Is the USA the next bubble?

Kids, I'm not sure, but it's possible.....

I've been pondering for some time the extraordinary state we have found ourselves in. Recent history has given us many historic fluctuations in asset prices......

Conglomerates in the 80's.

Internet stocks for Y2K.

Home values in 2006-7.

Leverage funds of recent years.

Gold prices...again.

The commentary from mass media usually encompasses some ridiculous statement about why something has to happen in the future! Well, if you say it enough times, the likelihood is at some point you may stumble upon a correct answer.

We are all aware in 2013 that bond prices likely have downside, but, not because they are a "bubble", it may well be because the USA is on its feet and fighting fit. We have seen precious metals falter since Oct 2011, just when the stock market started to correctly discount bad news for the first time in 3 years. Could the next bubble be us? Could it be that we are living and breathing and benefitting from the previous devastation, a Phoenix from the Ashes?

The US has been in an extraordinary state since 2007, Capex has been limited, cash to buy backs has been up and dividends now make the US look more like the UK than I can ever remember. I am going to assume an awful lot right now, so stick with me....

Let's just say that the we have seen "peak Washington disuption", sensible enough.

Let's also just say that the US has lost none of its entrepreneurship, think FB and TWTR for a minute.

Let's also, also say that Capex is going up, inflation will be in a tight range and the likelihood of the Fed applying the brakes are minimal. 

Corporations two biggest input prices are Employment and Energy prices. Wage inflation is tepid at best, with an escalation being a little positive for inflation. Energy prices are reasonably stable, without a super-spike ala 2008, that doesn't look an issue either. Technology improvements giving productivity gains are just the icing on the cake for me.

What about M&A? Taking some well earned cash and buying some growth seems sensible enough. We have already seen some low hanging fruit being absorbed in 2012 and 2013. Which likely means that at some stage in this cycle someone will reach higher and further, paying higher prices for less of that growth. That doesn't sound at all bad for the right here, right now trade.  

That's an awful lot of assumptions, I know, but.....the potential road we are traveling could well be paved with the most ridiculous upside imaginable. 

Now, the road isn't without it's bumps and it certainly isn't without consequence, but those are for another time in the future. At this point we are just starting on the path towards those problems and the journey has to travel through some very dynamic and rewarding landscapes before any precipice. We may well be witnessing one of the most extraordinary times for innovation and growth that many of us have rarely witnessed. We really could be looking at a US that can propel itself once more into the forefront of the World. There are obvious risks of over-confidence, political faltering in Foreign policy and basic Washington missteps on taxation, but barring an International quarrel, I have a feeling the next "bubble" may well be an overheating US economy! The most important point to note is that overheating isn't today......

What if we are witnessing a renaissance of historic proportions that give rise to quite wonderous advances (I'm not talking stock prices here either)? Smart, sensible, forward looking individuals that aren't at the whims of very large corporations, that have little of their foresight. For those at the peak of their chosen industries right now, congratulations, but if you do not see potential changes from those around you and act on the potential, your days are likely numbered.

What does it all mean?

Quite frankly, this would point to additional advances in property prices, innovative technology, small and micro-cap still, quality food and premium services. The masses could well be pleased as this tide raises all boats.....

Queen takes Pawn

Can anyone time the top and the bottom of a stock market?

Kids, it's a great question, I'll try to answer....

I'm sure some can, I've yet to see it work over longer periods of times though.

Market tops.

Just when you think the good times can last forever.....

Invariably a topping process can take many many forms. This is mainly due to the players involved. 

For instance, in 1987, the major players used margin to buy stocks in the belief that they could buy at will and sell at a profit without worrying they were on borrowed funds. 

2000 saw a tech spending boom for Y2K, that people extrapolated to last a lifetime, therefore the tech stocks gathered pace and rose only to succumb to lack of future revenues and earnings. 

As for 2007, this was the time of Home leverage! Blame the lenders, blame the borrowers, either way the financial system was leveraged across the board.

Timing the actual top of any of these recent times was almost an impossibility. There were always clues, you just had to know where to find them. One such clue was in a previous post here, the yield curve. The most important clue though was the market itself.

What I look for: outside day reversals in the dominant market. 

An outside day is a higher high and a lower low on price in combination with increased volume. If the market is higher, it's an outside reversal higher. If the market is lower, it's an outside reversal lower. 

SPX 2007 High.

 

It's not a hard and fast rule, there are times when other considerations need to be taken in consultation. However it's a starting point. 

