NICOLAS DARVAS AND HIS $2,000,000

icolas Darvas viewed Wall Street as nothing more than a gambling casino; therefore, he set out to learn how to gamble.

I would like us to take a look at Mr. Darvas’ understanding of the stock market, as outlined in his best selling book How I Made $2,000,000 In The Stock Market, originally penned in 1960, as we recognize that what was true over 50 years ago still holds true today.  In other words, trading the market today is THE SAME AS IT EVER WAS.

Mr. Darvas experienced an “important turning point” in his stock market career when he learned that “there is no such thing as cannot in the market.  Any stock can do anything.”  With this in mind Darvas developed his “box theory” based on the following realizations:

1.  There is no sure thing in the market.  I was bound to be wrong half the time. Darvas adopted what he called the “quick-loss weapon”.  He already knew he would be wrong quite often (half the time); therefore, he decided to accept his mistakes realistically and get out of a losing trade with a small loss.  “This way, I figured, I would never sleep with a loss.  If any of my stocks went below the price I thought they should, I would not own them when I went to bed that night.  I knew that many times I would be stopped out for the sake of a point just to see my stock climb up immediately after.  But I realized that this was not so important as stopping the big losses.  Besides, I could always buy back the stock by paying a higher price.”

2.  My pride and my ego would have to be subdued.  Darvas surmised that with a win ratio of 50% his profits had to be bigger than his losses.  Breaking even was not a sustainable option.  For that to happen he would have to take many losses while letting the winners run.  Egotistical pride would have to give way to humble reality.  “As if stocks were made to conform to my new attitude, I handled this quite successfully for quite a while.  I bought with bold confidence when I thought I was right and coldly, without a hurt ego, I took my limited losses when I thought I was proven wrong.”

3.  I must become an impartial diagnostician. Instead of trying to force his will upon market direction, Darvas allowed the market to direct him by becoming intimate with a few stocks at a time and by not listening to others.  “To try to fit the market into a rigid pattern was a mistake.  As I only handled five to eight stocks at a time, I automatically separated them from the confusing, jungle-like movement of the hundreds of stocks surrounding them.  I was influenced by nothing but the price of my stocks.  I could not hear what people said, but I could see what they did.  It was like a poker game in which I could not hear the betting, but I could see all the cards.  Of course, the poker players would try to mislead me with words, and they would not show me their cards.  But if I did not listen to their words, and constantly watched their cards, I could guess what they were doing.”

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EuropeFX: Everything you need to know about CFDs trading

What you need to know about trading CFDs

EFX
Contracts-for-difference (CFDs) are popular trading instruments that provide investors with unique potential opportunities to profit in specific markets. This includes taking advantage of certain assets price movement, without actually owning the asset itself.

Thousands of CFDs exist, which are now a common fixture amongst brokerages’ offerings. CFDs are quite simplistic, as profit is calculated as the difference between the entry point of the trade and its exit point.

Popular types of CFDs

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Why the US dollar continues to rebound and what’s next

The pressure is on

Dollar
The US dollar has extended its gains as market participants get caught wrong-footed in a rebound after multi-month lows.
The dollar looked to be breaking down yesterday and today but stabled itself and is making a move to the upside. There are two near term factors to watch:
1) The 20-year auction
The US is selling $25B in 20-year bonds at the top of the hour. Last week there was a strong 10-year sale and a very weak 30-year sale so the bond market is off balance. A higher-than-anticipted yield could boost the dollar further.
2) The FOMC minutes
The Fed is a below-the-radar risk at the moment. The strong belief in markets is that they’re creeping towards doing more for the economy but an improvement in US virus cases, decent economic data, higher inflation and the stock market at record highs might make them slow their roll. If so, the dollar could climb further
Overall, this looks like a position-squaring squeeze in a quiet mid-August market to me but you can’t take anything for granted. If it spills over into a broad risk-off move, then the dollar could have a lot of room to run.
The EUR/USD chart to me looks like a retest of the range break before a further breakout but a close over 1.19 today would add confidence.
EURUSD chart

