Thursday, March 31, 2011

New viewing options for Finance Trends readers

Blogger has introduced some new viewing options for blog readers and I wanted to share these with you. 

In addition to our regular site layout, you can now view Finance Trends Matter in five new formats called, "dynamic views" for readers

While I thought this would be a gimmicky style option, it turns out that the new views are pretty sleek and I imagine they'd be great for mobile web readers and iPad users. Here's one format I particularly liked, called "flipcard". 


As you can see, this view contains all our recent posts and I like they way the images from certain posts stack up with neighboring post titles. Pretty sharp, actually.

Take it for a spin. You'll find a drop-down bar that lets you easily navigate the five viewing formats to find the one that's right for you. 

Tuesday, March 29, 2011

Weekly futures chart: Trend in oil prices


Taking a gander at the longer-term trend in crude oil prices via this Finviz weekly futures chart.

You can plainly see the bull move of 2007-2008 and the ensuing correction (plunge) from $140 that followed here. Then we see the bottoming process and rally off the early 2009 lows, when crude oil traded near $30 a barrel. The uptrend of the past two years has taken us back above $100 a barrel.

You'll also notice the COT (commitment of traders report) data below the price chart. It seems the commercial hedgers are the savvy players in the oil market. Their relatively infrequent net long exposure seems to occur near cyclical bottoms in crude oil prices. Of course, their net short positions tend to increase as the price of oil trends higher. 


Perhaps some of our commodity-savvy readers can fill us in on any useful ways to read & use the COT data. If you have some helpful insights, please add them in the comments.

Saturday, March 26, 2011

Trading lessons from Nicolas Darvas

Charles Kirk recently re-posted a very worthwhile rundown of trading lessons from Nicolas Darvas.

Here is an excerpt from that piece:

"
Nicolas Darvas has inspired traders for many generations. His book, “How I Made 2,000,000 in the Stock Market” is one that you’ll find on many recommended reading lists including my very own. While some have argued that much of Darvas’ success had to do with lucky timing, his books are still widely read and for good reason.

A lot of traders can identify easily with Darvas because he went through the process of learning how to trade much like most people do today as he first began by searching for the “secret” to making money in the market. And, just like all of us have found, after finding no success from trading on the stock tips of others including brokers and expensive newsletters, Darvas figured out that he ultimately had to develop a trading system on his own.
.."

Check out Kirk's notes on Darvas' trading approach and the lessons gleamed from his famous book. This is a great rundown of the wisdom found in Darvas' personal approach to trading the stock market.

For those who'd like to read How I Made 2,000,000 in the Stock Market,
you can find it at Amazon or read it online, here in the Scribd Trading Books collection.

Related posts:

1. What makes a great trader? Managing risk - Finance Trends.

2. Interviews with Nicolas Darvas - Maoxian.

Wednesday, March 23, 2011

Interview with Michael Bigger, trader & author



Trader and author/blogger, Michael Bigger of Bigger Capital offers his thoughts on "trading recipes" and collaborative communities in this interview for The Trading Elite website.

Having read some of Michael's posts and thoughts on algorithmic trading and self-publishing, I was interested to hear more about his entrepreneurial trading efforts and building creative collaboration networks.

Here are some key takeaways from the discussion:

  • Michael talks about getting started in algorithmic trading. Start young, build a simple framework and improve it as you go over time. Start learning & experimenting as early as possible.
  • Develop some "trading recipes" with your algo experiments. You can learn more over time and try to scale your best trading ideas.
  • There are creative people who can help you develop programs and teach you more about trading. Michael wants to use the power of the internet to reach out to people and build collaborative trading communities.
  • Technology available to individuals now in many ways surpasses what Bigger had while trading billions at a large bank 10 years ago.
  • Wealth in finance will flow increasingly flow to those who are able to interpret info better than others. Filtering info and connecting important ideas & concepts is key for the future.
  • There is this pool of talented individuals who remain untouched by the teachings, dogma of elite schools. These are the people you want to reach out to and collaborate with.
  • Blogging, writing ideas down, and communicating with other traders and programmers via Twitter and social media is essential. You never know who you will meet or what will come out of it.
  • Hard work and long hours are key to Bigger's success, but he views this as worthwhile and just a part of something he loves to do.
Definitely a worthwhile chat. Check out the full interview, I think you'll enjoy it too.

Monday, March 21, 2011

Recap: Sunday $Macro chat on StockTwits

Last night on StockTwits, the Sunday $Macro gang convened for a global macro chat in 140 characters.

I hosted the chat, and with the help of some Sunday macro regulars and some new faces, the discussion was rolling in no time (see screenshot below).



