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U.S. Treasury to China – Revalue Remnimbi or We Will

  
Analysis, Economy, Education
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There’s a lot of talk around the markets and in Washington about China’s currency policy. What many want to know is whether the US Treasury will name China as a currency manipulator. Perhaps a more important question is, should China be named as a currency manipulator? And if it were named as such, what actions could the US take? In recent days the Chinese and the US administration have taken shots in the press at each other. The US is hinting that China is manipulating its currency to boost its economy. The Chinese is firing back saying that the US “should not politicize the remnimbi exchange rate issue.”

First, some background on the problem. Basic economics says that if you keep the currency of your country at a weak (but not so weak as to cause a collapse in it) level you help boost exports. The currency becomes weaker making your goods cheaper for foreign consumption. In a freely floating exchange system, the market determines the equilibrium value. Speculators look at economic statistics like GDP growth, interest rates, inflation etc. to figure out what a currency should be worth and then place bets accordingly. If speculators think that an economy can grow strongly while keeping inflation at a benign rate, they will bid up the currency of that economy. As that happens, the country whose currency is getting stronger could see a decrease in exports. This is caused by the larger amount of currency the importer uses to make the same purchase as previously made. (more…)

Bull Market Aphorisms

  
Analysis, Education
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  • Buy in May and Stay Leveraged Long
  • Buy the Rumor, Buy the News
  • Buy the Dip, Buy the Rip
  • Be Greedy When Others Are Greedy
  • Bulls Make Money, Bullish Pigs Make More Money
  • Rule No. 1: Never Go Short. Rule No. 2: Never Forget Rule No. 1
  • Buy Low, Buy High
  • The Uptrend is Your BFF
  • Always Go Long a Dull Market
  • There’s Always a Bull Market Everywhere
  • 3 Steps and Soar
  • Always Catch a Falling Knife
  • Stairs Up, Elevator Up
  • Stocks Climb a Wall of Serenity
  • Buy When There’s Anything on the Street
  • Always Reach for Yield
  • Buy Rosh Hashanah, Buy Yom Kippur
  • Anyone Who Went Broke Took Profits
  • This Will End Well
  • Everyone Has a Plan Until They Get Rich in Bitcoin
  • The Easy Money Has Yet to Be Made
  • The Calm Before the Melt-Up

The Stimulus Packages Will Soon Lose Its Influence

  
Analysis, Education
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“I am not sure yet that the recession is already over because the numbers of unemployed persons in the United States is still increasing and there are several indicators that barely suggest a rebound on the economy , I think that also this year it will not get better because the stimulus packages will already lose its influence So I could imagine that we would not have a basic rebound and that the markets will rather correct.”

translated from a german TV video interview, April 2010

Top 10 Most Expensive and Cheapest Stock Markets

  
Analysis, Education
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… look at the table ranking the top and bottom 10 countries by PE10 valuation. The bottom features a couple of usual suspects (Russia and Greece), although in the case of Greece you might argue that earnings are now structurally lower so the PE10 is less useful for that particular market. At the top end, it’s likewise many usual suspects: America and a selection of high growth Asian countries (and Japan). While there are some similarities between those at the top and bottom it’s hard to make a broad sweeping statement which generalizes the two groups  – 
Expensive and Cheap Global Stock Markets

Has A New Euro Downtrend Started?

  
  Education
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Standard Chartered think so, targeting an eventual move to 1.15.

They feel the ECB is getting closer to monetisation and euro-zone economy is weakening.

Dow Jones reporting the banks’ strategist Steve Barrow saying ‘In short, has the euro started a journey that will lead to significant declines in coming months? We think the answer is ‘yes,’ he says’

Marc Faber`s Picks For 2010

  
  Education
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photo-marc-faberDr. Marc Faber shared with the Economic Times his investment themes for 2010. Japanese stocks and shorting US Treasuries are his top picks for 2010:

“I would avoid US government bonds and I think as a contrarian you really want the contrarian play. You should buy Japanese stocks and Japanese banks. This is the absolute contrarian play. Nobody is interested in Japan all the funds have withdrawn money from Japan they have given up on Japan I guarantee you the economy would not do well, forget about the economy the population is shrinking but you can have an economy that does not do well but the companies do well that is a big difference and I think the Japanese banks are very depressed. All the banks in Asia have actually recovered very strongly but not the Japanese banks so as a contrarian play I would look at that.” in Economic Times.

TRADER’S TWO MOST POWERFUL WORDS

  
  Education
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Let’s face it, no matter the outcome of a trade-lose, win, draw, and even the miss-traders are rarely satisfied with the result.  This is exactly why it is so important that we utilize the two most powerful words in a stock trader’s vocabulary..and no… it does not involve four letters!  The following is a list that you can use these two words with.  You will get my point.  Of course you can add to it if you like.

I missed the trade…SO WHAT!

This trade did not work…SO WHAT!

I excited a profitable trade too early…SO WHAT!

I excited with a loss too quickly…SO WHAT!

My stock gapped against me…SO WHAT!

