Silicon Investor - DAYTRADING Fundamentals

[Dave O.] There's a place for investing for the longer term. This is (was) a thread about ...

Dave O. — 6/2/2017 11:35:12 AM

There's a place for investing for the longer term. This is (was) a thread about daytrading. There is a big difference. Although this thread seems dormant it was a lively thread at one time with lots of good ideas exchanged.

[bobevans] According to Quora, only 2% of day traders make money. Why not invest for long ...

bobevans — 7/30/2016 1:16:37 PM

According to Quora, only 2% of day traders make money. Why not invest for long term to become wealthy? It took me 30 years but I did it.Only high school education. It worked for my grandfather with only eight grade education. I believe most day traders have gambling mentality. Not a good attribute. Personal opinion.

[bobevans] Bob Brinker newsletter. Good for basics, DON'T rec. Following his sell sig...

bobevans — 5/27/2016 9:54:04 PM

Bob Brinker newsletter. Good for basics, DON'T rec. Following his sell signals always. Can find much of his rec. Free online, ask for free back issue. His main message,: dollar cost Ave into broad based mutual funds, etfs. Over your lifetime Fidelity, Vanguard, ex. Nearing retirement 5-10 years away, move closer to balanced portfolio.

[bobevans] For those who want to invest for the long term without much time to invest, doll...

bobevans — 5/21/2016 4:31:41 PM

For those who want to invest for the long term without much time to invest, dollar cost averaging into broad based index funds, etfs, and reinvesting dividends, good way to go. Near or in retirement, maybe % to good long term performing balanced funds, Vbiax, Vtmfx, for rx.

[Dave O.] < Most day traders lose all of their money eventually. It's gambling. Long te...

Dave O. — 5/21/2016 3:32:48 PM

< Most day traders lose all of their money eventually. It's gambling. Long term investing is a smart way to become wealthy. Dollar cost averaging into well diversified , low cost etfs, mutual funds, is a no brainer.>

Sure plenty of day traders do blow up. But 80-90% of startup businesses fail. Is that gambling? Not necessarily. Nor can one say trading is gambling. If someone works in the restaurant business for years, saves money and opens their own restaurant it may succeed or fail. And someone who studies the markets, develops multiple ways to trade them is not gambling. I left my corporate job 20 years ago to trade. And I still am.

People who dollar cost averaged in the late 90's were in for a shock after the bubble burst in early 2000. And it took many years to get back to 'even' and some may still be under water. NASDAQ peaked at 5100 in March 2000. Today it's at 4770. Traders who went home flat or nearly flat day in and day out didn't suffer the drastic meltdown of the early 2000's or the rough ride in 2008-09.

[bobevans] Most day traders lose all of their money eventually. It's gambling. Long term ...

bobevans — 5/13/2016 7:50:22 PM

Most day traders lose all of their money eventually. It's gambling. Long term investing is a smart way to become wealthy. Dollar cost averaging into well diversified , low cost etfs, mutual funds, is a no brainer. Maybe not exciting but easy way to become independent.

[TFF] Central Banks Load Up on Equities ...

TFF — 4/25/2013 1:54:13 PM

Central Banks Load Up on Equities
By Sarah Jones - Apr 25, 2013 8:34 AM ET

Central Banks Turning to Equities, but Not the Fed

Central banks, guardians of the world’s $11 trillion in foreign-exchange reserves, are buying stocks in record amounts as falling bond yields push even risk- averse investors toward equities.

April 25 (Bloomberg) -- Massimiliano Castelli, head of strategy at UBS Asset Management's global sovereign markets unit in London, and Bloomberg's Sarah Jones talk about central banks' investment in stocks. They speak with Erik Schatzker and Sara Eisen on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Central banks typically hold assets such as government debt that can be sold easily if funds are needed to counter a move in their currency.

The Bank of Japan announced plans to put more of its $1.2 trillion of reserves into exchange-traded funds this month as it doubled its stimulus program to help reflate the economy.

In a survey of 60 central bankers this month by Central Banking Publications and Royal Bank of Scotland Group Plc, 23 percent said they own shares or plan to buy them. The Bank of Japan, holder of the second-biggest reserves, said April 4 it will more than double investments in equity exchange-traded funds to 3.5 trillion yen ($35.2 billion) by 2014. The Bank of Israel bought stocks for the first time last year while the Swiss National Bankand the Czech National Bank have boosted their holdings to at least 10 percent of reserves.

“In the last year or so, I have spoken with 103 central banks on diversification,” Gary Smith, London-based global head of official institutions at BNP Paribas Investment Partners, which oversees about $649 billion, said in a phone interview. “If reserves are growing, so are diversification pressures. Equities are not for every bank tomorrow, but more are continuing down this path.”

