UUP
Here we have the Dollar Index and the UUP of course is the ETF for it. Aside from any brain surgeon's arcane economic theory about the impending death of the dollar, does this look like something that is crashing?
Honestly folks I have been harping on this for so long and at least readers of this blog have been told this was going to happen. Those who have been fortunate enough to find my blog which is not advertised in any way shape or form, have not been caught by surprise here. I did state in here just about a week ago that I was looking for a large upward move here, and viola here it is. This is just another example of why you need to learn how to trade. You cannot invest your money based on these macroeconomic theories. Why do you think most economists don't trade or invest well? After all aren't they all supposed to be more intelligent than the rest of us? They have all their degrees from fancy institutions.
Here is why they are wrong all the time, they are paper champions. What that means is they are textbook smart but not real world smart. There is a huge difference between these two things. Tom Brady looked bad at the combine when he was drafted in the 6th round by the Patriots and Ryan Leaf looked good. I think we all know how that turned out. Macroeconomic theories are based on so many assumptions in a completely random world. I would go as far as saying these theories themselves are arrogant in some ways. It is arrogant to assume that things will happen exactly as you think they should in the future. The nimbleness you can maintain as a trader just by watching what is actually happening is invaluable. You do not get stuck in a view.
Chairman Barry's plan being the communist that he seems to be rolling along just as advertised. So many people think this conversion to socialism and all this spending have to lead to huge inflation. If you study other countries and when they have converted to socialism what you will find is kind of flat markets. Everything is controlled so to me it makes sense. All these geniuses will come out and tell us why things should crash because of that but from my research I have not found that to be the case. Again, real world occurences vs textbook theory. If they can manage to steal enough from people like me without having any further fallout, they may be able to keep things relatively flat for quite awhile.
The good news is that the deoupling of the dollar and stock market inverse relationship is happening, and that is good for trading.
In any event, if you push back from the table a bit and just keep things a little simpler, we have a nice uptrend going here now so in general buy the dips in the dollar and short rallies in commodities.
Pretty Simple
4 comments:
Hi, Chris. I used to exchange posts with you on piggington.com a few years ago (I was 'jg'), before I was kicked off for continuing political incitement/commentary.
Back in ’06 and ’07, I was of the opinion that the stock market would crash, and you said there was nothing of the sort on the near-term horizon. You were right.
I went all in short the S&P 500 back in Mar. ’07, and scaled up my bet as the market finally started to moved down in ‘08. I tripled my money, covered my short bet in Nov. ’08, and retired one year ago.
Last year, I placed two bets: that silver and gold mining stocks would go up (they did) and that the stock market would continue its move down (it did not). Through pig-headed and completely non-existent money management, my short-term trading portfolio – 100% short the S&P 500 via futures – fell 80%. Lucky for me, my larger, long-term precious metals bet nearly fully compensated for my boneheaded losses on futures.
I saw you mentioned on another blog (Denninger?) two weeks ago, and have been checking in daily. Your approach seems very sound, and you appear to be aware of the shenanigans (i.e., PPT) in the market.
So, I will be listening and trying to learn from you – and Gary at ‘Common Sense Investing’ -- as I try to regrow my trading account via small, measured steps.
Keep up the good work, Chris!
John I do remember you so welcome. I too make political remarks here and there in here although it is not that forum. I just figure if someone does not like them they can go somewhere else. I am not getting paid for this so if people come and go it is of no consequence.
It sounds to me like your money management needs some work. I never risk more than 2% in any one trade, ever. This way I minimize the drawdowns which I usually keep under 7%. They are part of trading but you do not want to take big hits like that.
I don't post in any other blogs so that must have been someone else. I have gotten to the point where I am just tired of all the BS that is out there
2%/7%; I will take a hard look at those limits, Chris.
Thanks!
I think you will be suprised how much you can still make risking only 2%. Now it will likely stop you from tripling an account in a year, but doubling it easily accomplished with good trading techniques with those ratios. There is no way to be aggressive enough to triple your money without having huge drawdowns. Big drawdowns just weigh so heavily on me that I just can't take them anymore and I do not think it is the best way to trade. I would much rather just steadily make profits and over time it adds up to alot.
Of course for people with small account balances, they have to risk more than 2% starting off that cannot be avoided. Once you get large enough accounts, 2% risk still gives you enough contracts to make a good amount.
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