Market bottoms.

It really is darkest before the dawn.

There have been a couple of times when price action has been so bad, you almost were left laughing at the most extreme points. Consider the process starting at that point for marking a low. In 1987, October and December were awful.

1987 lows

 In 1990 the low was marked by Politicians not being able to prevent Gulf War I.

.

2002 low was the announcement of Afghanistan hostilities. For 2009, the actual price low was marked by an appalling unemployment report! You can see a pattern emerging. 

The price action from stocks was also very telling as at all points, further bad news was discounted and stocks actually rallied as further news was known.

So you see, with the benefit of hindsight and some stock market intelligence, being able to think clearly is of paramount importance.

Major tops and major lows can be seen quite clearly without pinpointing the exact days.

Consecutive down days to time the longs...

When we are in bull market mode, I like to use consecutive down days to guide my buying. There are usually 12-14 sets of 3 consecutive down days in any one year. 4 consecutive down days about 8, 5 days at 4 times. 6 consecutive down days number about 2. Any more than 6 consecutive down days risks a crash. 

In conjunction with these consecutive down days, you need to gauge some panic. I do this via the TICK index for NYSE stocks. The number needs to read -1300 or worse. Don't ask why, it just seems to work. This stacks the cards in your favor for entry levels. I use it frequently, it rarely let's me down. The trick is patience.
                                                   
TICK Index. -1500 is extreme

 

Important things to keep in mind:

A market can remain oversold for a longer time than you expect.

A market can remain overbought for far longer than you can anticipate.

Many experts try to employ a relative strength index, I've never seen one work well, much like an oversold/overbought condition.

Staying on a bull market...

This may sound ridiculous, but actually riding a bull market, is very difficult. At all points you have the threat of bad news derailing your long positions. When you inevitably sell something, it is no crime to re-enter the very same long at a higher price. That is part of managing your situation.

Trading a bear market....

Needless to say, that is as difficult as anything else, due to he fact they are shorter than bull markets and far more violent. The rallies within bear markets are sharp and fast. Many people have lost just by having to cover short positions in a violent bear market rally, only to see those same positions a day later significantly lower. You have to be consistently correct within a bear market. It's nearly impossible to be that correct for such a long period of time. If you try it, position size is the most important, risk very little capital.

Bull and bear markets do not only exist in equities, you can learn from others markets also, namely commodities (gold from 2001 to 2012) and other national markets outside the US. Being away from that action can teach you just as much, without having to listen to all the local noise (think Greece 2011). 

The stock market is a living and breathing creature, it is a difficult mistress. It neither cars for your intellect nor rewards your indiscretions. It cares not whether you are correct, only that the the stock prices themselves are correct. Keep your ego apart from your decisions, indiscipline will inevitably hurt! Everyday there are tricks to learn and, more importantly, re-learn. People will try and convince you there are trades everyday to take advantage of, this may be true, they just may not suit you and the way you trade. Be patient, then be brave.

Queen takes pawn

Why does the Yield curve matter?

Kids, you don't know what you don't know, until you know it!

Way back in the early 2000's a colleague pointed out the yield curve to me. What was the yield curve? The difference in yield between 2's and 10yr US Treasury debt. We discussed at length what it meant and how we might be able to use it. 

The Curve.

It is as cyclical as the market itself. Almost rhythmical. It has a habit of defining cycles. 

In essence it's primary use is for lending institutions to build balance sheets easily. Borrow short term money cheaply to lend it for a longer period, capturing the spread between the two yields. Simple enough. Remember the Fed are involved when it comes to a steepening or flattening curve.

Here is the longer term chart of yield curve vs SPX.

Steepening Vs Flattening Curve

So, as the yield curve steepens, you can bet your bottom dollar that financial institutions are making money. Conversely when the yield curve flattens it's likely that financial institutions are sacrificing some yield for more volume as the economy grows.

The cool part

When the yield curve finally moves from an inverted state and steepens for good, you can count the days to a stock market correction.  

I'll show you......

There are times that the yield curve has been INVERTED. This happens when 10yr yield is lower than 2yr yield, giving a negative carry (not being able to borrow short term at advantageous rates to lend longer term).

There are many and varied explanations as to why this happens, the most important thing to note is you are at the end of a bull market and are about to witness a bear market. The length of that Bear market changes according to circumstance. It's a strange sensation. You can see the yield curve steepen for good in 1990 that coincided with a correction in stocks, and in 2000 and, you guessed it, 2007!