The stock recovered without me…SO WHAT!

A stock I was bullish on was downgraded by an ANALyst…SO WHAT!

A stock I was bearish on was upgraded by an ANALyst…SO WHAT!

The market is not trending…SO WHAT!

The market is consolidating…SO WHAT!

The market is breaking support…SO WHAT!

The market is busting out of resistance…SO WHAT!

The economy stinks but the market is going higher…SO WHAT!

W. D. GANN’S 24 TIMELESS STOCK TRADING RULES

  
Analysis, Education
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1. Amount of capital to use: Divide your capital into 10 equal parts and never risk more than one-tenth of your capital on any one trade.
2. Use stop loss orders. Always protect a trade.
3. Never overtrade. This would be violating your capital rules.
4. Never let a profit run into a loss. After you once have a profit raise your stop loss order so that you will have no loss of capital.
5. Do not buck the trend. Never buy or sell if you are not sure of the trend according to your charts and rules.
6. When in doubt, get out and don’t get in when in doubt.
7. Trade only in active markets. Keep out of slow, dead ones.
8. Equal distribution of risk. Trade in two or three different commodities if possible. Avoid tying up all your capital in any one commodity.
9. Never limit your orders or fix a buying or selling price.
10. Don’t close your trades without a good reason. Follow up with a stop loss order to protect your profits.
11. Accumulate a surplus. After you have made a series of successful trades, put some money into a surplus account to be used only in emergency or in times of panic.
12. Never buy or sell just to get a scalping profit.
13. Never average a loss. This is one of the worst mistakes a trader can make.
14. Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.
15. Avoid taking small profits and big losses.
16. Never cancel a stop loss order after you have placed it at the time you make a trade.
17. Avoid getting in and out of the market too often.
18. Be just as willing to sell short as you are to buy. Let your object be to keep with the trend and make money.
19. Never buy just because the price of a commodity is low or sell short just because the price is high.
20. Be careful about pyramiding at the wrong time. Wait until the commodity is very active and has crossed resistance levels before buying more, and until it has broken out of the zone of distribution before selling more.
21. Select the commodities that show strong uptrend to pyramid on the buying side and the ones that show definite downtrend to sell short.
22. Never hedge. If you are long one commodity and it starts to go down, do not sell another commodity short to hedge it. Get out at the market: Take your loss and wait for another opportunity.
23. Never change your position in the market without a good reason. When you make a trade, let it be for some good reason, or according to some definite rule; then do not get out without a definite indication of a change in trend.
24. Avoid increasing your trading after a long period of success or a period of profitable trades.

100 TRADING TIPS

  
  Education
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experience2

1)Nobody is bigger than the market.

 2)The challenge is not to be the market, but to read the market. Riding the  wave is much more rewarding than being hit by it.
 
 3)Trade with the trends, rather than trying to pick tops and bottoms. 
    
 4)There are at least three types of markets: up trending, range bound, and  down. Have different trading strategies for each.
 
 5)In uptrends, buy the dips ;in downtrends, sell bounces. 
    
 6)In a Bull market, never sell a dull market, in Bear market, never buy a dull  market. 

    7)Up market and down market patterns are ALWAYS present, merely one is  more dominant. In an up market, for example, it is very easy to take sell  signal after sell signal, only to be stopped out time and again. Select trades  with the trend. 
  
 
 8)A buy signal that fails is a sell signal. A sell signal that fails is a buy signal. 
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10 Behavioral Economics/Psychology Books for Investors

  
Analysis, Education
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As a species, we are notoriously bad at understanding our own thinking and emotions. We are even worse at predicting our own behavior. Understanding your own mind and those of your fellow investors is crucial to successful investing.
These books will go a long way to helping you understand your hardwired weaknesses and blind spots.
 
1. How We Know What Isn’t So by Thomas Gilovich
Thomas Gilovich: How We Know What Isn't So
Published in 1991, this was the very first behavioral finance book I ever read — it is also one of the most influential investing books you will ever read. So many of our own foibles are detailed here that it is almost embarrassing. Everything from unsuspected biases to how we engage in critical reasoning comes under scrutiny. What it reveals isn’t pretty. Despite the genius that is human achievement, it turns out that we are all very poor at comprehending complex data and analyzing risk.
This book will help you understand how your brain processes randomness; overlooks evidence that is inapposite to prior beliefs; selectively perceives and reinterprets data; and engages in selective recall. It’s how we all create an artificial story line to help make sense of otherwise incomprehensible data.
Once you finish this book, you will never look at investing the same way.
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2.  Thinking, Fast and Slow (Daniel Kahneman)

Daniel Kahneman, a Psychologist, won the 2002 Nobel Prize in Economic Sciences with Amos Tversky for their seminal work in behavioral finance. The two challenged the idea of Homo Economicus and the rational model of judgment and decision making.
Thinking, Fast and Slow  looks at the two systems of Human Cognition: System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. The book exposes the extraordinary capabilities along with the faults and biases of our wetware. This book will transform the way you think about thinking.
The most recent and comprehensive book from a giant in the field.

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