I can tell you from talking to institutions that, after 14 years of having their hearts broken by the stock market, they are still leery of stocks even with the recent rally,? said Howard Marks, founder of distressed debt giant, Oaktree Capital Management.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Further Update to: Trade Alert -(SFTBY) Stop Loss
Sell Softbank Shares (SFTBY) at $37.23 or best
Closing Trade
1-29-2014
Portfolio weighting: 20%
Number of Shares = 460 shares
I?m pulling the ripcord on Softbank (SFTBY)
The day I bought my second lot of shares in the internet giant on December 12 was the exact point where a year of upward momentum came to a juddering halt. The shares have been like an errant teenaged child who you keep giving the benefit of a doubt until he goes out and steals a car. That is show business.
The immediate cause for the selloff was a downgrade of Alibaba by an unnamed Chinese internet analyst, in which Softbank is a major shareholder. The imminent IPO of Alibaba was the whole reason for owning Softbank.
It doesn?t help that the global emerging market rout has sent traders into ?RISK OFF? mode, especially in China. The doubling of Turkish interest rates overnight focused a great giant spotlight on the problem.
When in doubt, sell, especially stocks with funny sounding foreign names. ?Brave new world? technology stocks, like Alibaba, have been put on hold. A full handle move up in the yen against the US dollar to a new high for the year was further fat on the fire.
But what really tipped me over to the sell side was to see the Nikkei Average up a robust 2.70% last night, but Softbank shares to drop by -1.30%. If it can?t catch a bid with this tailwind, it?s time to get out of dodge, or in this case, Kabutocho.
You knew this eventually had to happen. Since June, my Trade Alerts have enjoyed an almost unbelievable success rate of 90%. My followers have earned a +41.15% return on their capital, a multiple of what the market did. It was just a matter of time before I got slapped across the face with a fresh piece of sushi. But the entire world had to conspire against me to do it.
If you do have to lose money, this is the way to do it. By owning shares instead of options I was able to limit my loss to 2.86% off the back of a 14.3% fall in the shares. The trade was part of the general deleveraging that I have been implementing with my trading book since the end of 2013. It?s far better to have leveraged gains and unleveraged losses than the reverse.
No doubt, everything I predicted about Alibaba and Softbank will come true, and vast fortunes will be made by shareholders. But for the time being, we will have to restrict ourselves to reading about it in the newspapers from the sidelines.
Here is the P&L calculation
Loss: $43.44 - $37.23 = -$6.21
(-$6.21 X 460) = $2,857 ? 2.86% for the notional $100,000 model portfolio.
Ouch!!
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Global Market Comments
January 29, 2014
Fiat Lux
Featured Trade:
(THURSDAY FEBRUARY 20 MELBOURNE, AUSTRALIA STRATEGY LUNCH)
(AAPLE STRIKES AGAIN), (AAPL).
(AN EVENING WITH TRAVEL GURU ARTHUR FROMMER)
Apple Inc. (AAPL)
Let me tell you my thinking here.
More than 51 million iPhones sold is good enough for me, 3.2 million more than they moved a year ago, and they are more expensive devices. IPads leapt from 22.9 million to 26 million, including the five high end ones I bought.
The earnings announcement wasn?t that bad, with record quarterly YOY revenues of $57.6 billion reported. Earnings per share jumped a middling 5%, from $13.81 to $14.50, partially in response to the company?s own massive buy back program. ?Gross margins came in at 37.9%, which would be gigantic if Apple were in any other industry but technology.
The dividend was nailed at $3.05 per share, setting the yield today at 2.43% annualized, a mere 30 basis points below ten-year Treasury bonds.
However, I think that traders have become so conditioned to selling on the news that the stock wasn?t going to take a dump no matter what the company said. This is why I went into the release flat on Apple this time. It?s too early in the year to lick wounds. At today?s low of $502, we were down $73 from the recent high, or 12.7%.
If you look back at the collapse after the September, 2012 $706 peak, it took two months for the shares to fall $100. For us to lose money on the Apple February, 2014 $460-$490 bull call spread, it would have to fall twice as fast as back then, and it has to do it in only 17 trading days. Sounds like a good bet to me.
We are also getting huge valuation support down here, with an ex cash multiple of 9, versus a market multiple of 16. Investors are going to hold a gun to the head of their portfolio managers to get them to average up in this neighborhood.
You also have corporate raider, green mailer, and former Manhattan neighbor of mine (activist, to be polite) Carl Icahn twittering away about how cheap the stock is, and buying another $500 million worth of shares today to cash in on the plunge. You can see him coming in every time the stock takes a run at $507. Carl was not a factor in the last melt down.
My whole theory on why Apple has disappointed continuously for the past 18 months is that the company has just gotten too big. A different sort of physics seems to apply when companies exceed $500 billion in market capitalization. The more money the company makes, the cheaper it gets. This is causing even the most seasoned value players to adopt a surly attitude, throw their handsets at their monitors, and tear out there hair, if they have any left.
Steve Jobs must be laughing from the grave.
For your edification, I have included a proprietary chart from my colleague, Mad Day Trader Jim Parker, showing huge technical support at the $470-$480 level. It is days like this that Jim is worth hit weight in gold. Too bad he isn?t heavier.
