No6's Financial Markets Thread

[littledavesab]

Hope you dont mind me copying this over No6, may provide a useful link:

 

I get the feeling we may be disappointed by Bens speech later today. However while flicking through this thread after it got mentioned on No6's diary a while back the following extract just stands out

 

 

The essey below is from the Daily Reckoning and may surprise. The best performing stock market in 2007? Up 12000% in 12 months? Zimbabwe. So, anyone expecting US/UK/western markets to fall in a hyper inflationary cycle need to think again.

 

If, as the Austrian theory states, money enters the economy at certain

points, it is likely that a nation's stock market will become a prime

beneficiary of any monetary expansion. Fresh money enters the economy

first through banks and other financial entities who may invest it in

shares, or lend it to others who buy shares. Thus stock prices rise

relative to prices of things like food and clothes and will outperform as

long as this monetary process is allowed to continue.

[littledavesab]

While waiting for Big Ben to clang I see oil is down a bit. However

 

http://wardsauto.com/ar/world_vehicle_population_110815/The number of vehicles in operation worldwide surpassed the 1 billion-unit mark in 2010 for the first time ever.

 

According to Ward’s research, which looked at government-reported registrations and historical vehicle-population trends, global registrations jumped from 980 million units in 2009 to 1.015 billion in 2010.

 

The figures reflect the approximate number of cars, light-, medium- and heavy-duty trucks and buses registered worldwide, but that does not include off-road, heavy-duty vehicles.The 3.6% rise in vehicle population was the largest percentage increase since 2000, while the 35.6 million year-to-year unit increase was the second-biggest increase in overall volume ever.

 

The market explosion in China played a major role in overall vehicle population growth in 2010, with registrations jumping 27.5%. Total vehicles in operation in the country climbed by more than 16.8 million units, to slightly more than 78 million, accounting for nearly half the year’s global increase.

 

it continues....

 

 

In the U.S., the ratio was 1:1.3 among a population of almost 310 million – the highest vehicle-to-person ratio in the world. Italy was second with 1:1.45. France, Japan, and the U.K. followed, all of which fell in the 1:1.7 range.

 

In China, the ratio was 1:17.2 among the country’s more than 1.3 billion people. India, the world’s second most-populous nation with 1.17 billion people, saw a ratio of 1:56.3.

 

The world vehicle population in 2010 passed the 1 billion-unit mark 24 years after reaching 500 million in 1986. Prior to that, the vehicle population doubled roughly every 10 years from 1950 to 1970, when it first reached the 250 million-unit threshold.

 

- this news was recently released. Brought to my attention thanks to Alister Heath @ City AM.

 

 

[No6]

Hope you dont mind me copying this over No6, may provide a useful link:

 

littledavesab, on 26 August 2011 - 02:34 PM, said:

I get the feeling we may be disappointed by Bens speech later today. However while flicking through this thread after it got mentioned on No6's diary a while back the following extract just stands out

 

The essey below is from the Daily Reckoning and may surprise. The best performing stock market in 2007? Up 12000% in 12 months? Zimbabwe. So, anyone expecting US/UK/western markets to fall in a hyper inflationary cycle need to think again.

 

If, as the Austrian theory states, money enters the economy at certain

points, it is likely that a nation's stock market will become a prime

beneficiary of any monetary expansion. Fresh money enters the economy

first through banks and other financial entities who may invest it in

shares, or lend it to others who buy shares. Thus stock prices rise

relative to prices of things like food and clothes and will outperform as

long as this monetary process is allowed to continue.

 

 

 

My theory on price inflation and the way stock markets behave in reaction to it (in general terms) is that during times of historically high price inflation for the country concerned and at a time of economic downturn or potential recession, markets will simply reflect this general uncertainty and may fall. There is no guarantee that during these periods of high inflation in the 5-30% range share markets can be guaranteed to keep pace. However, we are talking about historically high inflation as in 5-10% or at worse 15-30% range. This is clearly not hyper-inflation as we know it. In these periods of high price inflation markets will be expecting Government and Central Banks to address the issue, with over time inflation falling, so ultimately markets may well then rise in expectation of better times ahead. In other words, in times like these, too much price inflation is seen as a bad thing by the market and lower share prices may well reflect this fear.

