I have to apologize for not keeping up with this - it may be futile to try, and now I'm trying to figure out how to do it honestly without misleading anyone. Let me explain.
I'm a cowboy when it comes to this game. Yet, at a deeper level, I'm as conservative as it gets - this trading stake I'm working with is my main shot at putting food on my table regularly, funding the fusion efforts -- it's not something I will put at risk in a "swing for the fences" at all. Yet, in very uncertain times, it makes sense to make some fairly wacky bets. It's not required that they all make money - it's all learning, and no one ever wins 100%. You don't need to if you do risk management similar to what the Turtles do, or I do. If you ruthlessly cut losers short, but let winners run (up to a point, beyond a point that's risky too), even a coin flip or a dartboard with random timing makes you *some* money. But you obviously do better if you have a better plan than "random", and some sense of timing. I like to do fairly short term swing trades, with some time outs. One reason is that when I'm out, no worries, no way I can lose money, and I can take a break.
But if you don't play, you can't win, either.
Some would have you just buy something like SPY, and hold it forever. If you're lucky on timing, you can do fairly well doing that. If not, and of course "forever is relative", not so well. And to do well, you really have to "swing for the fences" and be "all in" as the low returns of the "safer" investments require this to even keep you past inflation, and even then, you won't always do that. I'll remind anyone who doesn't already know this that it's possible to lose your shirt if you buy near a top, and need money near a bottom, and that there have been several ten year intervals in the last 15 years where you at best broke even (depending on when you start and end the 10 years) or lost pretty badly. Buy and hold ain't "safe".
So what I do is try a lot of things, but with much smaller amounts of the total stake than most would -- basically, enough so that a win is worth having, a loss can't be so great no matter what, and keep most of the stake either on the sidelines as "dry powder" or just "security blanket". Though it doesn't happen often, let me tell you it can be real sweet to have the price of say, a luxury car or two available when that "pearl of great price" juicy trade setup comes along, and no worries about how to "pull the trigger" on a big trade instantly. Very nice to have that little weapon in the bag of tricks, maybe once or twice a year, an no delay to deal with margin when it's time to Carpe Diem.
The upshot is, I do some fairly dumb trades, and as often as not, rescue them by doing things it's hard to recommend to others in good conscience. If a trade goes against me, but my reasons for getting in still look good - just a little off timing wise, or if it looks like I just called it not too well, I might double or triple down -- always advised against, but sometimes it will get you out either a little green or a lot less red from what would otherwise be a bad loss. Timing this is hard, which is why I sit here all day every day watching - and even then I miss some things just by looking away for a few minutes in this manic robot driven market, and take a loss when a win was possible because I just missed it happening. The time to take a dump can be enough time for a trade to do the same.
This web communication can be fast but -- not fast enough to really track what I'm doing to be as successful as I am (not bad, even if it's me saying it -- I beat Madoff claims, but in real actual profits, regularly).
So, I'm not sure what to report here and what to leave out -- and should I be forward looking and discuss opening trades, or just report on trades gone by, and how I pulled each off? Should I mention the crazy things I try that often lose, if for no other reason than to warn you off from doing this kind of thing? Can I trust you'll take it right as a look into how some nut-case trades successfully despite the odd stupid move, not not follow that path and blame me for it if it doesn't work for you?
Any input from readers would be good, so I do this right if I continue to do it.
For some recent trades, here's what I've been up to.
I shorted the crap out of BAC, if not the satan of finance, one of his close associates. They are exposed to all sorts of bad stuff, and while some claim they are trading lower than their book value, those people are forgetting that FASB is letting big banks "mark to fantasy, and unicorns shitting skittles as they fly over", and BAC is right up there doing it. Their actual value sans government handouts is negative. I made pretty good money doing that, but got out on a small pop. Below some value, stocks just aren't that good a short target it seems, false beliefs like this above just prevent them from finding their true value (zero), or the government will put a, well, put under them if "systemically significant" which is the case here. But from 13-something to 10-something -- on a few thousand shares, well...that one was nice and didn't take too long.
Another short I just closed this AM was FXI (Chinese market index). That's done a fat percent for me as well, but current irrational exhuberance means I got out and will keep it on the radar to do again when it matters. What I really want is a good way to short Chinese commercial real estate, or local banks, but haven't found that yet. TAO looks kind of like what I want if I squint enough, but it's such a small time, illiquid ETF it may not be ideal.
The other trades that have done or are doing well are PM's. I've been picking them up on daily dips when and if, in fairly large amounts for gold and not as much for silver, since that fits my risk profile. Gold in particular rarely moves that fast. These trades are open now, and looking very nice, still single digit profits, but on large amounts of money not bad at all.
Let me show you a gold chart here and see a nice little secret I use for trading it: The dumb moving average, just set up right to reflect how gold tends to move. Note that I do have a core holding of physical that doesn't trade, but that's no way to eat or get rich - long term, gold is a store of value, not a good investment - it's flat in purchasing power over most of history.
So what I'm trading is the fact that it's not a smooth curve, and jumps up when people are fearful, back down when they relax. It just happens that this is fairly easy to catch. Of course, the news can tell you when to be looking, up to a point. But my little system here is worth a look and it's been keeping me in coin nicely for a goodly while.