1990

2000

2007

Implications of yield curve.

As you see flattening of the curve, there really isn't a concern as a goldilocks scenario exists in the markets. Once you enter an inverted phase, pressure starts on financial institutions to make money in other ways. They do this by increasing their risk profile for activities. At some point that inevitably comes unstuck. Call it bad financing of S&Ls, Internet incubators, Housing, Subprime!

This is a big red flag, do not attempt to outsmart the market or get caught up with a scenario that you lose because others are placing larger bets, what follows is a little chaos. You can see exactly what happens in 1987-1992, 2000-2002, 2007-2011.
As the yield curve is inverted, markets have a habit of rallying, the usual amount is about 6%. Use this time to build your cash positions, be at peace with your wins and your losses, do not over trade. There is an ill wind on the horizon. Timing this ill wind will be tricky, but there is one move that matters beyond any else.

WHEN THE YIELD CURVE FINALLY STEEPENS FROM AN INVERTED STATE, YOU CAN COUNT THE DAYS TO A CORRECTION.

Playing this on the short side can pay handsome dividends, however you will not sleep well as a bear has claws and all positions are subject to daily fluctuations that will force you out of your trades. You can also just be long cash which is a synthetic short as you expect cheaper prices.

These trends are very large and do not end without an awful lot of hardship and business's failing. 

This is your time to be humble and help those that are less fortunate than you. Many will ask for some help, offer it freely and with good grace. You had the benefit of reading this, they did not. 

Use the time of market uncertainty to assess its pulse. Use the steepening curve to understand that financial institutions will become healthy once more, no matter what the media says. When the market looks like it can't get any worse, likely doesn't! Lows have been marked by the starting of Wars, the inability of Governments to act or an Institution failing. The market will start discounting bad news and rally when everything points otherwise, be aware. This is a necessary healing process. You can benefit in the same way as before, allow the market to guide you on your journey.

Buy innovation, be brave. Some will not work out, keep your losses small, it is the gift of discipline. 

Never be afraid to re-enter the same trade, just understand your entry price. Some of the best companies in the world have suffered some short term setbacks.

Once the curve has steepened and the stock markets rally on bad news, you will notice something phenomenal! You are on the right side of the market and the Fed are helping you! That is a powerful friendship to have. 

Study the charts of leading stocks, they can guide you. No need to be too short term on your thinking, that is for others. Enjoy the peaks and troughs as the world really is a wonderful place. Keep your integrity, honour and discipline, it is yours alone.

Queen takes pawn.

What happens when the Fed moves?

 

Kids, before I answer the question, first some basics....

THE FEDERAL RESERVE (The Fed) MATTERS
The Fed is a private institution owned by its' members. The best book written on the introduction of the Fed is "The Creature from Jekyll Island". Read the book, it's in the library waiting for you.

This post is not to prove that the Fed is a "good" Institution or a "bad" Institution, its a post to prove the Fed matters.

The Fed issue the Federal Reserve notes that we call "currency" of the USA. they don't specifically control the "value" versus other currencies as that is apparently for the Treasury Dept. Either way you get the point that when it comes to dollars and cents the Fed matters. Now, given we know the Fed are important to the currency, it only goes to show that you need dollars to buy stocks and stuff, like commodities! Commodities are priced in dollars, as are the stocks in the USA. So the Fed matters again.

The other interesting point to make about the Fed is the dual mandate of price-stability and full employment. As you see the Fed matters.

Here is where it gets interesting, in order to fulfil both mandates, the Fed has the ability to lower and raise interest rates for the US. Now, there are several ways to measure interest rates: Fed Funds, 10yr Treasury yields and 2yr Note yields. For the sake of ease we are going to stick with Fed Funds as the point of reference.

When the Fed LOWER rates, you can assume that the economy in the US needs some help with easier monetary policy.
When the Fed RAISES rates, you can assume that the economy in the US needs a little cooling down with higher rates.
That's the basics then.

Here is where it gets really interesting when it comes to stocks and commodities and the dollar: WHEN THE FED CHANGES STANCE, THERE IS A RE-PRICE OF EVERYTHING PRICED IN DOLLARS!

I can not stress that enough.

FOMC dates matter!!

There are several reasons, the most important is the "risk-free rate of return" changes.This particular number is without a doubt the most important number to learn, it prices just about everything!

So when the Fed moves its' stance you can expect everything to change price, however insignificantly.