 

Once you get to hyper-inflation however, markets are looking for a store of value, they have effectively given up the ghost on the problem being resolved and want to try and preserve the value of their money as much as possible. Hence in Zimbabwe and I believe in Weimar Germany stocks rose with hyper inflation. However, given the damaging nature of out of control hyper inflation, stocks or anything for that matter is unlikely to stay on a par with it or ahead of it. Share price deflation does not really make sense in this scenario.

[drbubb]

I don't go to the main board much anymore, the aliens may abduct me. You are welcome to join in here.

Haha*

What I do think is sad that you have to trade UK-listed shares, where the bid-offer spreads are given away to market makers, making it doubly hard to make a profit

 

If you are making money in that environment, then GOOD ON YOU !

 

== ==

 

*btw: when I started buying gold and gold shares, many here were still messing about with property or dotcom shares, and I got in at the low, well before most were paying any attention.

 

The alternative view, looking at controversial topics like the NWO, et's, conspiracies, and earth changes has not yet gone mainstream. Consequently, some big events may take most people by surprise. By jumping into this chaos, whilst it is still off-limits to many may provide an important headstart if and when some big events emerge from the swamp. I don't expect many to "get it" until it is much later in the game.

[No6]

Haha*

What I do think is sad that you have to trade UK-listed shares, where the bid-offer spreads are given away to market makers, making it doubly hard to make a profit

 

If you are making money in that environment, then GOOD ON YOU !

 

== ==

 

The bid-offer spreads on FTSE100 and many FTSE250 companies aren't that bad. It is only the AIM and smaller companies where the spreads can be silly.

 

 

The alternative view, looking at controversial topics like the NWO, et's, conspiracies, and earth changes has not yet gone mainstream. Consequently, some big events may take most people by surprise. By jumping into this chaos, whilst it is still off-limits to many may provide an important headstart if and when some big events emerge from the swamp. I don't expect many to "get it" until it is much later in the game.

 

These subjects have been around for years, but I'm not sure what the purpose of them being so dominant in a forum which I thought was mainly about investment is. I don't share many of these views as to what is supposedly going to happen or what I'm supposed to "get", so perhaps I'm in the wrong place. I'm sure that is why many good members interested in investment no longer come here as much or at all.

[No6]

A useful series on trading psychology.

 

http://www.youtube.com/watch?v=ypCjoH1EsQ4&feature=related

[littledavesab]

Haha*

What I do think is sad that you have to trade UK-listed shares, where the bid-offer spreads are given away to market makers, making it doubly hard to make a profit

 

If you are making money in that environment, then GOOD ON YOU !

 

== ==

 

*btw: when I started buying gold and gold shares, many here were still messing about with property or dotcom shares, and I got in at the low, well before most were paying any attention.

 

The alternative view, looking at controversial topics like the NWO, et's, conspiracies, and earth changes has not yet gone mainstream. Consequently, some big events may take most people by surprise. By jumping into this chaos, whilst it is still off-limits to many may provide an important headstart if and when some big events emerge from the swamp. I don't expect many to "get it" until it is much later in the game.

 

Hmmm but what is the relevance re NWO Aliens etc, what stock / sector would benefit. Maybe best to answer me somewhere else rather than have me cluttering up No6's thread!

 

But a real life example of a sector with potential that is getting very little interest is Biotech. Pretty much zero discussion on GEI re that !

[bob monkhouse]

Why isnt this thread pinned? Its great!

 

You have inspired me to start my own thread...granted, it is this thread in reverse...sucking in opinions as oppose to offering them, but anyhow.

[bob monkhouse]

http://www.greenenergyinvestors.com/index.php?showtopic=15236&st=0

[bob monkhouse]

WHt are peoples thoughts on Oil stocks like BP and Petrofac? BP down 14% since begining of August...compared to mining sector does this look undervalued?

[No6]

http://www.greenenergyinvestors.com/index.php?showtopic=15236&st=0

 

 

WHt are peoples thoughts on Oil stocks like BP and Petrofac? BP down 14% since begining of August...compared to mining sector does this look undervalued?

 

So, your timeframe to trade is about 18 months before going on your travels?