- Gold chart
Shown is a 1 year daily plot of gold with bollinger bands and a simple 50 day moving average. Note that what the moving average said to me on say, June 14 wasn't quite the same as what it's showing for June 14 now -- the way these are computed some assumptions have to be made about data not yet available, so this is slightly tricky, but with a slow one like 50 days, not so horribly noisy anyway.
Here's your trading system for this, one I can recommend and still sleep ok -- it's understood you do this at your own risk and add your own brains, right? Dirt simple:
Buy when GLD crosses above this moving average, and put a tight (say, 3% or so) stop on it. If you trip out, go use the money for other trades for awhile unless you're sure it was a blip (and that's really on you). Next time it goes below that purple line, and is going up, start picking it up again on the daily dips until you have whatever your risk management system says is "enough". In my case, that might go as high as 25% of my stake as this is fairly low-risk most of the time. But I'll dribble in over a few days as the trend is confirmed. If it's come from a long way below the MA line, you've probably already got some pretty decent confirmation. Generally, if GLD has been riding and pushing the top bollinger band up, and then departs down from there, that's when I'll sell -- but you MUST remember that on that day, the bollinger band isn't quite where this pretty plot shows it as having been due to the assumptions in the moving average math. You just have to know that and back-figure a little. A good exercise for that is to save a few plots like this, and look at the right sides then as compared to data from the same date on a plot taken weeks later -- you'll see what I'm talking about and get a feel for it.
This system would have captured (And has! YAY!) most of the quick up moves that are fear premium driven, and gotten you out near all the peaks. Meanwhile, you were out a lot of the time, which has two good effects -- being out means less risk, obviously, unless you think the bank's going to lose your cash. It also insulates you from any risk that, as some suspect, the GLD etf might not be totally on the up and up about actually having that gold free of lien in their hot little hands. If that's discovered to be true, bam, it's toast, and the reason why the sample people who fear that recommend having physical. This could of course be the common thing "talking your book". And while some physical is surely nice, that really ties up your dough which might not be nice if you want it to trade in something going up lots faster at the time.
Today was especially nice, as I'd been getting long GLD and IAU via this system for the past week or so, and just yesterday and the day before, long some SLV and some CEF. Those have generated some rather nice green numbers and at this point we switch to watching close to time the exit...I rarely use pre placed stops, one rogue trade can trip them at what turns out to the the worst time, so I do this manually so I can add my judgment (sometimes faulty) to the picture. I'm right now showing a little under 4% and a little over 5% on gold and silver respectively. CEF is a Canadian gold/silver physical vault, guaranteed by their government and one replacement for having it in your hands that seems pretty safe. It's about half of each in value so is more volatile due to the silver in it. It trades a little different as those who really want something close to having it buried in their yard have a different emotional makeup. In times of really great fear, it goes up quicker than the rest, else it goes up slower, and down quicker when the big fear comes off.
Anyone but an idiot would now put trailing stops under these at what is now breakeven at least -- a 4-5% downturn in any of this means you probably should have gotten out sooner anyway. And at that big a spacing, due to the low volatility of gold anyway, I'd have manually gotten out before hitting this -- a few days of down at normal speeds would normally be what it took to hit that stop and that's plenty of time to sell. But you have to be careful about this, as a momentary spike (even just one robot rogue trade) can set the peak value the trailing stop is figured from too high and make it trip out on what would be a rather small dip if that rogue trade was ignored -- which is why I don't use them too much.
I've been posting lately on
Seeking Alpha and
ZeroHedge as DCFusor, if you want more of this from me (and other people some of whom are truly smart, some of whom are just nuts but entertaining). I like a few people on Seeking Alpha, among them "the inflation trader", Mat on commodities, and Philip Davis, who I don't agree with politically, but he's a real money maker anyway. ZeroHedge is for gold bugs, gloom and doomers, and cynics, very snarky -- you have to read through that to get to the otherwise super excellent content they provide. I stole this picture from there, showing what's really going on just now - drunk algo robots.
Who of course are celebrating because they just did this to the shorts, and it mostly worked (I'm more nimble and got out in time!)
I wish there were more "easy ones" I could share today, but truth is, my best longer term winners are things I'm largely out of, for cause, and when to get back in is ??? at this point. They seem overpriced and are kinda drooling down to where I'd buy them again, to not-quite-get-there and bounce a little once again. Those would be oil, played via BTE, and copper/gold played through FCX. Both are "conviction buy" under $50 if and when they get there, or some slightly higher price if they don't, but not at today's prices, not hardly. Both had fantastic runups almost since the bottom, and would have been great to just buy March 9, 2009 and sell in April 2011 more or less. I didn't but did make a ton of money on both. They've not corrected in tune with the markets as a whole yet, and when they do, that'll be time to get back in I think. Volatility in high yield bonds is just too high for me right now, and I normally love beta, but bonds are just different animals due to the other owners of them. Safety freaks with long time horizons defines that crowd. Not much gets them going but once they get scared, they panic harder than anyone else does and these things really can tank quicker than you can get rid of them. Low yield bonds are at this point a way to lock in a sure loss in my opinion, so I stay out of those completely. Don't keep up with inflation and have no where to go but down. But that doesn't mean they're going down soon or well enough to go short them either, so I just stay out. I do watch, every day, as if we really do this silly default thing, there will be a lifetime opportunity in shorting these. Won't last long I think, I might not catch it, but it's one of those things to keep on the radar.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.