Don’t worry, just a little bump - $70 is just around the corner. Short traders just keep making those margin calls, mortgage the house if you have to. Fortunes await you! PO is for pansies and doomers. At $70 short some more ..... it is going back to $22 .... the world is awash with oil ........ reality has nothing to do with it, its all in those charts!!!!!!!!!!
Posted: Tue Apr 22, 2008 1:45 am Post subject: Re: Peak Investments
I had a friend who was doing this and due to turbulence around mid-2007 had to go back to his old regular job. _________________ Men argue, nature acts !
Voltaire
"...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
Posted: Tue Apr 22, 2008 7:37 am Post subject: Re: Peak Investments
Yeah I have heard some horror stories too.
But still... If I bailed now... I'd be up around 40%.
Makes other investments look pretty weak.
It's this traders stop/loss limits which really convinced me. Very conservative... and he actually stops when he hits those marks. _________________ "When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
and I've lived through some horror stories.
There were 3 things that saved me:
1) STOP loss orders - If you're playing a game of leverage never go without it
2) Do not lose more than 10% on a single trade. - example if you lose 20% then you must make a 25% gain to get back to even. You can lose enough in 1 month that it will take you a full year to recover
3) Do not add to a losing position - if you are going long and the price instead goes down. Do NOT add a 2nd position thinking you're getting a good deal because the price is cheaper.
EVERY day trader has violated these rules before. What separates those who survive and those who had to go back and get a real job were those who learned from their mistakes and stuck to these rules. good luck
and I've lived through some horror stories.
There were 3 things that saved me:
1) STOP loss orders - If you're playing a game of leverage never go without it
2) Do not lose more than 10% on a single trade. - example if you lose 20% then you must make a 25% gain to get back to even. You can lose enough in 1 month that it will take you a full year to recover
3) Do not add to a losing position - if you are going long and the price instead goes down. Do NOT add a 2nd position thinking you're getting a good deal because the price is cheaper.
EVERY day trader has violated these rules before. What separates those who survive and those who had to go back and get a real job were those who learned from their mistakes and stuck to these rules. good luck
Totally agree with this.
Actually he has already hit the stop loss target twice when it turned out he would have made a great return staying in. He also only leverages 1:3, which I understand is pretty small compared to others.
So far 2 losing months out of 9 with under 7% loss for all trades.
Profit!
I'll update this thread as time passes. _________________ "When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
Posted: Mon Apr 28, 2008 3:18 am Post subject: Re: Peak Investments
Successful foreign exchange trading is being right 51% of the time. The rest is just discipline and good money management.
I have been sitting on a losing EURCAD short position for the past month. Now it looks like it has turned my way, but I was way too slow to pull the plug, and re-establish at better levels. So a good result at this point in time would be just to break even.
EURCAD CHART
Luckily it is a hedge, so actually I am better off when the euro appreciates and the Loonie falls. But as a trader I just entered at the wrong place and then did not take my stop loss early enough. No excuses. Your first loss, is your best loss. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Wed May 28, 2008 2:18 am Post subject: Re: Peak Investments
That's what I am doing wrong? Yeesh, and I thought trading was about buying low and selling high? Thanks for the advice. Cheers. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Thu May 29, 2008 2:18 am Post subject: Re: Peak Investments
Aaron wrote:
That's another reason Forex appealed to me. It's decoupled from the stock market. There is no direct correlation between Forex movement and stock market movement. With 401k's or other regular funds, they track with the stock market. Which really sucks if market growth doesn't at least equal inflation. Several weeks so far where the market tanked, but this fund still made money.
I think, it will be possible to generate profits out of Forex for considerable time.
The snag is that value of all involved currencies will deteriorate against everyday necessities as time pass, so nominally high profits would no longer translate into adequate purchasing power.
After sufficient time passed entire adventure will resemble children in playground trading between themselves shells for conkers at some "exchange rate".
Posted: Wed Jun 04, 2008 7:36 am Post subject: Re: Peak Investments
If I may humbly suggest the greatest failure of many posters is to realize that freely-floating currencies have no intrinsic value. They only have relative values against one another.
So there is absolutely no difference between buying EUR/USD at 1.00 and selling it at 2.00 (100% profit) than selling GBP/JPY at 250 and buying it back at 125 (100% profit). As a matter of fact it is the same as buying gold (XAU/USD) at $450 an ounce and selling it (USD/XAU) at $900 (100% profit).
If one is worried about a currency as a store of value per se then they would sell currency - USD, EUR, JPY, GBP, etc. - and buy another asset with that cash - gold, silver, stocks, bonds, oil, etc.
In every case there is a buy and a sell. A short and a long. So it very unlikely that all currencies will lose their value against one another. It is possible that all currencies can be collectively debased, so that real assets such as gold, silver and oil become relatively worth more than paper assets such as stocks and bonds that are merely claims on the underlying asset.
The relative value of free-floating currencies against one another are a function of: interest rate differentials; relative growth rates; trade surpluses or deficits; outstanding debt and whether it is expanding or contracting; balance of payments; confidence in the government; future inflation expectations; and, like in a matrix, any bilateral exchange rate, say EUR/USD, is also directly a function of EUR/JPY and USD/JPY, for example, but it is also indirectly a function of GBP/JPY, GBP/CHF, GBP/SGD, etc. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Wed Jul 02, 2008 2:49 am Post subject: Re: Peak Investments
No place to run, and no place to hide.
"when banks become more stingy with their loan books, as they have recently, industrial production tends to suffer about nine months later."