 

I would suggest that the first thing you do, if you haven't already, is determine the time period for your trades. How long would you look to hold each trade? It is important because in looking for entry points and if you are going to use charts and TA to help, then the timeframe of the charts are important.

 

As an example;

 

Daily charts are probably best for short term swing trades lasting from days to a few weeks.

 

Weekly charts are better for longer term trades, weeks to months.

 

Ideally you are looking to get in at the beginning, or very near of any uptrend. If you are shorting the reverse will apply.

 

So, BP on the daily chart has been in a down trend since around January. Not a severe one and the upturns which can be seen on the chart can be traded for swing traders, but had you bought in Jan and still holding on you would be on a paper loss. Now, with BP I doubt whether that would matter if your timeframe to hold was 3, 5 or 10 years, but on an 18 month timeframe you need to be aware that laggards effectively take up your trading pot if you are reluctant to sell for a loss. Needless to say, with the right technical set up you wouldn't have bought BP back in January . Swing trading you might have tried to time the lows in Feb, Mar, May and June and hope to get out without too much loss in April.

 

 

The weekly BP chart clearly shows an uptrend in 2009, an down and uptrend in 2010 (the oil spill and bounce in share price after) and a downtrend for most of this year. If I was trading BP using the weekly chart and hoping to hold for any length of time (i.e. months) I'd be looking for this chart to suggest a new uptrend has begun before buying. If there is a positive on this chart it is that there is a support line going back 2 years at around 380. The next support line is around 300, the low at the time of the US oil spill. I will be surprised if it goes that low, but it could if we get more general market corrections.

 

[bob monkhouse]

Thanks no.6, That is really interesting.

 

You have a knack for making things seem clearer. The two charts tell an interesting story...did you draw some of the TA lines? What charting software do you use...stockcharts dont seem to cover quite a few UK stocks.

 

I clearly need to spend a while understanding technical indicators before I dip my toe in with purchases. My window is really 12 months, though I would hang on longer if needs be. I will be saving cash for travel...however part of me wondered whether there was an off chance I may be able to use some profits.

 

There is a bigger picture at play here for me; financial markets have fascinated me for a while. More broadly I just want to learn how to invest. I realise the odds are against me.

 

I've also looked at Telecom Plus and Kentz, who have been on a tear for the last year. Kentz has had a large swing recently. I guess I need to see whether price movements suggest they will revert to growth or whether something more sinister is at play...the smart money has to get otu sometime, right? I would really appreciate it if you could give me your thoughts as to how you would read/interpret that Chart?

 

#edit#

 

http://www.google.co.uk/finance?q=LON:KENZ

[jerpy]

But a real life example of a sector with potential that is getting very little interest is Biotech. Pretty much zero discussion on GEI re that !

 

Possibly one very good reason for that! Outside big pharma, loads of these bio tiddlers eat investors cash on the patent this, trial that, jam whichever year we get bought by a big pharma story.

 

Just google the AIM story of Bioprogress/Meldex/CeNeS/Medisys etc and you will understand my point easy enough.

[jerpy]

I'm sure that is why many good members interested in investment no longer come here as much or at all.

 

Sadly I have to say I see it the same.

 

Having encouraged a few pals and even a relation to come here, because I felt I had learned a fair bit from GEI, it was disappointing to hear the latter felt ignored, bar the good doctor's welcome. Mainly though the "you're wrong, i'm right" general bitching on the main board did little to encourage her stay. Just the way GEI is I guess.

[No6]

Thanks no.6, That is really interesting.

 

You have a knack for making things seem clearer. The two charts tell an interesting story...did you draw some of the TA lines? What charting software do you use...stockcharts dont seem to cover quite a few UK stocks.

 

 

The package I tend to use is made available free by IG Index when you sign up to a spreadbetting account. All of the spreadbetting companies tend to offer free real time charting as well as more advanced charting, but you may have to pay a fee for that. Even if you don't spread bet, it is worth opening an account just to get access to the charts. There are no conditions that you have to place a bet with them in order to use the charts once you have an account, but you will need to deposit some money with them. You don't have to spread bet at all if you don't want to. You can then set up the charts and indicators the way you want them and draw the TA lines as I did on the charts above. The only downside of the basic free charting package is that you only get access to a limited number of indicators, usually the more widely used ones like macd, rsi, stochastics. If you want something like CCI (commodity channel index) you will need to sign up to their more advanced charts.

