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Marc Faber: Euro Oversold, If S&P Above 1150 Could See 20% Correction

  
Analysis, Education, US Market, Video
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Market: “I’m not so sure that we’ll make new highs but if we make a new high above 1,150, I don’t think it will be that far above the 1,150 level, maybe 1,200, and that thereafter we have a bigger kind of correction on the downside.  I think if we make a new high then I wouldn’t rule out a correction of at least around 20% and don’t forget many shares in America and globally have already corrected 20%, so for them to make a new high isn’t going to be all that easy in the first place. So what we could see is a new high in the S&P and the Dow Jones that is not confirmed by the new high list. In other words you will make a new high with fewer stocks making a new high than in January.”

Currencies:  Euro: “Now the Euro is very oversold and the news has been horrible. Everything you’ve read has been a disaster for the Eurozone and I think the Euro now can rebound to around 1.40 before it goes lower. I think there’s nothing good about the US Dollar, but I don’t think there is much good about the Euro either…”

US Dollar: “When investors realize that the fiscal deficits aren’t going to come down, that they’ll stay very high. When they also see that one state after another is essentially bust like California and Illinois. And when they see that monetization will become inevitable in the long run, I think at that point the Dollar will be weak. But don’t forget it may not necessarily have to be weak against the Euro.  Both currencies are sick and so both could go down and then ultimately you just have one or two sound currencies, notably precious metals and I think the Asian currencies will then probably also appreciate against the Euro and the US Dollar but notably precious metals will then be strong”.

Asset Class Right Now:  “Right now as of today I would probably go long the Euro and probably be long US Treasury Bonds but only as a trade for the next say 5-10 days and then we’ll have to see further.  In general, I would say better be in stocks than in bonds because we’ll get more inflation in due course”.

Dear Traders ,Just see ..What I had forecasted/Written about S&P 500 on 19th ,28th Jan’10 and on 3rd Feb’10

Technically Yours

Divine Intervention?

  
  Education
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intervention1How do you decide when a position is too large?

I have a rule that whenever I’m still thinking about my position when I lay my head on my pillow at night, I begin liquidation the next morning. I’m hesitant to say this because it could be misconstrued: You know that I’m a praying person. If I find myself praying about a position at any time, I liquidate it immediately. That’s a sure sign of disaster. God is not a market manipulator. I knew a trader once who thought he was. He went broke – the trader, I mean.

5-Costly Trading Mistakes

  
  Education
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1.  Undercapitalized.  If the trader does not have the adequate capital to trade with, then money, not learning how to trade, will be the primary focus.  Few, if any, ever succeed trading scared money.

2.  Overtrading.  The idea is to make money and keep it, not give it all back because of recklessness.  There is no such thing as being perfect when it comes to trading. Overtrading will easily prove just how imperfect you are. 

3.  Trading Too Many Markets.  Learn to be a specialist because in trading it is best to put all your eggs in one basket while knowing how best to watch and protect that basket very closely.

4.  Believing You Are Invincible.  Few activities teach humility as well as trading.  Seasoned traders respect the risk while novice traders treat success as their birthright.

5.  Lack of Dicipline.  You have to have a game plan when trading.  Failure to have a plan betrays your lack of discipline and feeds your desire to trade off the cuff.  Trading this way is a recipe for disaster.  Just ask someone who has tried it.

The Five Investing Essential Truths

  
  Education
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5-number

Markets are notoriously hard to read and people see only what they themselves want to see.

Bulls will find reasons why certain stocks will go higher, while at the same time, Bears will find many reasons for the same stocks to go lower.

The seldom-admitted truth is that most of the time, markets exist in some indeterminate state!

The main thing is that you cannot trust consensus and you cannot rely on the “Establishment.”

You can’t find refuge in the herd and you must resist the urge to join the crowd.

Your passion of the moment will most certainly create a disaster over the years!

On the other hand, if you do stick with the following five essential truths, you do stand a better than average chance to invest profitably:

1. Markets are unpredictable and ill-suited to forecasts.

2. Long-term fundamentals are key.

3. Investor emotion leads to volatility.

4. Valuation discipline should guide investment selection.

5. Perspective and patience are always well rewarded.

 

Errors by Traders

  
  Education
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1. Placing a limit order in and then leaving the screen and not canceling the limit when you wouldn’t want it to be filled later or some news might come out and get you elected when the real prices is a fortune worse for you

2. Not getting up or being in front of screen at the time when you’re supposed to trade.

3. Taking a phone call from an agitating personage, be it romantic or the service or whatever that gets you so discombobulated that you go on tilt.