Managers of banks’ assets are looking for alternatives to holding government bonds after efforts to stimulate growth from the Federal Reserve, the Bank of Japan and the Bank of England helped send yields near to record lows. Central banks’ foreign- exchange holdings have increased by about $8.5 trillion globally in the past decade, exceeding levels needed for day-to-day currency administration.

Currency MovesCentral banks typically hold assets such as government debt that can be sold easily if funds are needed to counter a move in their currency. The reliance on fixed-income securities at a time when bond yields are below inflation in many countries risks allowing to the value of reserves to decline.

While consumer prices are rising at a 1.5 percent annual rate in the U.S. and 1.7 percent in the euro area, the average yield to maturity of securities in Bank of America Merrill Lynch’s Global Broad Market Sovereign Plus Index fell to an all- time low of 1.34 percent on April 23, according to data compiled by Bloomberg.

The SNB allocated 82 percent of its 438 billion Swiss francs ($463 billion) in reserves to government bonds in the fourth quarter, according to data on its website. Of those securities, 78 percent had the top, AAA credit grade and 17 percent were rated AA.

More RiskThe survey of 60 central bankers, overseeing a combined $6.7 trillion, found that low bond returns had prompted almost half to take on more risk. Fourteen said they had already invested in equities or would do so within five years. Those conducting the annual poll had never before asked that question.

“I definitely see other central banks doing or considering equities,” said Jan Schmidt, the executive director of risk management at the Czech National Bank in Prague, which has built up stocks to 10 percent of its $44.4 billion in reserves since 2008. Even so, the risks of owning shares are the same as ever, he said in e-mailed comments.

Currency reserves among the world’s central banks climbed by $734 billion in 2012 to a record $10.9 trillion, according to datafrom the Washington-based International Monetary Fund. That’s about 20 percent of the $55 trillion market value of global stocks, data compiled by Bloomberg show.

Central banks’ purchases of shares show how the “hunger for yield” is changing the behavior of even the most conservative investors, according to Matthew Beesley, head of equities at Henderson Global Investors Holding Ltd. in London, which oversees about $100 billion.

‘Logical Move’“Equities are the last asset class standing,” Beesley said in a phone interview on April 18. “When you have dividend yields in excess of bond yields, it’s a very logical move.”

Companies in the Standard & Poor’s 500 Index pay 2.2 percent of their combined share price as dividends, compared with the 1.69 percent yield on 10-year Treasuries, according to data compiled by Bloomberg.

The S&P 500 (SPX) closed at an all-time high of 1,593.37 on April 11 and is up 11 percent this year though April 23. Investors have earned 0.7 percent owning U.S. government debt repayable in one year or more, according to Bank of America Corp. bond indexes.

Stocks are also cheap compared with government bonds using a valuation method favored by former Fed Chairman Alan Greenspan that compares earnings with interest payments. Companies in the S&P 500 (SPX) generate profit equal to 6.4 percent of their share prices, about 4.7 percentage points more than yields on 10-year Treasuries, Bloomberg data show.

Beyond PaleEven so, 70 percent of the central bankers in the survey indicated that equities are “beyond the pale.”

The growth in reserves has slowed as a strengthening dollar puts less pressure on policy makers to intervene by selling their currencies, data compiled by Bloomberg show. Central-bank assets grew by 1 percent last quarter, the smallest gain since the same period of 2012, as Taiwan’s reserves fell by more than $1 billion to $402 billion and Singapore’s dropped by a similar amount to $258 billion.

Some central banks, including the Fed in Washington and the Bank of England in London, have no mandate to buy stocks directly. The Fed has $42.6 billion in reserves and the Bank of England controls $65.1 billion, data compiled by Bloomberg show.

Other banks are deterred by price swings in equities that can be larger than for other securities. The MSCI All-Country World Index (MXWD) fell 3.3 percent in five days after rising to a 4 1/2-year high on April 11 and tumbled 11 percent in the five weeks through June 12 last year. The gauge of global stocks rose 0.6 percent at 8:33 a.m. in New York today.

SNB, IsraelAmong central banks that are buying shares, the SNB has allocated about 12 percent of assets to passive funds tracking equity indexes. The Bank of Israel has spent about 3 percent of its $77 billion reserves on U.S. stocks.

In Asia, the BOJ announced plans to put more of its $1.2 trillion of reserves into exchange-traded funds this month as it doubled its stimulus program to help reflate the economy. The Bank of Korea began buying Chinese shares last year, increasing its equity investments to about $18.6 billion, or 5.7 percent of the total, up from 5.4 percent in 2011. China’s foreign-exchange regulator said in January it has sought “innovative use” of its $3.4 trillion in assets, the world’s biggest reserves, without specifying a strategy for investing in shares.

‘Pursue Yield’“Central banks are looking at assets that I wouldn’t have necessarily expected in times gone by,” said Paul Price, London-based head of international distribution and client relations at Morgan Stanley Investment Management, which oversees about $338 billion. Low yields and “movement in the ratings around certain sovereigns is forcing central banks to rethink how they pursue yield and how equities are viewed in that context,” he said.