 

There is a free package at prorealtime.com, which I believe is what many of the spreadbetting companies use (or a version of).

 

I clearly need to spend a while understanding technical indicators before I dip my toe in with purchases.

I would suggest keeping it simple. The most useful thing TA tends to offer is showing you the start of and keeping you on the right side of the trend if you can master it. The biggest thing you may well have to master is the watching and waiting game involved in identifying a change in trend. Worth noting also that all indicators are lagging, you are unlikely to ever get in 100% of the time at the beginning of a trend change. If you manage to master this then you are will fast become a trading genius and I hope you will let me in on how you do it. Most will settle for getting in as close as possible to the early stages of trend change and the main reason why this is the case is because of the dreaded whipsaw. This is when it looks like the trend is changing but actually it doesn't and you have been wrong footed by the market as the trend goes back to doing what it did before. The key is to try and get to know the way the indicators you choose actually work and stick with them.

 

I think this guy is quite good in that it shows you a simple setup that probably works for him. His videos are worth watching and occasionally I post them here.

 

http://www.youtube.com/user/sjb5555

 

I've also looked at Telecom Plus and Kentz, who have been on a tear for the last year. Kentz has had a large swing recently. I guess I need to see whether price movements suggest they will revert to growth or whether something more sinister is at play...the smart money has to get otu sometime, right? I would really appreciate it if you could give me your thoughts as to how you would read/interpret that Chart?

 

#edit#

 

http://www.google.co.uk/finance?q=LON:KENZ

 

Telecoms Plus is a Naked Trader favorite, he has made a ton of money from it, but there again he has been in it from the early days and is one of their Utility Warehouse distributors. The company is now in the FTSE250 and has a tendency to move very quickly, up and down. Again, it is a question of whether you can catch those swings, but I would say it is a good company and NT is probably holding on for a bid from one of the bigger telecoms players some day. He has a knack for being right on these things.

 

Note; will have a look at Kentz later. NT has bought this one as well.

 

From his last update; "And Kentz got sold down to a silly price (won a billion pound contract recently) topped up at 371.8. (Currently losing a few quid on the last Kentz and AN topups)"

[littledavesab]

Sadly I have to say I see it the same.

 

Having encouraged a few pals and even a relation to come here, because I felt I had learned a fair bit from GEI, it was disappointing to hear the latter felt ignored, bar the good doctor's welcome. Mainly though the "you're wrong, i'm right" general bitching on the main board did little to encourage her stay. Just the way GEI is I guess.

 

For me the issue is largely a closed mindset on the main board, an unwillingness to see anything else outside of the PM space. OK thats a bit extreme (there is also oil!) but not far off. I dont see much joy in the world falling apart, unlike some. Also, some are enjoying a ride on a long term trend but I wonder if they will know when to get off at the right journey (not that I am in any position to boast in that respect). But really frustrating that this site is "green energy investors" or "global EDGE" and there is not much sign of either. Bubb could do with a reorganisation clearly separating the political/worldly insights from the investing side.

 

 

 

[littledavesab]

Why isnt this thread pinned? Its great!

 

You have inspired me to start my own thread...granted, it is this thread in reverse...sucking in opinions as oppose to offering them, but anyhow.

 

Agreed great thread. If you are after education, you could do worse than browse through the equivilent threads for 2010 and 2009

 

2010:

 

http://www.greenenergyinvestors.com/index.php?showtopic=8957 uk

 

http://www.greenenergyinvestors.com/index.php?showtopic=8968 world

 

You will find the 2009 ones somewhere over... here

 

http://www.greenenergyinvestors.com/index.php?showtopic=5555

 

+ Soros and Naked Trader are good reading choices.

[bob monkhouse]

Thanks Littledave & NO.6.

 

Today ive been playing around with Stockcharts. Im finding it interesting looking back at different moving averages, say 50 and 200, and seeing how trend and volume play out. Ive never looked at these indicator really, but iv heard people talk about them and didnt really pay much notice. Been reading through tons of different stocks just to see how their price action played out. Each one is like a little puzzle; im finding it really interesting. My girlfriend thinks im nuts.