Quote:
The banking sector, with its hundreds of billions of dollars worth of writedowns from reckless lending, has marched major equity indexes to the cusp of a bear market. Indeed, analysts at Goldman Sachs estimate that plummeting financial stocks have accounted for 55 per cent of the $1.9-trillion drop in the S&P's value over the past 12 months. More ominously, these same analysts are predicting that credit losses will not peak until the first quarter of 2009 – a rebuke to numerous predictions this spring that the worst of the crisis had passed.
Tightened credit has hurt spending for both companies and consumers, and personal finance sentiment is at its lowest level in three decades. Housing prices continue to get pounded, food and gas prices are rising to record levels, and unemployment is climbing: a noxious cocktail for the consumer goods and staples trade.
Investors seeking a safe haven in the looming bear market are in a shaky position. Energy, materials and technology companies have performed well, but many market watchers believe the upside has already been priced in.
Credit conditions are still tightening. Banks are refusing to lend for longer maturities. This creates a refunding risk for non-bank financial institutions, and possibly a gap risk in their portfolios if they are forced to borrow short-term to fund assets or investments with a longer tenure.
If and when those banks call those short-term loans then their clients either have to replace those loans with more expensive financing (if they can) or sell the underlying asset (at an inopportune time). They in turn may have to call in loans from their clients as the financial system de-leverages. That is shorthand for falling asset prices and further write-downs. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Following your thoughts on write downs the following is hot off the wire. Given your depth in international finance I doubt any of it comes as a surprise...except perhaps for the quickness in the reversal of fortunes.
INDIA:
Just six months ago, India was looking good. Annual growth was 9%, corporate profits were surging 20%, the stock market had risen 50% in 2007, consumer demand was huge, local companies were making ambitious international acquisitions, and foreign investment was growing. Nothing, it seemed, could stop the forward march of this Asian nation.
But stop it has. In the past month, India has joined the list of the wounded. The country is reeling from 11.4% inflation, large government deficits, and rising interest rates. Foreign investment is fleeing, the rupee is falling, and the stock market is down over 40% from the year's highs. Most economic forecasts expect growth to slow to 7%—a big drop for a country that needs to accelerate growth, not reduce it. "India has gone from hero to zero in six months," says Andrew Holland, head of proprietary trading at Merrill Lynch India (MER) in Mumbai. Many in India worry that the country's hard-earned investment-grade rating will soon be lost and that the gilded growth story has come to an end.
Posted: Thu Jul 03, 2008 1:48 am Post subject: Re: Peak Investments
I saw this great cartoon a while ago.
I did not save it and now I cannot find it again.
It is two young Indian men addressing their father in a rural village.
They say, "We are off to seek our fortune in India's high tech sector."
"Can we take the cow?"
What may apply to a small minority may not represent the majority.
That is the problem with broad generalizations.
Quote:
Problem number one was that BRIC was always a better sound bite than a sound investment strategy. The differences between these economies were as stark as their similarities.
Secondly, using Micheal Pettis' corporate finance model* to assess self-reinforcing inflows and outflows into emerging markets (see Trader's Corner - not sure when) it was clear that so long as the sun was shining, and the world economy growing quickly, that India would be rewarded with lower spreads and a higher credit rating (hence the term self-reinforcing), but when that dynamic goes into reverse they are punished by those same forces. That India was running a substantial budget and current account deficit, including broadly subsidizing food and energy, made them particularly vulnerable to a change in sentiment in capital markets, de-leveraging and higher inflation. Especially for food and fuel.
And thirdly, the high tide were Q2'07 US corporate earnings. We said at the time that we just did not see them getting any better. And they have not. They have deteriorated every since and still are. The sub-prime crisis was just the tipping point. The build-up of problems was already there. Then we extrapolated that it would spread around the globe from the US to the UK, the EU and CEE, and finally Asia. Evidence for 'the decoupling theory' was sparse, and its case is not getting any stronger. So we predicted the final shoe to fall some time in H2'08 following the Beijing Olympics. Countries like Vietnam are already imploding under the strains.
Those were predictions made in London in June of 2007 to our bankers. We have been more right than wrong. Perhaps surprised at the speed at which crude has climbed sheltered by subsidies that mask those higher fuel prices from consumers, and the effect that is having on inflation. The pace of acceleration has been sobering to say the least. We went from expecting the ECB to ease in Q2'08 (or this summer) to fully expecting two rate rises out of them this year. One likely today. Unless your timing is perfect you can get caught out very quickly. The pace with which the German bund yield curve shifted up really surprised us. Keeping in mind that the ECB has better inflation fighting credentials than the FED to be sure.
I think a year ago we were still arguing whether this was stagflation. Now practically everybody is openly using this term. The Minister of Finance in S. Korea used those same words today to describe the situation there. We are in a period of profound deleveraging caused in part by staggering losses to the banking sector. Any money they can attract to plug those holes in their own balance sheet is not being used for new lending, but just to shore up capital adequacy ratios. That is money, from high food and fuel prices for example, that is not being reinvested into the global economy, but just going to cover the losses of previous poor investment and lending decisions. As such they can be compared to rebuilding a house after it burns down. No new wealth is created. At least not for the homeowner that experiences the loss.
Far from believing the worst is over we are still very much in defensive mode. With or without peak oil, and its implications for growth, it will take maybe another year or two of sub-par global growth to work the imbalances out of the system and destroy excess capacity. If anything that is being optimistic. Global growth has already dropped by half this year over last, while inflation has roughly doubled. You're living through history. Enjoy it! ; - ))
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