1994
Back in 1994, after a diffcult period that started with the 1987 stock market crash and ran through an S&L crisis on the way to RTC, the Fed raised rates. What happened?

The Bond market re-priced. The article link will explain all.With the bond market re-price equities naturally lost some value. There are several theories behind why, the most obvious to me was positioning of assets. The peak to trough for stocks amounted to 10% of value. Not a disaster as long as you were prepared for the reaction. The lesson was to be prepared for the action and buy the panic that ensued. A healthy stock market would discount the worst possible news it could and quickly.

The following few months in the stock market caused many to fear for growth as rates would go higher crimping the conomy. This did not happen. The rally of 1995 was eye-watering and incredibly difficult to stay on. The rally from 1996-1999 was legendary with pockets of chaos.

1994 and the FOMC...




2004
The same type of action followed in 2004. A 2000-2002 market melt-down started by the Internet bubble, through Sept 2001 and into a recession and military action of 2002. In the October of 2002 the US and Allies embarked on Military action in Afghanistan. This actually marked a low for stocks in the US. "Buy to the sound of guns, sell to the sound of trumpets" as a good friend once remarked, was quite apt at that point.
The Fed started to raise rates in 2004, only this time stocks had prepared for a move previously, still the peak to trough for equites was around 10%!! The following rally in stocks in 2005-7 led to the housing bubble and subsequent Financial crisis.

(You just cant make those numbers up! 10% peak to trough! So similar to 1994 that you have to re-check the numbers.)


2013 and 2014
We are now in December 2013 and looking forward to 2014. The Fed are expected to change stance again, the question is when? This time the FED have enacted a policy of Quantitative Easing. It amounts to the same thing as easing. So using the previous two episodes for when the Fed moves, you can assume IT MATTERS.

What to expect:
Risk-free rate of return to change.
10yr bonds re-price
2yr notes re-price
Dollar strengthens (it already has significantly)
Commodities suffer (they already have)
Equities, peak to trough, could well be -10%.


What to do?
Be prepared for equity markets to discount further moves from the Fed and therefore price QE to zero quickly. It will look like the end of the world, it isn't. Trying to time the exact top and the exact bottom is likely fruitless, no matter how hard one tries.

The US is expanding its' economy and when that happens, everything else looks a little better for the majority of people. That is a good thing no matter what your politics are.

Enjoying bull markets is as important as playing them....

In a nutshell, buying panic is very difficult, but rewarding. Be prepared, do not panic. We will price the worst outcome quickly, subsequent news will be discounted. Position size is important, any position that doesnt allow you to sleep is the wrong size.....just ask Mum!

Queen takes Pawn

No crystal ball but a 2014 roadmap

Kids, we learned a lot in 2013, what about 2014?

It once again gives me great pleasure to put pen to paper (more for my benefit than anything else) for 2014 predictions, with a suitable amount of tongue-in-cheek.

2013 predictions weren’t bad at all. Europe, US, buying panic to sell complacency, Yellen, IPO comebacks, Housing, demise of correlation trading, Arsenal even spent money on players (black swan event)! All attached….

Now for some 2014….

*2014 bull market continues
*Bernstein stock target prices for next 12 months (within coverage) points to SPX 1900. Remember we don’t value growth particularly well!
*Blue-sky trading of breakouts the most rewarding vs the mean to reversion value strategy.
*ZeroHedge articles via email continue to be buy signal of choice
*Taper happens causing bonds to re-price and the mkt discounts taper to ZERO quickly
*Interest rate plays dominate, CME, SCHW
*Consecutive down days in combination with panic tick levels remain terrific long entry points: Nick rule #1
*Dollar strength continues
*China growth not an issue of at least 7%. Lets face it, who can argue with the sitting Government?
*Growth over value
*House price increases in the suburbs
*Stocks that do not show leadership and disappoint on earnings, do not reward capital: *Underperformance from Funds in a bull market continues, but the gap gets plugged with an IPO market on fire
*SPX +15%
*IWM outperforms SPY by 8%
*Utilities still the ugly step-child of equities:
*US GDP accelerates to 4%
*Navigating Yellen commentary and actions is the banana-skin
*Fund flows become a very important marker for underlying bid for equities regardless of “valuation”
*Action over price continues to win

SPX looks like this for 2014!!!! With the giant swings caused by FED moves and talk….

