Only one word need be said: Up!
Terry's Model Portfolio: The August 135 SPY calls closed @ 2.22.
Thursday, July 21, 2011
Wednesday, July 20, 2011
Market Conditions Today
Today was a high level consolidation day. The trend is up, so we are experiencing a pause right before the next upswing. The August 135 SPY calls in Terry's Model Portfolio closed @ 1.35.
Tuesday, July 19, 2011
Up We Go into August 1
The market is going up. We hit a low yesterday on the S&P 500 Index @ 1295. Yesterday was classic oversold conditions in an uptrend. Up we go. The trend is up.
Terry's Model Portfolio: July 19, 2011
Trade Execution: Buy 47 August 135 SPY Calls @ 1.05
Execution Time: 6:37 a.m. (PST)
Reason: Bullish conditions on daily stochastic. Falling Wedge Trend Line breached.
Execution Time: 6:37 a.m. (PST)
Reason: Bullish conditions on daily stochastic. Falling Wedge Trend Line breached.
Saturday, July 16, 2011
A Bottom Next Week: Up Trend Continues
As a rule of thumb, it is good to buy oversold conditions in an uptrend. Oversold conditions can be defined in one of several ways. One possibility is a daily stochastic reading below 20. We are there right now on the clearstation.com 9-month chart of the S&P 500 Index. Things are bullish right now, even though the news seems bleak. Another possibility is a dip below the 50-day and 13-day moving average in an uptrend. We dipped below both respective moving averages on Friday. Finally, there is a time element. We are due for a low this coming week.
Taken together, these factors suggest we are heading higher into August 1.
Interesting.
Have a good weekend!
Wink
Taken together, these factors suggest we are heading higher into August 1.
Interesting.
Have a good weekend!
Wink
Friday, July 15, 2011
Market Conditions for the Week
The market has spent this week correcting. We are very close to a low before the next rally. So, be on the lookout for the market to begin a rally next week. It is strange but the market remains in an uptrend. So, market bottoms are good opportunities to go long.
Tuesday, July 12, 2011
Market Conditions: Correction Within An Uptrend
The market appears to be correcting within an uptrend. I would give this correction perhaps 3-5 more days. Then, we should see higher prices and a price higher than the May 1 high of 1370.
Friday, July 8, 2011
Terry's Model Portfolio: Day 9
Trade execution: Sell all July 137 calls @ 0.15
Time: 6:31 p.m., Friday, July 8, 2011
Portfolio balance: $8,239.00
Market assessment: Market totally collapsed due to dreadful jobs report. Busted chart pattern negated inside day. Not encouraging.
More details later today.
Time: 6:31 p.m., Friday, July 8, 2011
Portfolio balance: $8,239.00
Market assessment: Market totally collapsed due to dreadful jobs report. Busted chart pattern negated inside day. Not encouraging.
More details later today.
Thursday, July 7, 2011
Terry's Model Portfolio: Day 8
Last Trade: Buy 468 July 137 SPY Calls @ 0.32. 6:35 a.m. (PST), Thursday, July 7, 2011.
Rate of Return Today: 53.12%
Profit Today (Unrealized):$7,968.75
Portfolio Balance: $24,317.75
Performance Year to Date:143.17%
Objective: 100% gain by November 21, 2011
Time: 1:00 p.m. (PST), Thursday, July 7, 2011
Market Assessment: Breach of July 1, 2011 daily high has produced explosive move higher. Uptrend is strong, particularly
the MACD Histogram. Probabilities favor a higher Friday. Natural resistance lies @ 1368 on the S&P 500
Index. High and Tight Bull Flag pattern. No reason to sell calls in a rising market.
Twyman Asset Management
July 7, 2011
Dear Terry:
We have reached our goal of a 100% gain by November 21, 2011.
I am not celebrating because the trade remains open. The profit is unrealized. The July 137 SPY calls closed @ 0.49 today. As a rule, we cut our losses short. We let our profits ride. The market action since July 1, 2011 has been extremely bullish. Rather than a price target, my time target would be to close out the trade tomorrow @ noon. I will closely monitor market conditions and, should an earlier close out of the trade be warranted, I will do so.
