Friday, August 23, 2013
08/23/13 'When in doubt, tough it out.'
The above quote was taken from Landry's guide to trading stocks (p 148). In fact, he goes on to say that one of his biggest regrets was putting 'when in doubt, get out' in his first book.
I've been thinking about that a lot recently.
I was within a day (in one case, less than a day) of being 'right' on several trades in the past few weeks. EEM/RYWVX. GDX. UNG/UGAZ. Instead, I allowed myself to be taken out either for significant losses or minor gains. Why? I was tied to a 'when in doubt, get out' mentality.
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Craig- If you're able to load screenshots of the 'bowties' in the major indexes that Landry sees developing, it would be instructive for all of us.
ReplyDeletethat's the 10DMA < 20DMA < 30DMA thing right? 2nd - You should be able to pull that up on stockcharts.com. I think the rule is that all major tops show this setup but not all of these setups are major tops. Just another feather in the cap I guess.
DeleteTechnically, I still think this market is very weak.
And I think you can make a case for fundamentals being very weak. Something is going on in the emerging markets. My guess is it is China. Most emerging markets are horribly weak. And the biggest stocks in the US are looking weak. Retail stocks are also doing quite poorly.
DeleteLast thing...clearly the rise in interest rates is having an effect on things here...why would WFC be laying off a big chunk of their mortgage division?
Seriously, though, something is up with the emerging markets. I wouldn't be surprised to see some kind of liquidity event. If its China it could be a big problem. I would read p.4 and on of this article if you haven't seen it before:
http://www.btinvest.com.sg/system/assets/18401/CN%20Credit%202013%20Aug%205%20GS.PDF
Is it the Chu Interview your referring to TOF?
DeleteT3 - Yeah the Chu interview. I read it earlier today when I was snooping around and it immediately brought memories back of the Chibor thing that I guess people were getting worked up about a few months ago.
DeleteTOF is doing a great job of explaining what is going on.
DeleteI fired off an email with charts.
Still waiting for the trigger as a few big up days would have us back to making new highs, but there are a lot of weak key sectors that TOF nails.
Hope you all are having a great weekend.
I've actually been buying some crap for both inside and out. Nothing from the wicker rocket though.
ReplyDeleteNLS- Nice gap fill and support hold there. Still a pesky little gap back in Jan. though.
DeleteTchotchkes - I haven't in a long time, the ones mounted over my commodes are still working fine.
ReplyDeleteJO - Higher low, decent place to hide if the market stalls?
ReplyDelete$WTIC - Maybe with all this talk about reserves estimates depleting, oil will break out to the upside.
ReplyDeleteWould an event such as that tend to create any downside pressure on natty?
Seems like commercials are quite short $WTIC though, heading down soon?
DeleteCLH - This one looks like it would be fun to trade.
ReplyDeleteRe BSBR,
ReplyDelete"In accordance with the Bank’s bylaws, stockholders are entitled to a minimum dividend equivalent to 25% of net income for the year, adjusted according to legislation."
their dividend payout history in Brazil Real is:
2009 - .16
2010 - .44
2011 - .30
2012 - .39
http://www.ri.santander.com.br/ShowResultado.aspx?IdResultado=6Ngkyized+lDwZihBGeKgQ==
So, I would certainly not take their decreasing dividend as a sign that they are heading into financial crisis - it just varies with profits - this is a common European practice as opposed to the U.S., never decrease your dividend approach.
They are actually under-capitalized and this is one of the things to like about the stock. It gives a higher level of safety, plus provides the potential to grow faster than in the past as opportunities present themselves as the Brazil economy turns around. From their 2012 investor fact sheet:
"Furthermore, for the second consecutive year, Santander Brasil has been elected by the magazine Bloomberg Markets as the 11th most solid bank in the world and the first among Brazilian banks. This fact can be demonstrated by the bank’s BIS¹ ratio, which in this quarter was 20.8%, in accordance with the Brazilian Central Bank’s methodology."
Going back to our discussion yesterday on whether markets may be turning to bear, saw this interesting article discussion valuation differences around the world and how expensive the US markets are relative to most:
ReplyDeletehttp://www.mebanefaber.com/2013/08/22/what-siegel-is-missing/
Made me take a second look at the stocks I have been buying this year and I realized I have not really been buying US companies this year.
I have made 16 stock purchases this year and only 1 was a US company. 8 were Canadian, 4 European and 2 Brazilian. Many of these were adds to existing stocks, so of my new stocks, 3 were European, 1 Brazil and 2 Canadian. Dollar-wise, many of the Canadian purchases were small adds, so over half of my purchases were in Europe.
Other than my home-country bias for better research and tax treatment, I don't specifically target certain markets when buying stocks (I just look for the best risk/reward stocks), so it tells me that the best place to find value in the markets is outside the US and probably in Europe.
Makes me think that we possibly all could be right here and that the US does experience a bear market, but the global stock market, especially excluding the U.S. does well.
The new stocks I have bought this year are:
DeleteEuropean - IBDRY, CCL, ING, AEG
Brazil - BSBR
Canada - IBG.TO and CNI (which really wasn't a new purchase, just a valuation trade out of UNP)
BB- There's one very serious flaw in your investing/trading process... Only very intelligent people can implement it.
DeleteThanks for the BSBR idea.
CNI looks like a great candidate for shorting if it breaks below $94 soon. I'll be watching out for that event.
DeleteBB -- I have no idea about the company, so please don't take it as criticism of your value-based investment strategy. I am just trying out my new personality of a chart-based trader without any beliefs...
For that matter, SPY is a good shorting candidate if it breaks below last week's lows. I'll be watching out for that too. If the breakdown of SPY coincides with a breakdown in CNI -- THAT would be one hell of a confirmation for shorting CNI...
DeleteCNI (CN Rail) is one I'm a bit hesitant on.
DeleteI've identified it as one of my 3 or 4 buy and hold stocks. The reality with the rails is that they got a great long term competitive advantage in their unbeatable low fuel costs for ground transportation, have oligarchical pricing with 5 main players, and no new competitors will ever appear as you could never build a railway now. If you look at the long term chart, it has been in a solid uptrend since it went public in 1996.
The issue with it now is that it is expensive relative to it's normal valuations and it's growth prospects in a slow-growth economy. I also agree that the chart does not look great. It is tempting to sell, but I'm concerned that if I did, I wouldn't get back in. It is a stock that I looked at for years and finally got in the 2009 crash under $50. The reason I bought it this year is I did a flip last year of CNI to UNP based on valuation, and then bought CNI back this year when the valuation gap switched back, so not really a buy for me this year.
It's a tough call for me. It's good to have some steady stocks like this in the portfolio, but very likely could be dead money for a couple of years or down as the economy and fundamentals catch up.
I like this strategy. A lot.
DeleteWowza!
ReplyDeletehttp://seekingalpha.com/article/1653072-nuverra-environmental-a-sinking-ship-with-default-risk?source=email_rt_article_readmore&app=1
I'd love to send this the X+3B to see what he thinks.
DeleteOne birthday party down, one to go.
ReplyDeleteMark Mobius on being a good time for emerging markets.
ReplyDeletehttps://www.linkedin.com/today/post/article/20130823184348-217978279-have-emerging-markets-gotten-oversold?_mSplash=1
PBF - This one's been beaten pretty hard, might not be done yet?
ReplyDelete