Off the reservation calls:
*Arsenal win the league
*Obama cover of Time magazine with Headline “The Loved one I lost”
*Argentina win World Cup

*England retain the Ashes
*Wall Street confidence climbs again
*Philanthropy thrives
*US tax code goes 20% flat tax
*US Government signs off on $2trillion infrastructure spending bill
*Nobody sells their Bitcoins in the assumption it prices at $100,000, making it the currency for the privelaged
*TSLA gets a LOI from Toyota
*Jeter retires with guard of honour
Just for some context here were the 2013 predictions:US.....
*Another bull market move higher in SPX, 1560 acheivable with a following wind
*M&A pick-up, at some point the use of cash is better deployed than just
dividends, however it might be muted from the "special divi" craze of late.
*FED...well that's just boring now with QE infinity *Single stock moves do
better than SPX, correlations continue to decline.
*Buying panic and then selling into complacency works wonders for performance
*Value names continue to be value traps *Housing works.
*Wall Street makes a resounding comeback as Washington focus on growth
allowing funds to invest appropriately and the IPO market to regain a footing.
*3/4/5 Consecutive down days for SPX in conjunction with TICK index continues
to work as a buying of panic opportunity.
*Short squeezes become normal practice
*US BONDS give ground all year, without showing a danger of a yield spike.
*We seriously start to talk about inflation expectations again.
*Correlation trading continues to be a disastrous strategy, single stocks win
Some Macro....
*EURO/Dollar reverts to stronger dollar and weaker Euro, but this time is
deemed a POSITIVE for the markets as resolutions take hold!
*Europe slowly sees signs of strength as the weaker EUR benefits *Silver/Gold
ratio hints at going back to 20 given SILVER STRENGTH *China reverts to better
growth *Commodities remain well bid and defy the inevitable "topping out"
predictions.
*Japan. The stimulus vs monetisation debate continues to thrive with no
outcome.
General.....
*Obama getes "Man of the Year" award, for doing not very much at all!
*Geithner replaced by Corzine after evading all Court processes from MF Global
*Bernanke calls it a day. Yellen in line to the thrown, gets blown off course
by a Petraeus email scandal.
*BOE employs a NON-Brit as BOE Governor....oops, that's happened!
*The average Hedge Fund complains about liquidity when chasing stocks +5% on
the day!
*Arsenal spend some money on players
*Mets fall at first hurdle, whichever hurdle you deem is the first!
*Yankees sell A-Rod, win World Series with Jeter retiring in Game 7

Queen takes Pawn

When Christmas comes to town....

Kids.....

As you know I am a Sucker for Christmas. 

The tradition, the fun, the friends and, more importantly, you and Mum. There is nothing like the build up to get my heart rate high. There are several events over the Christmas period that are joyous, leading to you opening your presents on Christmas morning.

The season is a time for giving, it's a time for you to know how truly loved and blessed you are.

But, remember just one thing, no matter what present you didn't get (because there will always be one) Father Christmas did his best, and the ones you did get were the best on sale at the time! Just kidding.

The football season is in full swing, our beloved Arsenal have games to play that could define the season (good or bad). My bet is our team will give us as many highs as lows, that's the beauty of our sport. Just watch some highlights of great Arsenal teams of the past to know exactly how they play the game. Whatever you do in support of the team, do it with respect and dignity, the club has earned that right. At Christmas It's a joy to see the crowds at matches in England and the USA dress up in Santa regalia, you can't help but smile. Great fun, you should try it with your friends. 

There are great movies to be seen throughout the season, here are some suggestions:

The James Bond movies: any will do, they are great entertainment.

It's a Wonderul Life: it's the emotion of the season wrapped into 2hrs.

Prep and Landing: a new classic.

The Wizard of Oz: that's right, time to get angry with that Wicked Witch.

The Santa Clause: there's nothing wrong with a little humour.

Miracle on 34th Street: there's nothing wrong with believing.

The Great Escape: nothing better

A Christmas Carol: pick one, they are all good. 

Arthur Christmas: Mum loves it.

Love Actually: Heathrow as the opening credits is genius.
White Christmas: Tradition at its' finest.

Learn Christmas hymns and go to Midnight Mass one Christmas Eve, you might like it. Mum and i used to go in England and had a blast. You might even want to pop into the pub beforehand with friends.

You will never be too old to light a fire, roast chestnuts, raise a glass of cheer or call your mother! 

Buy a great tree, put lots of lights on it, place the photos of a bygone era where you can see them, admire your work! 