We had a disappointing trade on July 1 but today's trade has more than made up for the difference. If we keep our losses to a bare minimum, we will have the resources to exploit opportunities like today.
Warm regards,
Wink
Rate of Return Today: 53.12%
Profit Today (Unrealized):$7,968.75
Portfolio Balance: $24,317.75
Performance Year to Date:143.17%
Objective: 100% gain by November 21, 2011
Time: 1:00 p.m. (PST), Thursday, July 7, 2011
Market Assessment: Breach of July 1, 2011 daily high has produced explosive move higher. Uptrend is strong, particularly
the MACD Histogram. Probabilities favor a higher Friday. Natural resistance lies @ 1368 on the S&P 500
Index. High and Tight Bull Flag pattern. No reason to sell calls in a rising market.
Twyman Asset Management
July 7, 2011
Dear Terry:
We have reached our goal of a 100% gain by November 21, 2011.
I am not celebrating because the trade remains open. The profit is unrealized. The July 137 SPY calls closed @ 0.49 today. As a rule, we cut our losses short. We let our profits ride. The market action since July 1, 2011 has been extremely bullish. Rather than a price target, my time target would be to close out the trade tomorrow @ noon. I will closely monitor market conditions and, should an earlier close out of the trade be warranted, I will do so.
We had a disappointing trade on July 1 but today's trade has more than made up for the difference. If we keep our losses to a bare minimum, we will have the resources to exploit opportunities like today.
Warm regards,
Wink
Terry's Model Portfolio: Day 8
Trade execution: Buy 468 July 137 SPY calls @ 0.32.
Time: 6:35 a.m.
Rationale: Inside day high breached. Technicals suggest big up move ahead. Cup and handle breakout. Resistance @ 1345 breached. Probabilities favor higher prices into middle of July.
Market conditions: Strong uptrend. Stochastics approaching embedded status. Target @ 1420. High and Tight Bull Flag playing itself out.
Time: 6:35 a.m.
Rationale: Inside day high breached. Technicals suggest big up move ahead. Cup and handle breakout. Resistance @ 1345 breached. Probabilities favor higher prices into middle of July.
Market conditions: Strong uptrend. Stochastics approaching embedded status. Target @ 1420. High and Tight Bull Flag playing itself out.
100% into the C Fund
I am 100% in the C Fund. The market is going up. We had two inside days this Wednesday and Thursday. The daily high of July 1 will be breached this morning. So, the market is going up for now. The trend is now up. Follow the trend or be left behind.
Tuesday, July 5, 2011
Terry's Model Portfolio: Day 7
Trade execution: Sold all July 125 puts @ 0.10.
Time: 10:02 a.m. (EST)
Rationale: Anticipated a July 5 post-holiday drop in the market. Monitored the first 15 minutes for trading range. Trading range was not broken to the down side after 30 minutes, so decided to close trade, preserve capital, and wait for better trade opportunity.
Rate of Return Today: - 17%
Loss on Trade Realized: $3,230
Portfolio Balance: $16,349
Performance Year to Date: 63.49%
Objective: 100% by November 21, 2011
Time: 10:02 a.m. (EST)
Rationale: Anticipated a July 5 post-holiday drop in the market. Monitored the first 15 minutes for trading range. Trading range was not broken to the down side after 30 minutes, so decided to close trade, preserve capital, and wait for better trade opportunity.
Rate of Return Today: - 17%
Loss on Trade Realized: $3,230
Portfolio Balance: $16,349
Performance Year to Date: 63.49%
Objective: 100% by November 21, 2011
Monday, July 4, 2011
The G Fund As A Safe Haven
Happy July 4th!
The question for the day is whether the G Fund remains a safe haven in the days ahead. Obviously, I am well versed in the ups and downs of the C Fund (S&P 500 Index). But might the G Fund become less of a safe haven should U.S. government debt be downgraded? I want to explore this issue in coming posts.
