Thursday, March 5, 2009
The RO Report, "Stinky Fingers" Edition
A wise man once said, "Those who try to pick bottoms get stinky fingers."
Today I think there are a lot of traders who will be washing their hands well before dinner.
What can you say about a market that bleeds significantly lower each day? You can say it's getting scary. Immediately after the close a friend called me and was like, "Dude, WTF?" That's a good thing. Let's talk about the best case scenario, shall we?
Tomorrow the jobs report is so abysmal that it bottoms the market. I think it's doubtful, since it's a Friday, but I'm just being hopeful here. People need to puke up their stocks, give up on America for good, and invest in China. When that happens, we'll bottom.
I'm hoping sometime by next Tuesday.
Anyway, it was a disappointing day in the RO. Out of 30 traders today, 16 were gross positive or, 53%. 3 traders made over $1,000 gross and 6 traders lost over $1,000 gross. I was #13 of 30. Flat. The Manservants took the day.
"Chambermaid" - Trader H*, -$13,763 on 22,900 shares traded.
2. Trader 10*, -$8,822 on 5,900 shares traded.
3. Trader A, -$3,062 on 408k shares traded.
4. Trader E, -$1,303 on 54,900 shares traded.
5. Trader &, -$1,235 on 105k shares traded.
"Lucky Pierre" - Trader B, $8,520 on 351k shares traded.
2. Trader Z, $7,284 on 112k shares traded.
3. Trader F, $3,519 on 41,000 shares traded.
4. Trader V, $989 on 50,400 shares traded.
5. Trader J, $900 on 54,600 shares traded.
BLOG NOTE: I may change up the names for the top and bottom traders of the day. If so, I'm going to let the RO members vote on the names. If you have any suggestions, list them in the comment section.
Paraphrasology
-John Cheever
The sun was hot. Dinosaur Trader sat by the green water, one hand in it, one around a glass of gin. He was a slender man-he seemed to have the especial slenderness of youth-and while he was far from young he had slid down his banister that morning and given the bronze backside of Aphrodite on the hall table a smack, as he jogged toward the smell of coffee in his dining room. He might have been compared to a summer's day, particularly the last hours of one, and while he lacked a tennis racket or a sail bag the impression was definitely one of youth, sport, and clement weather. He had been swimming and now he was breathing deeply, stertorously as if he could gulp into his lungs the components of that moment, the heat of the sun, the intenseness of his pleasure.
Wednesday, March 4, 2009
The RO Report, "Jinx" Edition
The market showed a little resilience today. Okay, I'm kidding, I hate when people say that.
Early on, it was a battle between the strength of the rally in oil and other commodities and the weakness in GE. Then, Bill Gross said some stuff, GE said some stuff, and GE stabilized after dropping under $6.
Six dollars.
I understand the banks getting ass-blasted, but doesn't GE sell stuff still? I bought a refrigerator from them not too long ago. Should I not get that extended warranty?
Anyway, in the end, the market held onto its gains albeit on lighter volume and only after a nasty late-day sell off. The financials couldn't join in the fun, and therein lies the problem.
My guess is that this is just setting up bear flags, getting traders ready for the Big Washout.
The RO had an excellent day. If I wasn't in my little self-imposed trading bubble (i.e. ignoring chat and keeping my own counsel through the day) I could give you a little hint about where they made their money. As it stands, I haven't the slightest idea but I'm happy for them.
Out of 30 traders, 22 were gross positive or 73%. 12 traders made over $1,000 gross and 5 lost over $1,000. I was #13 of 30, green again. Also, I want to apologize to Trader & for jinxing his ass in last night's RO post...
"Lucky Pierre" - Trader B, $30,433 on 458k shares traded.
2. Trader D, $21,852 on 414k shares traded.
3. Trader A, $20,905 on 415k shares traded.
4. Trader Z, $10,019 on 188k shares traded.
5. Trader T, $6,046 on 6,300 shares traded.
"Chambermaid" - Trader &, -$7,386 on 84,800 shares traded.
2. Trader N, -$2,136 on 292k shares traded.
3. Trader P, -$1,823 on 279k shares traded.
4. Trader F, -$1,433 on 52,400 shares traded.
5. Trader E, -$1,086 on 100k shares traded.
Larry Hite: Market Wizard
(Each week I've been discussing a new interview from Jack Schwager's canonical trading book Market Wizards. This week I discuss the interview with Larry Hite.)
I had very low expectations for this interview. The subtitle was "Respecting Risk," and I thought, "How dull, another dude here to tell me to cut my losses short while trading in the stock market." But I was pleasantly surprised by Larry Hite and what he offered.
