- let's "clear the air" and get back on track here.
Hi Frank;
Obviously, we've gotten a bit sidetracked here - for some reasons that are quite apparent to many longtime Si Threadsters (vbg).... and for some "not so apparent" as well.
A few weeks ago I had mentioned privately to a couple of Si threadsters that I had accepted an offer to join a group of Traders in a Private Business Venture and was also going to be writing a regular column in a Public Newsletter, primarily on the Gold Sector, but also on the Natural Resource Sector in general.
Unfortunately soon thereafter, this unleashed the "little Green Monster" and this inane battle ensued...
After September 15th, the time that I will have and ultimately my involvement on SI will be limited and to a degree - restricted...but, I still plan to keep my original idea for this thread intact - that being discussing the "macro" Trends that affect the Market, as well as individual sectors and long/short stock idea's.
I'd like to keep a once a week involvement on the thread and given the coming changes to my schedule... it will probably be once a week on Sunday evenings.
In conjunction with this new Venture, I will also receive the benefit of greatly expanded resources and the opportunity to do more extensive research that I would never have as an independent Investor. For example, in late September I am getting the opportunity to meet with some Industry Leaders in the Alternative Energy Sector and will get to tour some facilities and get an inside the Sector perspective on the emerging opportunities in the Alternative Energy Sector. I think I'll be able to share much of that here on SI.
From an investment, or trading perspective... there may well be more upside leverage and less risk to these Alternative Energy Plays - than the traditional Oilpatch stocks.
For me, the value of SI has always been on the exchange of NEW IDEA's with other Traders concerning outside of the box contrarian thinking and discovering the emergence of new trends, or under the radar - under/overvalued sectors and stories, as well as individual stock ideas.
Personally, "why" someone makes a trade either long, or short in regards to how they view the macro & micro trends underlying a given sector, or individual stock - is more valuable from an information, or trading perspective - than is the individual in & out tic's of the tape that a given trader makes....so that is how I will try to shape my ongoing contributions here - as I'm quite sure that people really do NOT want to wade thru what becomes the mass posting of multiple threadsters day to day trades....that really isn't relative to anything and if someone wants a "daytrading room" environment - those are elsewhere. Here on SI they usually develop into ego-driven Fish Swapping Story Rooms full of unadulterated BS fwiw.
Ideally, I would think that the reason Individual SI threads exist is to exchange idea’s concerning to a small extent - "how" we trade, but to a greater degree, "WHY" we trade – what we do.
My individual Trading Style has developed over the years to where I've come to specialize in just a few sectors and I trade those sectors on a portfolio weighted basis, often having as much as 2/3rd's weighted to an individual sector at any given point in time and for the last couple of years – that has primarily been the Gold & PM stock sector.
I also trade other sectors that I follow like the Homebuilders, the Oilpatch, the RV Sector, the Mortgage/SubPrime Sector and Alternative-Energy etc...but, in these sector's I'm usually just trying to time either over-sold, or over-bought extreme's and take what the market gives me...especially on the short-side.
Earlier this spring being Short FNM was the single largest position I ever had in a single stock and it turned out very well. Earlier this year in the Oilpatch & Homebuilder Sectors and to a lesser degree, in the RV Stocks... I got a nice well timed entry on the short-side and picked up a nice scalp-trade...but, these are small positions on a portfolio-weighted basis and when trading "SHORT" - especially, on initial entries...I do keep tight stops and won't let a small initial profit turn into "no profit", or a loss... and will trade more actively, even on a daily basis.
But, in a longterm upcycle for a Sector where I am trading from a longterm bullish perspective - as I am presently within the Goldstock Sector; I do NOT "daytrade" and am not looking for 3,4, or 5% short-term in & out trades. I usually am "swing-trading" over a multi-month period for hopefully a 30 to 60+/- Point move in the Index.
Obviously during the individual sub-cyle legs within a given sectors move, there arises interim opportunities where Traders lighten, or overweight positions due a multiplicity of factors such as in the Goldsector, where the COT #'s, Fed Rate Hikes, TIC #'s, changes in the Deficit, CPI/PPI #'s regarding inflation, moves in the US Dollar, moves in other commodities such as Oil, or Copper, Geopolitical news all create interim peaks and valleys to an ongoing move...but I am not dancing in & out on a Portfolio Weighted Basis 29 times every 30 days on these types of trades…and I don’t think that anyone else that is actually successful on a longterm basis – is either..
I think most traders would agree, that the way to catch the majority of of a substantial move in a Sector is to be either long, or short it...for the majority of the duration of that move.
My goal on these Sector Moves is to hopefully scale into a well timed interim bottom and then to fade out of an interim top - hopefully catching 2/3rds to maybe 3/4's of an a given 40,50,60 Point Index move...such as what we have just received in the Goldstocks.
THOSE are the type's of swing trades that I want to try to time and to be significantly weighted to - for the duration AND on a Portfolio weighted basis.
In times when I exit what I view as an interim move in a Sector and have taken the profits off of the table and Banked them and am sitting in high Cash Positions...then, I often to try to pick up some little "nicks" in other Sectors, as I am doing now on the Short-side in the Homebuilders, the Oilpatch, Airlines, SubPrimes - waiting for hopefully yet another "discrepancy between Price and Risk" to develop and to increase positions into momentum when & if a small interim move, expands and develops into a bigger and broader move.