To start the conversation, I am attaching this interesting essay from Money Morning:
"Since last November, the U.S. Federal Reserve has been buying U.S. Treasury bonds at a rate of about $75 billion a month. That's part of Fed Chairman Ben S. Bernanke's "QE2" program, under which the central bank was to buy $600 billion of the government bonds.
But QE2 ended yesterday (Thursday), meaning the Fed will no longer be a big buyer of Treasury bonds.
So starting today (Friday), the U.S. Treasury needs to sell twice as many Treasury bonds to end investors as it had been.
But the problem is, who's going to buy them?
Not China, which is diversifying its trillions in assets to get as far away from the U.S. dollar as fast as it can.
Not Japan, which is trying to rebound from its March 11 earthquake, tsunami and nuclear disaster - and is focusing all its spending on reconstruction.
And - as we've seen -neither is the Bernanke-led Fed.
I'm telling you right now: We are headed for an epic bond market crash. If you don't know about it, or don't care, you could get clobbered.
But if you do know, and are willing to take steps now, you can easily protect yourself - and even turn a nice profit in the process.
Let me explain ...
A Timetable for the Coming Crash
I'm an old bond-market hand myself - my experience dates back to my days at the British merchant bank Hill Samuel in the 1970s - so I see all the signs of what's to come.
Having the two biggest external customers of U.S. debt largely out of the market is a huge problem. Unfortunately, those aren't the only challenges the market faces. The challenges just get bigger from there - which is why I'm predicting a bond market crash.
Steadily rising inflation is one of the challenges. Inflation is a huge threat to the bond markets, and is almost certain to create a whipping turbulence that will ultimately infect the stocks markets, too.
Many pundits will tell you that if investor demand for bonds declines, and investor fear of inflation increases, bond-market yields could increase in an orderly fashion.
But I can tell you that the bond markets don't work like that. Price declines affect existing bonds as well as new ones, so the value of every investor's bond holdings declines. And with many of those investors heavily leveraged - especially at the major international banks - the sight of year-end bonuses disappearing down the Swanee River as bonds are "marked to market" will cause a panic. That's especially true when end-of-quarter or end-of-year reporting periods loom.
That's why we can expect a bond market crash at some point. If you ask me to make a prediction, I'd say that September or December were the most likely months for such a crash.
A Boxed-In Bernanke
One sad - even scary - fact about what I'm predicting is that Fed Chairman Bernanke won't be able to do much about it ... though he'll certain try.
Consumer price inflation is now running at 3.6% year-on-year while producer price inflation is running at 7.2%. In that kind of environment, a 10-year Treasury bond yielding 3% is no longer economically attractive. Since monetary conditions worldwide remain very loose, inflation in the U.S. and worldwide will trend up, not down.
The bottom line: At some point, the "value proposition" offered to Treasury bond investors will become impossibly unattractive. When that happens, expect a rush to the exits.
If Bernanke attempts "QE3" - a third round of "quantitative easing" - he will have a problem. If other investors head for the exits, Bernanke may find that the U.S. central bank is as jammed up as the European Central Bank (ECB) currently is with Greek debt: Both will end up as the suckers that are taking all the rubbish off of everyone else's books.
There's a limit to how much Treasury paper even Bernanke thinks he can buy. And if everyone else is selling, that "limit" won't be high enough to save the bond market.
With Bernanke buying at a rapid rate, the inflationary forces will be even stronger, so every Bureau of Labor Statistics report on monthly price indices will be marked by a massive swoon in the Treasury bond market.
Eventually, there has to be a new head of the Fed - a Paul A. Volcker 2.0 who is truly committed to conquering inflation. Alas, it won't be Volcker himself since, at 84, he is probably too old.
But it might be John B. Taylor, who invented the "Taylor Rule" for Fed policy. The Taylor Rule is actually a pretty soggy guide on running a monetary system. But it has been flashing bright red signals about the current Fed's monetary policy since 2008.
However, since a Fed chairman who is actually serious about fighting inflation would be a huge burden for current U.S. President Barack Obama to bear - and could badly hamper his chances for re-election, any such appointment is unlikely before November 2012.