Read the great Christmas stories, whisper "'twas the night before Christmas" your memory will come to life. 

As you get a little older, you will be doing the cooking. Open a bottle of white and a bottle of red, you don't have to drink anything, but just in case you want a glass of something, give yourself a good choice. As for the turkey, go big, it's fun, wrap in bacon (because everything tastes better with bacon), inundate the table with vegetables and gravy. Delicious. Take your time in preparation, take your time in delivering a great time for friends and family. These are memories that will live with you for the rest of your life, they are priceless. Cook bubble and squeak, lace the plate with Branston pickle and cold cuts. Mum makes the best "bubble". Take all the applause your guests offer, they mean it. 

If you need help on any cooking call Mum, if that fails, call Nan if you can!

Remember, rushing through the Christmas season risks missing something along the way. The world will continue turning whether you agree with the timing or not, be at peace with it.

Re-read "Desiderata". Re-read "if" by Kipling. For the new year there is advice within both poems that will likely hold you to a higher standard than others. That matters, trust me.

Cheers to Christmas kids, enjoy.

As for the stock market, it ebbs and flows in this period, do not take moves that seriously unless you absolutely have to. There is a new year approaching and prices of stocks will inevitably change, there is plenty of opportunity. Decide on your plans, work hard at updating them and trade those plans accordingly, success can be yours.

Queen takes Pawn

Trading when liquidity is low...

Kids, today's muse.....

A respected friend of mine once noted "never short a dull market". I couldn't understand his comment at that time.  

What was so different about a dull market versus any other time?

The trick is to understand the players, the motives and the calendar.

1) the players. They are not created equally. Some have more influence on market moves than others. The professional seller will stack as many cards as he can in his favour, that means data and signals. There are notoriously few around low volume days.

2) the motives. The motive for selling is always the assumption that something will go down in price. For that you require a reason or a catalyst. That is unlikely when volume is lower.

3) the calendar. Trust when you are looking forward to a vacation, time away from your screen or about to see Nan for Christmas that you aren't the only person thinking that way. The calendar can play tricks on the stock market uninitiated.

You can look back over a long period of time and rarely do sellers make money over thanksgiving and Christmas. If the market goes your way at these times, be quick to say thank you.

One last note: there are no friends on the other side of your trades! don't think for a moment that the playing field is level, it isn't, so deal with it.

As for today's action, standard operating procedure. Melt ups and rallying high beta at the expense of safety. 

Bonds starting to get antsy on Dec Fed meeting. I just don't see them changing tack with only 2 weeks left in the year (funding for year end issues). 2yr paper is the canary in the coalmine, hence a flattening curve.

Bull market trading still.

 

Potential 2 day melt up around thanksgiving. 

Hopefully Mum excels herself once more for our feast on Thursday! 

 

Queen takes Pawn

First musings for my children......

Blog number 1. Some basics.....

THIS BLOG IS INTENDED AS A RECORD OF MY THOUGHTS ONLY, TO BENEFIT MY CHILDREN.

1) Stock markets are difficult to navigate, lets not over complicate a complex issue.

2) It's a bull market and has been since Oct 2011, in my opinion.

This particular bull run has been difficult to stay seated on. At every turn we are told "the next leg lower" is around the corner. At some point that will be true, the real trick is timing. In the meantime, learn the rules and play the game.

The term "blue-sky" trading applies to being long stocks that trade at new highs, this allows wins to be garnered from market intelligence rather than trying to outsmart the professionals. Some call it momentum, I like to think reading a market correctly is as difficult as an other subject.

3) Bear markets are notoriously difficult to capture from start to finish. Don't try to predict it, let the market show you the way.

4) Yield Curve matters. (gives bear market signals religiously)

5) Capex matters (gives bull market signals religiously)

6) Rotating sectors matter, rotation within sectors matters. (trends can be see consistently)

7) Action matters over price. True bull markets never allow you the re-entry price you are looking for do not make the mistake of always having to buy cheaper than you sold.

8) Swimming against the tide is absolutely fine. (2007 and 2012)

9) Swimming with the tide is absolutely fine. (2012-)

10) Be prepared to lose money and learn. Be prepared to make money and know not how.

11) Learning happens everyday, no matter your age

12) Position size is the most important part of sleeping well. (ask Mum about the 2007 short position)

13) Instinct matters. Trust it, it's yours and you worked hard for it.


I will post links in future as this blog evolves.......

Queen takes Pawn