That's where I am now...
Just letting the Gold Sector sort itself out here... waiting to see how Currency markets rebalance relative to the China Re-Peg, to see whether the US Dollar temporarily continues to hold it's own here - into a continued environment of expected continued Fed Rate Hikes, to see if the Commercials have yet another "smackdown" in the works for POG and to see if Gold can once again begin to lead not just currencies, but other commodities as well...
So far, I think this has proved to be a prudent move as the 40point move in the HUI that all occurred in just 20 trading days is now safely in the bank... and all we've received from the sector since....is another 10 points in choppy trading action over the last 8-9 weeks.
I still have a 10% Portfolio weighting to the Goldstocks here...and am still very, very bullish longterm... but, as a Trader that had a 2/3rds total portfolio weighting to this recent move in the HUI... I will never, ever fail to bank any 40+ point Index move that begins to stall...regardless of the reason, or longerterm expectations.
CASH is NEVER - TRASH....especially, when it comes from cashing in a significant Sector Run.
In my opinion; we are at a very HIGH RISK inflection point for the markets here and this is the most prudent of times – in which to be in HIGH CASH positions.
The US has been the engine driving the Global Economy and the engine has been fueled by the very unhealthy and equally unsustainable mixture of excess Debt, Credit and Fiat Money Creation.
The Housing and Refinance Bubble has kept Consumer Spending (2/3rds of US GDP) and Sentiment afloat...and now in an environment of ramping Energy Costs and the Fed Hiking Interest Rates atop a Fiat Inflated recovery that never produced wage, or job growth; let alone savings....the broad market and the US Economy seems to be headed for rollover.
Greenspan has only recently acknowledged that rising Oil & Gasoline prices are indeed, negatively affecting the US Economy. I believe that just the rise in Gasoline Prices alone - is now taking $700 Million per day out of the US Economy and Consumers pockets... add rising Interest Rates that increase payments on variable rate loans ranging from Credit Cards & Auto Loans to Mortgage Loans...and the US Consumer that hasn't seen any significant job, or wage growth and now has a "0" Savings Rate.... has to be - being squeezed.
...throw in other factors such as ramping Property Taxes - thanks to the Housing Bubble and rising costs in most consumer goods that seem to defy CPI statistic's and it seems a matter of when and not if... the US Economy begins to slow, if not rollover into Recession.... or worse – if the Credit Bubble collapses from it’s own weight.
It surprises me, that issues and warning signs like we have with Fannie Mae/FNM – seemingly go ignored by the masses….
The Industrial Midwest has already shown signs of a coming economic rollover vis a vis a 33% increase in year over year Foreclosures...and this is coming from a region that basically has NOT participated in the Housing Bubble.
Given the broad markets being at still bullish levels... potential "discrepancies between Price and Risk" are starting to develop on the Short side of the market imho.
The Oilpatch is yet another sector where a "potential" discrepancy between Price and RISK is developing... in that Matt Simmons and the Peak Oil Kool-Aid Crowd have now backed both their thesis and themselves into a coming Q4 Supply-Demand Shock corner and should Inventory levels continued to stay above trailing 5 year average levels...there is a significant amount of money in the Oil Stock Sector (15 year high Sentiment levels of 81% Bullish Sentiment) that is going to all be headed toward that very small and narrow Profit-Taking Exit Door....should Simmon's Q4 supply-demand shock not unfold...
In the Airline Sector...regardless of whether we see $48 Oil, or $68 Oil , let alone a Peak Oil Shock; for a multitude of reasons related to Energy Costs as well as Labor and overall Cost Inefficiencies... we have many individual players heading for Bankruptcy and that mid-October Window - where the New Bankruptcy Laws take effect - offers yet another Short-side Trading opportunity.
And given the Fed Hikes and Greenspans propensity to take rate hikes higher, for longer periods of time than the Market would otherwise like to see... yet another potential "discrepancy between Price and Risk" seems to be developing in the Homebuilders - and yet another Short Trade opportunity that only gets better on a risk:reward perspective the longer the Housing Bubble Continues and the higher the Homebuilder Stocks rise...
I'm sitting in High Cash waiting patiently for either yet another "discrepancy between Price & Risk" to develop in the Goldstocks... or at least for Gold the Metal - to resume leadership vs. laggard status amongst the other commodities and to break thru it's very difficult overhead resistance level.
...in the meantime - just chipping away at the Oil's, Homebuilders, Airlines, SubPrimes et al... hoping to just "rake" a few chips off of the table here while Gold sorts itself out... and possibly to get more "lucky than good" and catch one of these sectors rolling over - to where I can add positions into accelerating momentum.
PS: ...anyone having any idea's/comments on Alternative Energy...specific sectors they are most interested in - such as LNG, Ethanol, BioDiesel, Solar, Fuel Cell Technology etc... either PM me, or feel free to post your thoughts on individual subsectors, or stocks.
I'm hoping to put together a professional piece on this...versus the stream of conscious "rants" I ususally leave here on SI (vbg)...
later,
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