How to Profit From the Bond Market Crash
Given that reality, it's likely that Bernanke will attack any bond market crash that occurs ahead of the presidential election just by printing more money; there won't be any serious attempt to rectify the fundamental problem, meaning inflation will continue to accelerate.
For you as an investor, this insight leads to two conclusions that you can put to work to your advantage. The scenario I've outlined for you will be:
Very good for gold and other hard assets. Challenging for Treasury bonds; prices will remain weak no matter how vigorously Bernanke attempts to support them.
So what should you do with this knowledge? I have three recommendations.
First and foremost, if Bernanke were not around, I would expect gold prices to fall following a bond market crash. But since he's still at the helm at the Fed, I expect him to do "QE3" in the event of a crash. And that means gold - not Treasury bonds - would become an investor "safe haven."
You can expect gold prices to zoom up, peaking at a much higher level around the time Bernanke is finally replaced. Silver will also follow this trend. So make sure you have substantial holdings of either physical gold and silver or the exchange-traded funds (ETFs) SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV).
Second, if you want to profit more directly from the collapse in Treasury bond prices, you could buy a "put" option on Treasury bond futures (TLT) on the Chicago Board Options Exchange (CBOE). The futures were recently trading around 94, and the January 2013 80 put (CBOE: TLT1319M80-E) was priced around $4.50, which seems an attractive combination of low price and high leverage.
Finally, if you don't already own a house, you should buy one - and do so with a fixed-rate mortgage. A U.S. Treasury bond market crash will send mortgage rates through the roof, so today's rates of about 4.8% will represent very cheap money, indeed. Even if house prices decline by 10%, a 2% rise in mortgage rates would increase the monthly payment (even accounting for a 10% smaller mortgage), by a net 11.8% (the payment on a $100,000 mortgage at 4.8% is $524.67; that on a $90,000 mortgage at 6.8% is $586.73).
Needless to say, the same benefits apply to rental properties financed by fixed-rate mortgages: With lower home ownership and rising inflation, rents are tending to rise significantly.
There's a storm coming in the Treasury bond market. But by recognizing its approach, we can turn the bond market crash to our advantage."
Q: What do you think? Does the argument make sense? Are TSP investors boxed in with no viable out, should bond prices collapse? Its a difficult question but a good one since cash may be less and less of a safe haven over time. Personally, I believe we need more diverse options in the TSP suitable for the times. There should be a precious metals fund. Why there isn't a precious metals fund is beyond me. There should be a foreign currencies fund. I know we are federal employees but, if the U.S. dollar is debased, then why should we be denied the option of sweeping our retirement funds into the Swiss Franc or the Australian Dollar or the Norweigan currency for protection? I'm not sentimental about these questions. I'm realistic.
What choice is really there if every choice given is depreciating and every choice denied is appreciating?
Offer some thoughts and we can get the conversation going....
The question for the day is whether the G Fund remains a safe haven in the days ahead. Obviously, I am well versed in the ups and downs of the C Fund (S&P 500 Index). But might the G Fund become less of a safe haven should U.S. government debt be downgraded? I want to explore this issue in coming posts.
To start the conversation, I am attaching this interesting essay from Money Morning:
"Since last November, the U.S. Federal Reserve has been buying U.S. Treasury bonds at a rate of about $75 billion a month. That's part of Fed Chairman Ben S. Bernanke's "QE2" program, under which the central bank was to buy $600 billion of the government bonds.
But QE2 ended yesterday (Thursday), meaning the Fed will no longer be a big buyer of Treasury bonds.
So starting today (Friday), the U.S. Treasury needs to sell twice as many Treasury bonds to end investors as it had been.
But the problem is, who's going to buy them?
Not China, which is diversifying its trillions in assets to get as far away from the U.S. dollar as fast as it can.
Not Japan, which is trying to rebound from its March 11 earthquake, tsunami and nuclear disaster - and is focusing all its spending on reconstruction.
And - as we've seen -neither is the Bernanke-led Fed.
I'm telling you right now: We are headed for an epic bond market crash. If you don't know about it, or don't care, you could get clobbered.
But if you do know, and are willing to take steps now, you can easily protect yourself - and even turn a nice profit in the process.