[bob monkhouse]

ps Naked Trader; do you think he is legit? I have just ordered his book on the basis that I find his explanations easy to grasp as a beginner. Im a little concerned that he's more a self publicist than a trader but who knows...I love the way he states his trades out clearly. Im hoping it might be a nice introduction book anyhow.

[littledavesab]

ps Naked Trader; do you think he is legit? I have just ordered his book on the basis that I find his explanations easy to grasp as a beginner. Im a little concerned that he's more a self publicist than a trader but who knows...I love the way he states his trades out clearly. Im hoping it might be a nice introduction book anyhow.

 

Seems to be legit - see the thread on NT here

 

http://www.greenenergyinvestors.com/index.php?showtopic=2687

 

There is also a podcast interview on the Motley Fool site.

 

+ found a good link to NT's trade diary from the Proactive website,cuts through all the bumph

 

http://www.proactiveinvestors.co.uk/columns/the-naked-trader/

 

I vaguely remember reading in one of his posts that NT says he is going to close the website when he gets to £1M.! Only £50k to go.

[No6]

Thanks Littledave & NO.6.

 

Today ive been playing around with Stockcharts. Im finding it interesting looking back at different moving averages, say 50 and 200, and seeing how trend and volume play out. Ive never looked at these indicator really, but iv heard people talk about them and didnt really pay much notice. Been reading through tons of different stocks just to see how their price action played out. Each one is like a little puzzle; im finding it really interesting. My girlfriend thinks im nuts.

 

Perhaps she could help you once she sees how markets move? Quite a lot of evidence to suggest that women make better traders, although the City is still clearly an alpha male, sexist environment.

 

A fascinating study by Dr John Coates, a former derivatives trader for Goldman Sachs, reveals that there are specific biological reasons why women make better traders than men. Male hormones direct us towards boom and bust. Coates studied traders when they were either making or losing money and found that many of the cognitive errors responsible for poor investment decisions can be explained by an excess of two critical hormones: testosterone and cortisol.

 

Coates's 2008 study, for Cambridge University, claims that the release of testosterone when traders are winning can lead to the creation of market bubbles. Traders believe themselves invincible and repeatedly seek the rush of victory, even when reason and experience direct them otherwise. If enough traders indulge in this bullish behaviour, it pushes prices up beyond fair value, creating a bubble.

 

http://www.newstatesman.com/economy/2010/07/women-traders-banks-keep-city

 

A woman was the best trader in this series (it should also be said that the worst, most emotional one was also female).

 

http://www.youtube.com/watch?v=68cciZYNqn0

 

ps Naked Trader; do you think he is legit? I have just ordered his book on the basis that I find his explanations easy to grasp as a beginner. Im a little concerned that he's more a self publicist than a trader but who knows...I love the way he states his trades out clearly. Im hoping it might be a nice introduction book anyhow.

 

I don't think there should be any doubts that he is legit. His website with trades has been running for years, although it would be dangerous to follow his selections regardless, because he often gets in early, especially with smaller companies, and the price has often moved up by the time he publishes. You can also never be sure when he gets out. He also states that not all his trades are recorded on the site. Reading his blog he has stated recently that he might not continue with it in the future and his updates are often once or twice a month now, whereas in the past it was 3 times a week. He also does regular seminars which are always fully booked although it will cost you around £400, so if he wasn't legit I doubt whether he would have lasted this long.

 

He always comes across to me as someone who knows what he is doing and has found a way that works. He doesn't do interviews that often, but he comes across as a decent bloke when he does.

 

How To Make Money Trading Shares

 

http://www.fool.co.uk/money-talk/how-to-make-money-trading-shares-6270.aspx

 

The Dos & Dont's Of Spread Betting

 

http://www.fool.co.uk/money-talk/the-dos-donts-of-spread-betting-8122.aspx

 

Rookie trader series.

 

Later in the day I meet Robbie Burns, whose book "The Naked Trader" to some extent provided the inspiration for the "Rookie Trader" series. Personable, calm, witty and great company, Robbie is an inspiration, the perfect antidote to the stress of the adrenalin-fueled trading floors of the past few days.