Warren Buffett makes a big bet on gold

Buffett bought a stake in miner Barrick Gold

Barrick Gold Warren Buffett
Warren Buffett has famously disparaged gold but evidently he’s had a change of heart.
According to a Q2 13F filed today, The Oracle of Omaha added 20.9 million shares of Barrick Gold, which is the world’s second largest gold miner. He paid $563.5 million for the stake, which equates to $26.95 per share and his Berkshire Hathaway owns 1.2% of the company. It was the only new company he bought in the second quarter.
The shares closed at $26.99 on Friday but jumped about $1.00 in after hours trading.
Warren Buffett
This could indicate a massive change of heart from the world’s most famous investor, or one of his deputies.
His most-famous musing on gold was from back in 1998:
“(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
As recently as 2018 he repeated his misgivings about gold.
“The magical metal was no match for the American mettle,” he wrote in his annual letter while comparing the returns of both since he first invested in stocks in 1944.
Now this doesn’t necessarily mean he has a new view on gold. Barrick’s cash flows with gold steady at these levels are compelling (and other miners are even more compelling).  Still, expect much more interest in the space now that Warren Buffett has given it his blessing.
Other highlights from his Q2 13F:
  • Exited Occidental Petroleum, but added to Suncor Energy
  • Cut JPMorgan stake by 62%
  • Cut Mastercard stake by 7%
  • Aside from SU, only added to STOR and KR
  • Reduced WFC, SIRI, PNC, MTB, BK
  • Exited DAL, LUV, UAL, AAL, QSR, GS, OXY
In terms of the ones he reduced. In general Buffett doesn’t sell shares unless he plans to sell out. However at times he has to sell to stay below ownership limits.
Overall, his investment mix doesn’t exactly show confidence in the economic or stock market recovery.

Trump says he agreed with Moderna for 100m doses of potential coronavirus vaccine

A dual Trump pump … for the stock market and his electoral chances

Moderna (MRNA) are working hard to develop a cov1 COVID-19 vaccine. Trump jumping onto the bandwagon. The government deal with Moderna is worth around USD1.5bn to the firm.

Major indices close higher and at session highs. NASDAQ leads the way with Apple, Facebook, Amazon outperforming

Dow, S&P, NASDAQ close higher for the 4th consecutive month

the month of July is over and all the major indices closed higher for the 4th consecutive month. The S&P index had its second-best July performance since 2010. Apple, Amazon, Facebook all of the way after their earnings release last night. Apple rose up 10.47%. Facebook rose 8.18% and Amazon rose by 3.7%.  Alphabet was left out despite posting better earnings. Their stock fell by -3.28%.

On the downside the Dow post its 2nd straight weekly decline.
The final numbers are showing:
  • S&P index up 24.9 points or 0.77% at 3271.12
  • NASDAQ index up 157.46 points or 1.49% at 10745.23
  • Dow industrial average up 114.67 points or 0.44% at 26428.33
For the week, the NASDAQ led the way. The Dow industrial average could not make it to the unchanged level falling by -0.16%:
  • S&P index rose by 1.73%
  • NASDAQ rose by 3.69%, and as mentioned
  • Dow fell by -0.16%
For the month, the market initially tried to rotate out of the NASDAQ stocks and into the industrial/broader market, but the run up in tech stocks today and this week push the NASDAQ back into the lead:
  • S&P index rose by 5.51%.  As mentioned it was the 2nd largest July increase since 2010
  • NASDAQ index rose by 6.82%
  • Dow rose by 2.3%
For the year to date, the Nasdaq index continues to outperform, but the S&P index has moved back into the black (it dipped into the red earlier this week). The Dow remains lower on the year.
  • S&P index up 1.25%
  • Nasdaq up 19.76%
  • Dow down -7.39%

“What Buffett wouldn’t do”

Warren Buffett (@WarrenBuffett) | TwitterInvesting:

  • Don’t be too fixated on daily moves in the stock market (from Berkshire letter published in 2014)
  • Don’t get excited about your investment gains when the market is climbing (1996)
  • Don’t be distracted by macroeconomic forecasts (2004)
  • Don’t limit yourself to just one industry (2008)
  • Don’t get taken by formulas (2009)
  • Don’t be short on cash when you need it most (2010)
  • Don’t wager against the U.S. and its economic potential (2015)

Management:

  • Don’t beat yourself up over wrong decisions; take responsibility for them (2001)
  • Don’t have mandatory retirement ages (1992)
  • “Don’t ask the barber whether you need a haircut” because the answer will be what’s best for the man with the scissors (1983)
  • Don’t dawdle (2006)
  • Don’t interfere with great managers (1994)
  • Don’t succumb to the attitudes that undermine businesses (2015)
  • Don’t be greedy about compensation, if you’re my successor (2015)

Last, Buffett advises “Don’t worry about my health” — because Berkshire’s future success is is tied to reinsurance lieutenant Ajit Jain. “Worry about his.” (2001)

Moderna, S&P: Vaccine hopes

A look at vaccine developments and its impact on the stock market

Moderna

FBSSource: Bloomberg

Yes, we’ve heard it already – both statements. Of course, from a humane point of view, it’s good to hear there is progress with the vaccine development. But it increasingly looks like by the time it is ready, most people indeed will already have immunity to the virus. In the meantime, Moderna is enjoying spikes of investor attention.

