AAR & TOL 01 (May 08 - Oct 08)

Re: AAR & TOL

Postby sidney » Fri Oct 17, 2008 12:39 am

TOL:

Heroes of Chaos

Cao Cao from "Wu" state in the 3 kingdoms. Named "Heroes of Chaos" for his ability to win against bigger numbered enemies amid chaotic warring times...(Yuan Shao the most pitiful one..in infamous battle of Wu Chao.) Best at using psychology, cunning, strengths of his cavalries, his fearless generals and essence of Speed. He admires man of abilities and surrounds himself among them. Thou highly intellegent, he is also highly suspicious of men who attempts to read his mind and battle tactics.

Back to global capital markets. Who will emerge a hero from the chaotic financial turmoil?
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Re: AAR & TOL

Postby winston » Fri Oct 17, 2008 8:07 am

winston wrote:TOL:-

How does one knows when the market has turn from a bear marlet to a bull market ?

1) When people start to measure things using PE rather than P/B

2) When people switched from "Selling into Rally" to " Buying on Dips"


Another one:-

When people switched to "Return ON Capital" from "Return OF Capital"
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: AAR & TOL

Postby iam802 » Fri Oct 17, 2008 5:05 pm

A review of my mistakes that I made during the volatile month.

Issues
1. Reading too much news
I was reading too much news and was not able to hold on to my beliefs and was having knee jerk reaction.

2. Position sizing
One of the reason for the knee jerk reactions was due to my leverages. My sizing was wrong, and it makes me feel panicky.

3. The above 2 causes me to make mistakes and lose money. No good.

Rectifications
1. Sell all and rebuilt my positions
I closed off all my positions and went back to my more discipline approach. I identify the support and resistant levels again and follow my rules.

2. Position sizing
Having reduce my sizing, I am able to ignore noises in the market and stick to my trading plan.

3. Results
The plan is good, I am trading correctly again. Profits is coming back.
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: AAR & TOL

Postby millionairemind » Fri Oct 17, 2008 8:08 pm

These are the questions that is running thro' my head every single day. Just TOL

1. US market has launched a follow thro' day last night. Will it last?? If not, how low can it go?

2. Asian market, esp. Singapore and HK did not follow higher today. Y?? Is there continued capital flight out of Asia?

3. Korea won is under attack. Many are afraid that it could be Asian Currency Crisis Redux. Are we stronger now to withstand another onslaught? Is Korean strong enough to withstand the attack?

4. Libor rates and Euribor rates continue to inch down. Can they go back to normal, with a spread of only 25-50basis points from FED fund rates and ECB rates?

5. When are funds coming back to Asia?

6. The sell down in the last 5 weeks HIT ALL ASSET CLASSES. No classes is spared. From commodities to equities, everybody suffered. This is massive de-leveraging in process. Is it done? Hedge funds are now holding 20-40% cash levels, is it enough to face redemptions? If not, will there be another round of selling?

7. Everybody is screaming the end of the world and coming great depression. With central banks and gahmens acting together, how is it possible?

8. The equities market is just a side show. The main show is the credit markets and that seems to be improving. Will it continue to improve?

9. It took just 3 months for oil to drop by 50%. Clearly this is de-leveraging instead of supply and demand like every pandit out there is screaming. No doubt there is demand destruction but it does not occur so quickly. I think alot of pension funds are hurting as they were pouring into commodities at the beginning of the year. Corn, wheat and for that matter, GOLD is hurting badly too. Corn prices have dropped more than 1/2 in line with oil and equities. They don't grow corn this fast or the world did not stop reduce corn consumption by 1/2 in 3 months.

10. 3-mths T-bills at one time had a rate almost close to 0 during the panic last week. There is a wide gap between that and the FED fund rates. Obviously the RICH are worried about the RETURN OF THEIR CAPITAL rather than RETURN ON THEIR CAPITAL. (this one came from a discussion I had with DOL over orange juice one night). He is a sharp guy. FDIC only guarantees up to $250K.. is it enough for them to put money in the banks?

All comments welcome.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: AAR & TOL

Postby winston » Fri Oct 17, 2008 10:26 pm

1. US market has launched a follow thro' day last night. Will it last?? If not, how low can it go?
They say that 75% from the high is normally enough..

2. Asian market, esp. Singapore and HK did not follow higher today. Y?? Is there continued capital flight out of Asia?
a) HK still allows short-selling. I was looking at the short-selling details and there's alot of short-selling in HK. If only they have some confidence to ban short-selling until things stabilized.
b) Spore is off the radar. International Funds look at Rigs, Banks and Properties in Spore. All 3 are doing badly.

3. Korea won is under attack. Many are afraid that it could be Asian Currency Crisis Redux. Are we stronger now to withstand another onslaught? Is Korean strong enough to withstand the attack?
Should be ok. It is not like the Asian Financial Crisis.

4. Libor rates and Euribor rates continue to inch down. Can they go back to normal, with a spread of only 25-50basis points from FED fund rates and ECB rates?
Yes, slowly but surely. The antibiotics are working and the bacteria are being killed bit by bit.

5. When are funds coming back to Asia?
It will flow to China & HK first. I dont think Spore is on the radar. Neither is Russia. Maybe some funds may go to Brazil & Australia if commodities go up in price.