First of all, from a completely non-trading perspective, Hite told great anecdotes while making his points about trading. I get the feeling that in some of the Market Wizard interviews, the interviewees were like, "Who is this Jack Schwager guy, and why is he asking me all these questions..." and so they offer lots of terse responses.
Hite wasn't like that. He offered page-long responses to many of Schwager's questions with nice little stories about death and success peppered here and there. And hey, they conducted this interview from Windows of the World, the restaurant that used to sit atop the World Trade Center... perhaps that made me a little nostalgic.
Anyway, so lets get right into one of the long meaty answers that Hite offers. Schwager asks him about trading systems, but I think Hite's response speaks more to human psychology, and why the market will always be here. It also hints at why we'll eventually bottom.
People don't change. That is why this whole game works. In 1637, tulips in Holland traded for 5,500 florins and then crashed to 50, a 99 percent loss. Well, you might say, "Trading was relatively new then; these people were primitive; capitalism was still in its infancy. Today we are much more sophisticated." So you go to 1929 and find a stock like Air Reduction which traded at a high of $233 and after the crash fell to $31, a decline of 87 percent. OK, you might say, "The Roaring '20s were crazy times, but now things are surely different...Hite offers more examples, but you get the point. However, if you really need more, check this table put up by Barry over at The Big Picture, (a blog that refuses to link me) in his discussion of Zombie Banks.
At a few separate times during the course of the interview, Hite says that trading is boring. He's not into exchanging war stories. As he puts it, "I don't trade for excitement; I trade to win." That makes a lot of sense to me.
I mean, if you read this blog, you know about the RO and how on any given day some dude normally makes $20 grand, and some dude normally loses $8 grand. There's a lot of excitement in those numbers and often traders will vacillate between winning and losing all day. My goal is to always be in the top 10 and just stay there throughout the day. It's a little boring, but it'll extend my life a few years, I know it.
Now we get to the portion of the interview where I decided that I really liked Hite. Schwager asks him how he has been able to achieve returns far above the industry average. Hite answers that they manage risk. "The truth is that, while you can't quantify reward, you can quantify risk."
In a nutshell, this is how I used to trade back in my sun filled early years. I'd sit at my desk and hold 30 or 40 positions knowing that I could get out if they went a quarter point against me. I entered, knowing where I would get out and let them run if they worked. Sure, I got stopped out of many, but a large percentage also ran. Often, out of those 30 or 40 positions, I'd only have 1 or 2 big winners and then the rest of them would cancel out.
The hybrid market really changed this equation. With all the 100 and 200 share static moving stocks 40 or 50 cents on no volume, managing my risk became a much more difficult task. This is the story of the last two years for me, figuring out how to manage my risk once again.
Also, I liked Hite because he didn't claim to really "know" anything about the markets he was trading. "Fuck yeah!" I thought. I mean, aren't 95% of analysts always wrong? You can only manage your personal risk, you can't know a market. Schwager asks Hite about how he can trade so many different markets successfully and Hite replies, "We don't trade markets, we trade money." When asked how he differentiates a trade in gold versus a trade in cocoa, Hite answered, "They are both a 1 percent bet; they are the same to me." Indeed.
This helped me come to terms with the apparent fog I've been in for the last decade. People who know I trade are always asking me about the stock market. I always respond, "I don't know anything about what the stock market is going to do." I think that often, people walk away thinking I'm some sort of crackpot. But it's the truth and it always has been, I simply don't know. Further, I don't know what credit derivatives are, I don't care about the relation between bonds and stocks, and fundamental analysis is and always will be silly.
To a trader, these things, these specifics are rather unimportant. You just care about managing the money you have, finding good entries, and managing your risk. Hite really drove that point home and I walked away from the chapter more confident than ever in my utter ignorance and disregard for the minutia of the markets.
Next week we will venture into Part II of Market Wizards where the focus shifts away from commodity traders to stock traders.
What It's Like To Trade
Normally, I post videos under the title, "Another Person Who Shouldn't Trade." However, I know I have a small audience out there who doesn't trade at all. They wonder what it's like... well, watch the following clip. It's something like this.
Hunter Barely Avoids Lion Charge - Watch more Funny Videos
Tuesday, March 3, 2009
The RO Report, "Weight" Edition
It's funny when the market gaps up in the morning. You wonder while you glance at a green reading for the futures, "What are they doing up there?"
Simply put, what could possibly drive this market higher right now?