Let me explain ...
A Timetable for the Coming Crash
I'm an old bond-market hand myself - my experience dates back to my days at the British merchant bank Hill Samuel in the 1970s - so I see all the signs of what's to come.
Having the two biggest external customers of U.S. debt largely out of the market is a huge problem. Unfortunately, those aren't the only challenges the market faces. The challenges just get bigger from there - which is why I'm predicting a bond market crash.
Steadily rising inflation is one of the challenges. Inflation is a huge threat to the bond markets, and is almost certain to create a whipping turbulence that will ultimately infect the stocks markets, too.
Many pundits will tell you that if investor demand for bonds declines, and investor fear of inflation increases, bond-market yields could increase in an orderly fashion.
But I can tell you that the bond markets don't work like that. Price declines affect existing bonds as well as new ones, so the value of every investor's bond holdings declines. And with many of those investors heavily leveraged - especially at the major international banks - the sight of year-end bonuses disappearing down the Swanee River as bonds are "marked to market" will cause a panic. That's especially true when end-of-quarter or end-of-year reporting periods loom.
That's why we can expect a bond market crash at some point. If you ask me to make a prediction, I'd say that September or December were the most likely months for such a crash.
A Boxed-In Bernanke
One sad - even scary - fact about what I'm predicting is that Fed Chairman Bernanke won't be able to do much about it ... though he'll certain try.
Consumer price inflation is now running at 3.6% year-on-year while producer price inflation is running at 7.2%. In that kind of environment, a 10-year Treasury bond yielding 3% is no longer economically attractive. Since monetary conditions worldwide remain very loose, inflation in the U.S. and worldwide will trend up, not down.
The bottom line: At some point, the "value proposition" offered to Treasury bond investors will become impossibly unattractive. When that happens, expect a rush to the exits.
If Bernanke attempts "QE3" - a third round of "quantitative easing" - he will have a problem. If other investors head for the exits, Bernanke may find that the U.S. central bank is as jammed up as the European Central Bank (ECB) currently is with Greek debt: Both will end up as the suckers that are taking all the rubbish off of everyone else's books.
There's a limit to how much Treasury paper even Bernanke thinks he can buy. And if everyone else is selling, that "limit" won't be high enough to save the bond market.
With Bernanke buying at a rapid rate, the inflationary forces will be even stronger, so every Bureau of Labor Statistics report on monthly price indices will be marked by a massive swoon in the Treasury bond market.
Eventually, there has to be a new head of the Fed - a Paul A. Volcker 2.0 who is truly committed to conquering inflation. Alas, it won't be Volcker himself since, at 84, he is probably too old.
But it might be John B. Taylor, who invented the "Taylor Rule" for Fed policy. The Taylor Rule is actually a pretty soggy guide on running a monetary system. But it has been flashing bright red signals about the current Fed's monetary policy since 2008.
However, since a Fed chairman who is actually serious about fighting inflation would be a huge burden for current U.S. President Barack Obama to bear - and could badly hamper his chances for re-election, any such appointment is unlikely before November 2012.
How to Profit From the Bond Market Crash
Given that reality, it's likely that Bernanke will attack any bond market crash that occurs ahead of the presidential election just by printing more money; there won't be any serious attempt to rectify the fundamental problem, meaning inflation will continue to accelerate.
For you as an investor, this insight leads to two conclusions that you can put to work to your advantage. The scenario I've outlined for you will be:
Very good for gold and other hard assets. Challenging for Treasury bonds; prices will remain weak no matter how vigorously Bernanke attempts to support them.
So what should you do with this knowledge? I have three recommendations.
First and foremost, if Bernanke were not around, I would expect gold prices to fall following a bond market crash. But since he's still at the helm at the Fed, I expect him to do "QE3" in the event of a crash. And that means gold - not Treasury bonds - would become an investor "safe haven."
You can expect gold prices to zoom up, peaking at a much higher level around the time Bernanke is finally replaced. Silver will also follow this trend. So make sure you have substantial holdings of either physical gold and silver or the exchange-traded funds (ETFs) SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV).