 

A former journalist, Robbie has quit the rat race and now makes a very good living trading from his waterside home and through his book he’s willing to show you and me how we could do the same. Robbie has a knack for spotting undervalued or overbought companies and for picking just the right moment to trade them. His trading record is published on his Website for anyone to scrutinize and in my inexperienced view it makes for very impressive reading.

 

http://business.blogs.cnn.com/2009/07/02/rookie-trader-ready-to-cast-my-lines/

[bob monkhouse]

Ouch.

 

BP getting hammered this week. How low..can you go...

[No6]

Ouch.

 

BP getting hammered this week. How low..can you go...

 

There are some interesting FTSE100 companies under the cosh right now which could be cheap for those looking 3-5 years down the road. Of course, everything could get cheaper still, blood on the streets buying time surely? If BP were to go below 300p that would put it on a price reached at worse during the oil spill, what problems are BP related right now other than general market marking down? The dividend should be back up and it does look cheap on fundamentals, but buyers might want to wait for the weekly chart to go positive.

[No6]

Some interesting comments from Robbie Burns in his latest Naked Trader blog. Tempted to agree with all of them.

 

August 2011 has to go down in my book as the hardest month in 12 years of trading that I've ever encountered. It was really hard for anyone to handle whether beginner or experienced.

 

It was almost like we were all being robbed/mugged by someone somewhere, the rotten stinking swines!

 

The volatility appears to still be with us. Markets are worried about a double dip. Every single small economic stat is met with a rise or fall of hundreds of points.

 

Or anytime anyone in America says something. Or if Ben Bananas looks slightly worried. And oh no Obama is speaking tomorrow and the moment he starts speaking the markets start tanking! (He has been a disappointment hasn't he?).

 

Indeed it looks like the market is up today because some kind of US stimulus package is expected to be announced by the man himself tomorrow. Expect a sell off again if he disappoints. Life is a roller coaster.

 

It doesn't seem to matter to the markets what happens in the UK. UK stats are neither here nor there and markets barely move on those. It's all about America.

 

Which is why the markets make their dramatic moves at 1.30 our time when US stats get released.

 

Of course it is all crazy. Psychiatrists reckon if the markets were really a person, said person would need urgent treatment for bipolar disorder, panic attacks, multiple personality disorder and a host of other serious conditions!

 

Fear and greed is all around us. Darn, why didn't I sell my shares at the top. S***!!!! Why didn't I buy some at the bottom!

 

Of course as per usual when was the best time to buy? Yes, exactly. Just at the biggest moment of panic.

 

It's actually very easy to say "Buy when all others are fearful" but very hard to do.

 

I did do it a little, to smaller stakes than I would normally.

 

Now the good news in my opinion...

 

I had a look round some bulletin boards for the first time in months (I gave up with them a long time ago on the basis that life is too short and there is more interesting things to do with the short time we have on the planet).

 

What was interesting was the doom and gloom, gurus retiring from the scene, people saying they were in cash, or fed up, etc... people trying index trading instead (usually means they just lose their money faster)

 

This seems to me like good news. It is nearly always when private traders give up that the market starts to go back up - the markets have sucked all the money out of them it can... and.. well... it shows the genuine fear about, and yet again, fear like that often preceeds better times.

 

Secondly, I've been reading a huge number of reports from companies producing very decent results but who also said the outlook was fine.

 

So while a double dip is possible there isn't a big sign of it in any reports I read.

 

And finally there is a whole wall of cash out there waiting to get back in. If fear can somehow be sidelined, it is there, waiting.

 

http://www.nakedtrader.co.uk/

[jerpy]

Some interesting comments from Robbie Burns in his latest Naked Trader blog. Tempted to agree with all of them.

 

One observation he opens by saying it was one of the hardest months in his 12 years of trading. Personally lost a fair wedge of early year profits from about June onwards, hindsight is great, but I opted to remove second guessing and get out of dodge on these light volumes.

 

Maybe Robbie should have done more of the same, but thats just it, by nature of being a trader(with a published diary), he is somewhat "forced" to trade. August was less taxing for me, just a case of deciding when to be brave and get back in a bit.