Unfortunately, it doesn't appear that we can expect any economic news or earnings to drive prices higher. So what do we need? Lower prices. And hopefully those lower prices will bring in buyers again to put a floor in this market.
I'm starting to get a very non-technical, non-scientific feeling that we're due for a nice disaster day soon, that will bottom us out for awhile. Today I put some bids in my long term account starting at $68 in the SPY. We will see.
The RO had an average day. But amidst the mediocrity, there are some standouts. "Trader A" has been on a tear. It's always nice to see a trader catch fire. Sometimes, that helps pull everyone else up. Also, "Trader &" has been doing very well, and he's new. That too is hopeful.
New blood can wake the old complacent traders out of their slumbers...
Anyway, out of 28 traders today, 17 were gross positive, or 61%. 8 traders made over $1,000 gross and 4 traders lost over $1,000 gross. I was #13 of 28. Green and happy because I made some mistakes early and I had to fight back.
"Lucky Pierre" - Trader A, $25,464 on 140k shares traded.
2. Trader T, $4,138 on 7,200 shares traded.
3. Trader N, $2,492 on 32,400 shares traded.
4. Trader &, $2,282 on 17,200 shares traded.
5. Trader L, $2,005 on 61,000 shares traded.
"Chambermaid" - Trader C, -$7,078 on 277k shares traded.
2. Trader Z, -$4,926 on 158k shares traded.
3. Trader H*, -$4,883 on 24,500 shares traded.
4. Trader E, -$1,139 on 75,500 shares traded.
5. Trader B, -$778 on 652k shares traded.
As always, head over to Alphatrends for your daily technical analysis. And also be sure to click this link and check out this chart comparing 1929 and our current decline. The chart plots "calendar days from the top" on the X axis and "percent from top" on the Y axis... very interesting.
Monday, March 2, 2009
The RO Report, "Blizzard Surfing" Edition
I'm going surfing. I'll post the RO much later this evening.
UPDATE: That was one of the more extreme events of my life which will, no doubt, find its way into a post if I ever have time to sit and write again. In short, we surfed a large stormy swell in chaotic conditions and then got back to our car which was dead. That's when the real fun began. But another time...
I'm tired so I'm getting right to the numbers. What can you say about this market anyway? I think the HCPG guys summed it up nicely in their newsletter tonight. They said they wouldn't be surprised if it dropped another 2% or 20%.
It was a mixed day that got better as it progressed. Out of 30 traders today, 17 were gross positive or 57%. 9 traders made over $1,000 gross and 4 traders lost over $1,000 gross. I was #13 of 30. Green.
"Lucky Pierre" - Trader A, $9,320 on 429k shares traded.
2. Trader B, $7,236 on 533k shares traded.
3. Trader &, $5,880 on 41,000 shares traded.
4. Trader Z, $1,780 on 81,892 shares traded.
5. Trader F, $1,373 on 21,000 shares traded.
"Chambermaid" - Trader 10*, -$8,453 on 25,500 shares traded.
2. Trader E, -$6,449 on 43,600 shares traded.
3. Trader D, -$2,976 on 113k shares traded.
4. Trader M*, -$2,693 on 0 shares traded.
5. Trader G, -$466 on 25,200 shares traded.
BLOG NOTE: Since I'm getting in late tonight and heading out at dawn to surf again tomorrow, I won't have the Market Wizards post up. Apologies. Expect it Wednesday.
Buffett's Letter To Shareholders
There's a foot of snow blanketing the world where I live. I turned on my computer and see another storm is brewing.
Indeed, things look awful and there isn't too much to suggest they're going to get better anytime soon.
But before you go out and buy your guns and grain check out this article about the letter Warren Buffett wrote to his shareholders.
If you trade this market, you need to do so without emotion. Buffett is building positions in GS and GE preferred shares. Could he lose? Perhaps... but he's been pretty good at this game for a damned long time.
Sunday, March 1, 2009
Sunday Space
Freedom to cut down world's oldest trees
Freedom to make Indians get down on their knees
And pray to your God and obey your FBI
And freedom to protest if you're not too scared to die.
Allen Ginsberg "Industrial Wave," White Shroud: Poems, 1980-1985
Friday, February 27, 2009
The RO Report, "Mess" Edition
Today was a real chopfest. We gapped lower with lots of bearishness, but then ripped higher the entire first hour. After that, it was chop until a mild sell-off in the last hour.
Not fun trading action despite the impressive volume, over 1.8 billion traded.
I recall when the Bear Stears (remember them?) news dropped two Augusts ago that we were doing over 2 billion a day and sometimes close to 3 billion on the NYSE. If we start to see volume rise, it could be an indication that some kind of climax is approaching.