Second, if you want to profit more directly from the collapse in Treasury bond prices, you could buy a "put" option on Treasury bond futures (TLT) on the Chicago Board Options Exchange (CBOE). The futures were recently trading around 94, and the January 2013 80 put (CBOE: TLT1319M80-E) was priced around $4.50, which seems an attractive combination of low price and high leverage.
Finally, if you don't already own a house, you should buy one - and do so with a fixed-rate mortgage. A U.S. Treasury bond market crash will send mortgage rates through the roof, so today's rates of about 4.8% will represent very cheap money, indeed. Even if house prices decline by 10%, a 2% rise in mortgage rates would increase the monthly payment (even accounting for a 10% smaller mortgage), by a net 11.8% (the payment on a $100,000 mortgage at 4.8% is $524.67; that on a $90,000 mortgage at 6.8% is $586.73).
Needless to say, the same benefits apply to rental properties financed by fixed-rate mortgages: With lower home ownership and rising inflation, rents are tending to rise significantly.
There's a storm coming in the Treasury bond market. But by recognizing its approach, we can turn the bond market crash to our advantage."
Q: What do you think? Does the argument make sense? Are TSP investors boxed in with no viable out, should bond prices collapse? Its a difficult question but a good one since cash may be less and less of a safe haven over time. Personally, I believe we need more diverse options in the TSP suitable for the times. There should be a precious metals fund. Why there isn't a precious metals fund is beyond me. There should be a foreign currencies fund. I know we are federal employees but, if the U.S. dollar is debased, then why should we be denied the option of sweeping our retirement funds into the Swiss Franc or the Australian Dollar or the Norweigan currency for protection? I'm not sentimental about these questions. I'm realistic.
What choice is really there if every choice given is depreciating and every choice denied is appreciating?
Offer some thoughts and we can get the conversation going....
Sunday, July 3, 2011
A Playbill: Historic Rates of Performance
After a little research, I have put together a preliminary list of the greatest rates of performance within a 12-month period of time. I already hear the naysayers (What about this trade or that campaign?). This listing is based on a light review of my trading and investment library. So, you should not assume the list is 100% complete or accurate. Instead, think of the listing as a playbill for keeping Terry's Portfolio growth in perspective over the coming months.
Selected 12-Month Epic Rates of Return:
1. 1973 - 433% - Larry Williams' 1973 Commodities campaign
2. 2007 - 400% - Michael Burry's 2007 Mortgage subprime derivatives
3. 2008 - 16,324% -Unidentified currency trader reported in Super Trader by Van K. Tharp, pages 202-204. The results were unaudited and were only from July 28 through October 12, 2008. (The trader probably died of a heart attack!/smile)
4. 1987 - 67,000% - Nassim Taleb's front month long position in eurodollar options on October 20, 1987
5. 1972 - 3,428% - Michael Marcus' commodities trade in plywood/lumber
6. 1973 - 266% - Michael Marcus commodities
7. 1977 - 1,333% - Bruce Kovner futures contracts
8. 1980s - 100%+ - Paul Tudor Jones (five consecutive, triple-digit return years)
9. 1965 - 100% - Gary Bielfeldt soybeans contracts
10.1962-1963 - 4,000% - William O'Neil pyramids profits in three exceptional back-to-back trades--short Korvette, long Chrysler, and long Syntex
Blogger's note-To repeat myself, I know I have omitted many other epic trades. For example, I did not calculate rates of return on a 12-month time frame for Nicholas Darvas or Jesse Livermore or John Paulson or George Soros or
Marty Schwartz. So, view these examples as an illustration of A+ performance over the years.