6. The sell down in the last 5 weeks HIT ALL ASSET CLASSES. No classes is spared. From commodities to equities, everybody suffered. This is massive de-leveraging in process. Is it done? Hedge funds are now holding 20-40% cash levels, is it enough to face redemptions? If not, will there be another round of selling?
There could be another round of selling in late Oct to early November if they dont have enough cash to meet redemptions. Deadline Nov 15 ( 45 days notice ) for Dec 21, 2008 redemptions.

7. Everybody is screaming the end of the world and coming great depression. With central banks and gahmens acting together, how is it possible?
Fear sells. If you appear cautious on CNBC, people will say that u have been smart.

9. It took just 3 months for oil to drop by 50%. Clearly this is de-leveraging instead of supply and demand like every pandit out there is screaming. No doubt there is demand destruction but it does not occur so quickly.
Funds redemption. I think Commodities eg. Grains and Oil, will come back very soon.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: AAR & TOL

Postby sidney » Sat Oct 18, 2008 12:45 am

TOL:

Everyday i flip newspapers there will be advertisement on forex, trading secrets. Report consisitent winnings (most of the time), low risks..

I was wondering if people bothered to ask:

1) If KFC is unwilling to sell their winning recipe for success, why should advertisors selling recipes and spit profits.

2) Even if it is a winning recipe, then by the sheer numbers of students learning, then efficient market hypothesis will erode any abnormal gains

3) If the winners are really tat true, then how come still got ppl Q for 4D? Won't there be a mass exodus of auntie uncles quitting their day jobs and start "clicking?"

4) If winners won, then who are the lemmings---> becos their recipes from compeitiors' sucks?
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Re: AAR & TOL

Postby iam802 » Sat Oct 18, 2008 1:23 am

the low risks part is easy for a trading system. just have a cut-loss in place.

1% cut-loss? small enough?

problem is, pple can't stick to rules (myself included). Until burnt badly and honestly recognized the mistakes, then can one learn how to stick to the rules.

Kennynah has mentioned about the 'Turtle' book. It has a pretty good trading system there. But, not everyone will follow it or even learn it.

Here's something to ponder:

The system is meant for everyone, but not everyone is meant for the system.
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
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Re: AAR & TOL

Postby sidney » Sat Oct 18, 2008 1:41 am

Code of conducts while doing trading.

Discipline.
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Re: AAR & TOL

Postby winston » Sat Oct 18, 2008 7:06 am

Over the past few days, the talking heads on CNBC have been comparing the current stock market crash with the Great Depression. They even interviewed people who have gone thru that crash :D :lol:

TOL:-

1) Do you really remember what happened during the Oct Crash or even the Asian Financial Crisis ? If you dont really remember the full story, how can one remember the full story on something that happened 75 years ago ?

2) Even if they remember the entire story, is the info of relevance? It is like comparing an apple with an orange. Ya, both are fruits. Both will become black when rotten. Both contained Vitamin C. Both will make you lau sai if you take 20 at a time and so on... Noise Noise Blah Bah.

3) The perception now is that this time would be different. In 1932, the US govt. did not intervene. This time, the governments are coordinating things and moving sky & earth to shore up things. Anyway, I recalled Sir John Templeton mentioning that the most dangerous words are, "This Time Is Different" ;)

4) Maybe this time the Kondratieiff Cycle would really materialize although it is off by 16 years now...

=====================

The Kondratieff cycle is based on the logarithmic progression of the consumption of resources, as it relates to boom and bust cycles. Kondtratieff was a brilliant Russian who studied why markets for anything consumable seem to always progress through boom and bust cycles, he found it is explainable mathematically, and that all boom bust cycles follow the same function, growing exponentially until there is a collapse of the market.

The Communists in Russia sent him to die in Siberia, because Kondrateiff's conclusions showed that even a Marxist market will follow the same boom / bust growth cycle. It was the commie belief that, according to Karl Marx, communism would ultimately succeed economically and socially and end in ever lasting happiness.

Are the gestational periods of these 4 generations, and the psychological effects that result from first, harshness, then comfort, then excess and corruptness and loss of personal discipline. A common example is Rome's rise and eventual decline... Another is the rise and decline of the British Empire, another the rise and fall of both Imperial France and Spain.
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Re: AAR & TOL

Postby kennynah » Sat Oct 18, 2008 4:26 pm

iam802 wrote:the low risks part is easy for a trading system. just have a cut-loss in place.

1% cut-loss? small enough?

problem is, pple can't stick to rules (myself included). Until burnt badly and honestly recognized the mistakes, then can one learn how to stick to the rules.

Kennynah has mentioned about the 'Turtle' book. It has a pretty good trading system there. But, not everyone will follow it or even learn it.

Here's something to ponder:

The system is meant for everyone, but not everyone is meant for the system.


i concur with you....we all must have a trading system and each will differ in some ways from others... what works for us, must be tailored to our investment goals. whether we use the "turtle" way or "ah beng" way, is not as important as actually having a "systematic" way of trading/investing...this one, only we can discover it for ourselves... unfortunately, most times, it includes making enough losses to learn. fees must be paid to those who have learned and succeeded after years in the mkt...and after years later, we become the "fees" collector...it's a cycle... the sure losers are those who quit after paying school fees...
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