4. Talking to people during the trading day when you need to watch the ticks to put your order in.

5. Not having in front of you what the market did on the corresponding day of the week or month or hour so that you’re trading for a repeat of some hopeful exuberant event which never happens twice when you want it to happen.

6. Any thoughts or actual romance during the trading day. It will make you too enervated or too ready to pull the trigger depending on what the outcome was.

7. Leaving for lunch during the day or having a heavy lunch.

8. Kibbitsing from people in the office who have noticed something that should be brought to your attention.

9. Any procedures that violate the rules of the British Navy where only a 6 inch plank separated you from disaster like in our field.

10. Trying to get even when you have a loss by increasing your size and risk.

11. Not having adequate capital to meet any margin calls that mite occur during the day, thereby allowing your broker to close out your position at a stop while he takes the opposite side. What others do you come up with?

Speculation by definition requires some amount of loss otherwise the game is fixed. However, I believe loss can be broken down into avoidable loss and unavoidable loss. Unavoidable loss is, well, unavoidable. But in my personal experience (and based on pretty much all speculative loss I have seen or read about) all avoidable speculative loss is traced back to some core elements/violations: not being disciplined (many interpretations), getting emotional and all of the associated errors and mistakes that brings, sizing positions too big so that regardless of odds you eventually have to reach ruin, not being consistent in your approach (the switches), not managing your risk adequately either via position sizing or stop losses, finally you have to be patient for the right pitch whatever that may be for you.

Trade what you Observe – Not what you Believe

  
  Education
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One of the hardest lessons to learn in your quest to become a true trader is to susobservationpend your beliefs and to trade that which you have learned through hours of observation.

How many times have you stated that company x is overvalued only to watch it go higher? Or undervalued only to watch it continue lower? How many times have you thought that the “market” can’t go any higher and yet it did day after day? Or lower? How many times have you been scratching your head because the “market” is rising on such low volume? When is the last time you were in disbelief because company y has closed higher for 10 days in a row (after shorting it on the third day)? And have you ever acted on a recommendation from Jim Cramer only to watch in disbelief because as soon as you entered it reversed course?

Bottom line – trading what “you” believe is a recipe for disaster.

Eventually most folks figure out that the market is so chaotic that they are lost and admit they don’t know how to trade. Many quit in disgust. A few of you press on and begin a journey of real study. (more…)

11 Common Errors

  
  Education
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1. Placing a limit order in and then leaving the screen and not canceling the limit when you wouldn’t want it to be filled later or some news might come out and get you elected when the real prices is a fortune worse for you
2. Not getting up or being in front of screen at the time when you’re supposed to trade.
3. Taking a phone call from an agitating personage, be it romantic or the service or whatever that gets you so discombobulated that you go on tilt.
4. Talking to people during the trading day when you need to watch the ticks to put your order in.
5. Not having in front of you what the market did on the corresponding day of the week or month or hour so that you’re trading for a repeat of some hopeful exuberant event which never happens twice when you want it to happen.
6. Any thoughts or actual romance during the trading day. It will make you too enervated or too ready to pull the trigger depending on what the outcome was. (more…)

John D. Rockefeller Quotes

  
Education, Life
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John D. Rockefeller is said to have been the richest person in history, even if he lived today. He left us with some wise quotes, check them out:

I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.

If your only goal is to become rich, you will never achieve it.

It is wrong to assume that men of immense wealth are always happy.

The most important thing for a young man is to establish a credit… a reputation, character.

I know of nothing more despicable and pathetic than a man who devotes all the hours of the waking day to the making of money for money’s sake.

Don’t be afraid to give up the good to go for the great.

Don’t blame the marketing department. The buck stops with the chief executive.

Good leadership consists of showing average people how to do the work of superior people.

I always tried to turn every disaster into an opportunity.

I believe in the dignity of labor, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living.

These are some very wise quotes from the richest man in history.

Divine Intervention?

  
  Education
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From “The New Market Wizards” by Jack Schwager, in an interview with Mark Ritchie:

How do you decide when a position is too large?
I have a rule that whenever I’m still thinking about my position when I lay my head on my pillow at night, I begin liquidation the next morning. I’m hesitant to say this because it could be misconstrued: You know that I’m a praying person. If I find myself praying about a position at any time, I liquidate it immediately. That’s a sure sign of disaster. God is not a market manipulator. I knew a trader once who thought he was. He went broke – the trader, I mean.

 
 
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