. I've never heard of any of these. I don't like any of the charts but the volumes for LEE and MBIS are way outside the norm.

    JRN
    LEE - I can't even see this one on yahoo finance
    MBIS

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  12. FCSC - I do like this chart but the news below was released today. I wonder if there's any more gogo juice left in this one?

    " Fibrocell Science, Inc. (NYSE MKT:FCSC), an autologous cell therapy company focused on the development of innovative products for aesthetic, medical and scientific applications, announced today that it will be included in the Russell Global, the Russell 3000®, and the Russell Microcap Indexes when Russell Investments reconstitutes its comprehensive set of U.S. and global equity indexes on June 28, according to a preliminary list of additions posted June 14 on www.russell.com/indexes."

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    1. This is my version of Stewart's Pic Of Power chart for FCSC.

      http://stockcharts.com/h-sc/ui?s=FCSC&p=W&b=5&g=0&id=p41021883652

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    2. not the ideal buy point for me but i've seen crazier shit happen in this market.

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  13. And my last stock for the night. Ran my AbvGL scan and this one looks promising.

    CYH - SLow STO is 13.53, buy when it moves back above 20. I would prefer to see the price trade down to/thru the 50 day before turning up. It's on the watch list.

    http://stockcharts.com/h-sc/ui?s=CYH&p=D&b=5&g=0&id=p68667642509

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  14. My wife will be very bummed out tomorrow when she see's this. She loves the Sopranos.

    Actor James Gandolfini, Star of 'The Sopranos,' Dies in Italy
    http://www.cnbc.com/id/100829857

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  15. This is part of the reason why I'm sticking with the bull thesis:
    http://www.trucking.org/article.aspx?uid=1acfa814-f1b7-430f-aa76-a746a3713865

    And yes, I regret selling YRCW :)

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