Or, perhaps volume is simply rising as stocks across the board get cheaper, making traders have to buy more shares to make the same profits. Who knows?
Anyway, we tested Dow 7,000 today. And no, it's not the bottom... so expect a nice 6,000 number sometime next week. My stomach churns for boomers locked into stupid retirement accounts.
The RO got clipped today. Out of 29 traders, 15 were gross positive or 52%. That's bad... worse, only 1 trader made over $1,000 gross and 9 lost over $1,000 gross. Were I not dead this year, I'd suffer from survival guilt with my #2 showing. As it stands, I don't feel guilty at all. I'll take the #2 and a solid close to my week.
The Manservants dominated. And "Trader D" pulled a rare "George Michael" today. (A "George Michael," for you n00bs, is when a trader's daytrading account and swing account are the worst two accounts of the day.)
"George Michael" - Trader D, -$10,783 on 281,000 shares traded.
Trader 10*, -$2,562 on 8,000 shares traded.
3. Trader J, -$1,981 on 30,000 shares traded.
4. Trader F, -$1,827 on 96,400 shares traded.
5. Trader N, -$1,501 on 97,800 shares traded.
"Lucky Pierre" - Trader B, $2,045 on 733k shares traded.
2. Trader S, $593 on 9,600 shares traded.
3. Trader O, $457 on 24,400 shares traded.
4. Trader R, $405 on 11,400 shares traded.
5. Trader T, $314 on 5,700 shares traded.
Week In Review
I hate dogs because people let them bark outside their houses for hours on end. Another good reason to hate dogs is because they all worship Satan. See below.
Slightly Possessed Demon Dog - Watch more Funny Videos
I'm so happy that "the Fly" finally released his PPT to (roughly) coincide with Obama taking office. Whenever he complains that the market is tanking because of something Obama did, I'll just blame the PPT. Gonna be a fun 8 years. DT Wins Again!!!
The Reformed Broker sits down with none other than JP Morgan to discuss the financial mess we're in.
Then he re-imagines "I Will Survive" by Gloria Gaynor sung by Vikram Pandit. Internet gold.
Just in case you've missed the last 10 or so years of the Internet, Time gives you the top 99 things you've missed. I was #100 apparently.
Overkill punishments dished out by the greek gods.
The diary of a sperm. Surprise ending!
File under crazy religious zealots... dude kidnaps a woman, saddles her into an adult diaper, and then reads the Bible to her FOR THREE DAYS!
Is This The Bottom?
Bobby Jindal, America's Slumdog Millionaire.
Trader X found a nice graphic of Golden Parachutes.
Einstein solved major problems with one second nano dreams. Zentrader tells you how you can do the same thing.
Topless coffee shops? Changing the meaning of "You want cream with that?" forever.
Worried about the moral hazard that all the bailouts create? Stop worrying!
Thursday, February 26, 2009
The Big Pink, "Velvet"
Naked chick alert... 2/3 of the way into the video there is a topless woman whipping something. Porn Thursday indeed!
The RO Report, "Leaves" Edition
I traded early, made some easy money and decided to spend the rest of the day raking and picking up leaves.
You may ask, why the fuck would he do that? The answer, my friend, is that right now I'm all about small consistent victories that will rebuild my confidence. I traded only 6200 shares today and made about $600. A great confidence builder. If I manage 3 positive days in a row, I'll build my share size on each position. That's my plan for now.
As for the RO, they had a pretty solid day. These past few days have really helped bring a few guys back to positive or nearly positive on their year to date levels. Volume slackened a little today, but the bulls suffered another reversal. Those recent lows are very close...
Out of 29 traders today, 20 were gross positive or 69%. 8 traders made over $1,000 gross and 3 lost over $1,000 gross. I was #10 of 29, happy. The Bosses took the day.
"Lucky Pierre" - Trader B, $10,147 on 432k shares traded.
2. Trader D, $8,842 on 310k shares traded.
3. Trader H*, $5,152 on 18,300 shares traded.
4. Trader C, $4,933 on 122k shares traded.
5. Trader &, $2,021 on 50,200 shares traded.
"Chambermaid" - Trader A, -$5,626 on 130k shares traded.
2. Trader L, -$1,599 on 40,000 shares traded.
3. Trader N, -$1,361 on 95,800 shares traded.
4. Trader V, -$770 on 51,464 shares traded.
5. Trader F, -$546 on 95,400 shares traded.
Click here for Brian's take.
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