Here's a partial recap of some important themes and debate points from our macro discussion:
  • Early on the discussion centered around Japan and the currency interventions designed by the G7 nations and BOJ to make the Yen cheaper. As I was not following the currencies closely, it was good to have the other stream members fill me in and offer their views on the likely impact of the recent Yen strength on Japan's economy.
  • The Yen discussion carried over into a thread on Japan's rebuilding efforts, and how a "repatriation of assets" held abroad might bring renewed Yen strength. Some debated the effect (if any) Japan's investors would have on global stock and commodity markets.
  • Some debate followed on various beneficiaries in Japan's rebuilding phase. LNG, shippers, copper, and timber were some materials and sectors thought to offer upside in coming weeks and months. Demand for cotton was also discussed briefly on the stream.
  • We discussed the media's coverage of the nuclear crisis in Japan. I highlighted James Altucher's recent post on the subject and asked the stream participants if the threats from this disaster were being over-amplified by the media. Some discussion on risks of nuclear power and plant siting ensued. Some stream members also highlighted the risks to food and the latest movements in grain prices.
  • Our chat was moving along so well that some of the stream participants moved to keep chatting beyond the conventional 1 hour time slot, so we continued the discussion ("$macro overtime") for another 30 minutes. I cannot recall the last time this happened. It was great to see the discussion take off and branch off into many smaller side discussions on a variety of topics, including geopolitical events, war, and energy issues.
Lastly, I'd like to thank all the regular and newer $Macro 140 participants for their insights and questions on the stream. It's been great reviving the spirit of the old Sunday global macro chats (hosted by Gregor Macdonald) with you, and I'd especially like to thank Jim Gobetz for his help in bringing these discussions to life during the past few $Macro 140 sessions.

I'm hearing that StockTwits TV will be producing a new $Macro show with (I believe) Jack Barnes and Robert Sinn. I will be sure to tweet the details of this new program when I have them. See you on the stream!

Friday, March 11, 2011

Joe Fahmy interviews Market Wizard, Mark Minervini

Wanted to share this excellent video chat on trading and the stock market with you. Joe Fahmy interviews his trading mentor, Mark Minervini of Stock Market Wizards fame.

Mark and Joe both maintain a presence on Twitter and StockTwits, so it's been rather interesting to get a closer look at some of their thoughts on markets and trading through their real-time updates.

In this interview, Joe talks with Mark Minervini about his trading philosophy and the importance of blocking out meaningless distractions when focusing on one's trading strategy. This is a great discussion, and it serves as a very good learning opportunity for stock traders.

Check it out, and when you're done, take advantage of some of the other archived posts and trading videos on Joe Fahmy's excellent site.

Tuesday, March 08, 2011

Dana Galante on the value of auditing firms

Currently rereading Jack Schwager's Stock Market Wizards and I came across a very illuminating excerpt from an interview with short-seller, Dana Galante.

Had you read Galante's interview back in 2000, especially her comments on the value of auditing firms and the discretion banks and fund managers had in valuing illiquid investments, you might not have been surprised by subsequent events in our capital markets (read: Enron, Arthur Andersen, The Financial Crisis of 2007-2009, and so on).

Here's an excerpt from Schwager's chat with Galante in which she explains how a former boss was hiding trading losses from investors by marking up the value of illiquid private company investments in the fund's portfolio:

"JS: It almost sounds as if he was gambling with the portfolio.

DG: It sure appeared to be gambling. Looking back, it seemed that he tried to hide these losses by marking up the prices on privately held stock in his portfolio. He had complete discretion on pricing these positions.

How was he able to value these positions wherever he wanted to?

Because they were privately held companies; there was no publicly traded stock.

Is it legal to price privately held stocks with such broad discretion?

Yes. In respect to private companies, the general partner is given that discretion in the hedge fund disclosure document. The auditors also bought off on these numbers every year. He would tell them what he thought these companies were worth and why, and they would accept his valuations. They were these twenty-two-year-old auditors just out of college, and he was the hedge fund manager making $20 million a year; they weren't about to question him.

Another hedge fund manager I interviewed who also does a lot of short selling said that the value of audits on a scale of 0 to 100 was zero. Do you agree?

Yes.

Even if it's a leading accounting firm?

Oh yeah."

Now this type of exchange may not come as a surprise to readers in 2011, but I can assure you that plenty of people were shocked and caught unaware by these realities back in 2001-2003 and once again during the recent financial crisis.

So I guess the moral of the story is, do your own thinking and don't rely on the word of prestigious auditing firms and conflicted ratings agencies. Always do your own homework and try to understand how "business as usual" at the supposed safeguard firms can lead to disastrous results for those caught unaware.