Your faithful newsletter writer,
Wink
Selected 12-Month Epic Rates of Return:
1. 1973 - 433% - Larry Williams' 1973 Commodities campaign
2. 2007 - 400% - Michael Burry's 2007 Mortgage subprime derivatives
3. 2008 - 16,324% -Unidentified currency trader reported in Super Trader by Van K. Tharp, pages 202-204. The results were unaudited and were only from July 28 through October 12, 2008. (The trader probably died of a heart attack!/smile)
4. 1987 - 67,000% - Nassim Taleb's front month long position in eurodollar options on October 20, 1987
5. 1972 - 3,428% - Michael Marcus' commodities trade in plywood/lumber
6. 1973 - 266% - Michael Marcus commodities
7. 1977 - 1,333% - Bruce Kovner futures contracts
8. 1980s - 100%+ - Paul Tudor Jones (five consecutive, triple-digit return years)
9. 1965 - 100% - Gary Bielfeldt soybeans contracts
10.1962-1963 - 4,000% - William O'Neil pyramids profits in three exceptional back-to-back trades--short Korvette, long Chrysler, and long Syntex
Blogger's note-To repeat myself, I know I have omitted many other epic trades. For example, I did not calculate rates of return on a 12-month time frame for Nicholas Darvas or Jesse Livermore or John Paulson or George Soros or
Marty Schwartz. So, view these examples as an illustration of A+ performance over the years.
Your faithful newsletter writer,
Wink
Saturday, July 2, 2011
Basic Concepts from Jim Rogers
Jim Rogers is a famous investor profiled in Market Wizards. Born in Baltimore, Maryland, Rogers grew up in Alabama and came of age at Yale and Oxford. While at Oxford, he began investing and became quite adept at spotting trends. He co-founded the Quantum Fund with George Soros in 1973. Between 1973 to 1983, the Quantum Fund gained 4200% while the S&P gained 47%.
The following is a listing of basic concepts from Rogers:
1. Buy value. If you buy value, you will not lose much even if your timing is wrong.
2. Wait for a catalyst. Bottoming markets can go nowhere for very long periods of time. To avoid tying up your money in a dead market, wait until there is a catalyst to change the market direction.
3. Sell hysteria. Wait for hysteria, examine to see whether the market is wrong, go against the hysteria if fundamentally validated, be sure you are right, and then hold on tight.
4. Be very selective. Wait for the right trade to come along. Have the patience to sit on your money until the high probability trade sets up exactly right.
5. Be flexible. Biases against certain markets or types of trades limit your field of opportunity. A trader who says, "I will never go short," has a distinct disadvantage compared to the trader who is willing to go short as well as long.
6. Never follow conventional wisdom. Keep this principle in mind and you will be less likely to buy stocks after the Dow has already moved from 1,000 to 2,600 and everyone is convinced that there is a shortage of stocks.
7. Know when to hold and when to liquidate a losing position. "The first loss is the best loss."
Have a great holiday weekend!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
The following is a listing of basic concepts from Rogers:
1. Buy value. If you buy value, you will not lose much even if your timing is wrong.
2. Wait for a catalyst. Bottoming markets can go nowhere for very long periods of time. To avoid tying up your money in a dead market, wait until there is a catalyst to change the market direction.
3. Sell hysteria. Wait for hysteria, examine to see whether the market is wrong, go against the hysteria if fundamentally validated, be sure you are right, and then hold on tight.
4. Be very selective. Wait for the right trade to come along. Have the patience to sit on your money until the high probability trade sets up exactly right.
5. Be flexible. Biases against certain markets or types of trades limit your field of opportunity. A trader who says, "I will never go short," has a distinct disadvantage compared to the trader who is willing to go short as well as long.
6. Never follow conventional wisdom. Keep this principle in mind and you will be less likely to buy stocks after the Dow has already moved from 1,000 to 2,600 and everyone is convinced that there is a shortage of stocks.
7. Know when to hold and when to liquidate a losing position. "The first loss is the best loss."
Have a great holiday weekend!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Friday, July 1, 2011
Terry's Model Portfolio: Day 6
Short.
Trade execution: Buy 1583 July 125 SPY puts @ 0.12.
Time: 12:47 p.m., Friday, July 1, 2011.
Rationale: Parabolic market @ 1340 resistance. Long holiday weekend. Probabilities favor some pullback.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Trade execution: Buy 1583 July 125 SPY puts @ 0.12.
Time: 12:47 p.m., Friday, July 1, 2011.
Rationale: Parabolic market @ 1340 resistance. Long holiday weekend. Probabilities favor some pullback.
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