FBS 2
The latest update is that it got one step closer to the vaccine pushed its stock from the rage of $60 to $75. Needless to say, if the reports informed us tomorrow that another testing stage is cleared, we would see this stock already somewhere at its recently made all-time high above $85. Trajectory zone 2 would be the channel of movement in this case.

In fact, Moderna’s stock may well get to those highs anyways: fundamentally, the interest for anti-virus business will keep its momentum months or even years ahead, even if tomorrow is no virus at all. So Moderna will see its rise, just it will be a slow case scenario – the one that corresponds to trajectory zone 1.

S&P 500

For the stock market, the vaccine hope seems to be the only “joy” that keeps the optimism on the stage. With the S&P, currently, we are almost exactly at the previous high of 3 320, and in an obvious consolidation. Meaning, the market is not really sure what to look at more: still spreading infections in the US of the vaccine hopes. Today, it seems the latter is taking the upper hand. What the next step is going to be?

An optimistic scenario suggests we will see Trajectory 1 giving the green light to bulls and repeating the pattern of the previous upward wave the S&P followed in May. How probable is that? Quite probable, given that the reports about vaccine developments keep coming more often.

A pessimistic scenario as per Trajectory 3 suggests that we are actually at the tip of another “inside wave” which will bounce down from the resistance of 3 230. How probable is that one? Also very probable: clearing testing processes is good, but we don’t have the vaccine yet. It may take months before we finally see it.

A moderate scenario presumes that the market will overlook the absence of the vaccine and take on a more positive mood. That will be Trajectory 2.

The thing is that, indeed, it may be not until the very end of 2020 when the vaccine eventually gets done. Everyone knows that. If the S&P was only waiting for the vaccine to finally get developed, then it would be going sideways between 2 980 and 3 230 for months from now. Is that likely? No. Regardless of the vaccine process, the more we move into the future, the more the market becomes insensitive to the reality of infections and, therefore, independent from the vaccine hopes. Why? Because with the vaccine or without it, life goes on. And even the virus is now on the rise in the US – again – it will slow down pretty soon. So the question is not “if” but “when”. And the market is bored waiting.

FBS 3

This post is written and submitted by FBS Markets for informational purposes only. In no way shall it be interpreted or construed to create any warranties of any kind, including an offer to buy or sell any currencies or other instruments. 

The views and ideas shared in this article are deemed reliable and based on the most up-to-date and trustworthy sources. However, the company does not take any responsibility for accuracy and completeness of the information, and the views expressed in the article may be subject to change without prior notice.

Strong close for US stocks

Major indices close at session highs

Today saw the stock market rotate into the Dow and broader S&P indices. The tech heavy NASDAQ was the laggard. However a late day surge “raised all boats”. The Dow had its best day since June 29. The dow rose for the 3rd day in a row.

The final numbers are showing:
  • S&P index rose 42.39 points or 1.34% to 3197.61
  • NASDAQ index rose 97.73 points or 0.94% to 10488.53
  • Dow industrial average rose 557.72 points or 2.14% at 26643.53
Leading the Dow 30 were:
  • Caterpillar, +4.96%
  • Travelers, +3.8%
  • Chevron, +3.49%
  • Exxon Mobil, +3.31%
  • Home Depot, +3.25%
  • McDonald’s, +3.19%
  • UnitedHealth, +2.96%
  • Goldman Sachs, +2.58%
  • Boeing, +2.48%
Other big gainers today included:
  • First Solar, +9.96%
  • Alcoa, +9.47%
  • Rite Aid, +7.57%
  • Schlumberger, +5.81%
  • Ford Motor, +5.12%
  • NVIDIA, +3.31%
Laggards included:
  • Wells Fargo, -4.55%
  • Intuit, -4.13%
  • Citigroup, -3.93%
  • Slack, -3.14%
  • LYFT, -3.02%
  • Delta Air Lines, -2.61%
  • Uber, -2.51%

NASDAQ closes at a new all time record level

Now erases 203 point decline and close higher for the 1st time in 4 days

The major US stock indices are closing the day near highs for the day.

  • The NASDAQ closed at a record high surpassing the previous high of at 10020.35
  • The NASDAQ has closed at a record low for the 20th time in 2020
  • Apple closes at record high
  • Dow industrial average erased a 203 point decline
  • NASDAQ post longest win streak of 2020 (7 trading days)
  • NASDAQ is up around 12% on the year
  • Dow close higher for the 1st time 4 days
The final numbers are showing:
  • S&P index rose 20.45 points or 0.66% at 3118.19
  • NASDAQ index rose 110.35 points or 1.11% at 10056.42
  • Dow industrial average close up 150.81 points or 0.59% at 26024.23