The yield on the benchmark 10-year U.S. Treasury reached a record low of 1.38 percent in July. The same month, German government rates of similar maturity declined to 1.13 percent. France’s 10-year yield retreated to 1.7 percent on April 23, the lowest level since Bloomberg began tracking the data in 1990.

“Government bonds remain a fundamental pillar of central- bank asset allocation, but there is scope to go into other asset classes to help provide a higher return,” said Massimiliano Castelli, head of strategy at UBS Asset Management’s global sovereign markets unit in London. “We are in a lot of discussions with several or so institutions who are considering such a step.”

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

[Eric P] Hi Eric, What is it about HFT activity that erodes the trading environment for y...

Eric P — 12/31/2012 11:18:42 AM

Hi Eric,
What is it about HFT activity that erodes the trading environment for you?
Craig.

I think HFT's have moved much of the 'real' liquidity out of the open and into the dark. On the majority of stocks (those with spread of 5-25 cents), HFT's tend to penny jump the bid and offer to ensure they are first in line for a fill. Those that post 'real' orders are at a disadvantage, and tend to lead to fewer real orders in the market, with the associated wider spreads.

In general, I think this had led to wider spreads to the extent that real orders have left the market (and the associated increasing trading costs for those that remove liquidity due to the increased spreads). For those that add liquidity, the perpetual HFT penny jumping and zero latentcy tricks to ensure first-in-line at the queue had led to fewer fills on non-marketable orders.

[CraigNZ]

CraigNZ — 12/29/2012 2:52:58 PM

[CraigNZ] Hi Eric, What is it about HFT activity that erodes the trading environment for y...

CraigNZ — 12/29/2012 11:54:24 AM

Hi Eric,
What is it about HFT activity that erodes the trading environment for you?
Craig.

[Eric P] Would be nice to see some real volatility again. The markets were awesome for ...

Eric P — 12/27/2012 8:24:15 PM

Would be nice to see some real volatility again.

The markets were awesome for trading from mid 2007 until mid 2009. Since then, it's been 2 1/2 years of pretty boring trading, with the exception of some Flash Crash excitement (in May 2010) and debt ceiling excitement in Aug 2011.

I don't think we'll see any real volatility originating out of the U.S. this year. However, the European situation could be poised to generate some sharp volatility as the year progresses. Unfortunately, European created volatility tends to cause our markets to gap sharply at the open, and then snooze for much of the day (not exactly the best sort of volatility for effective trading).

In any case, best of luck to everyone in 2012!

=> Well, I must admit it was a disappointing trading year. While I didn't expect a good, volatile trading environment, I had hoped to be happily surprised. While I managed to finish the year with only one down month, 2012 is closing as the worst trading year for me in a decade. I think the combination of lower volatility and the increasing domination by the HFT firms has made this the most difficult trading environment I can recall. On the positive side, my golf game continues to improve with the dull market and my reduced trading income will still not generate sympathy from those that 'work for a living'.

Looking ahead to 2013, we certainly have an increased potential for volatility with the looming fiscal cliff resolution and next iteration of the debt ceiling limit being reached. Note that the last real volatility for the U.S. stock markets were from August 2011, when the last debt ceiling limit was reached. While I'm hopeful for increased volatility and trading opportunities, we still face a market will little interest from the public and increasing growth in ultra competitive high frequency firms. I will predict that 2013 will be a better year for trading than 2012, but nothing even close to resembling the awesome trading markets of 2007-2009.

I hope readers of this (virtually inactive) thread had a great year in 2012, and I wish you the best of luck in the year ahead.

-EricP

[Fiscally Conservative] So very true,so very true. I think the Fed and Co's back is against the wall. D...

Fiscally Conservative — 5/17/2012 8:27:19 PM

So very true,so very true. I think the Fed and Co's back is against the wall. Depression is not an option and yet high inflation, as of yet, is not an option either. Debt is the problem and they know it.

[TFF] So tired of the endless central bank pumps Will it EVER end? I have never seen ...

TFF — 1/22/2012 7:35:09 PM

So tired of the endless central bank pumps Will it EVER end? I have never seen a year like 2011 for outright government manipulated news/rumors to prop up the market at any sign of weakness. It hardly feels like a market anymore. It's like playing against some guy who bluffs ever hand but has most of the chips at the table, so who is gonna test him? Everyone just keeps folding.

Would be nice get rid of the infinitesimal spreads as well.

[Ron] The S&P and Nasdaq Eminis have been providing plenty of volatility, especially i...

Ron — 1/21/2012 10:34:26 PM

The S&P and Nasdaq Eminis have been providing plenty of volatility, especially in the mornings, most days.
They work for me. A steady income stream, both from manual trades and occasional automated scalps.

[2MAR$] Just using BAC as proxy , the "boyz" did play it beautifully off another one of ...

2MAR$ — 1/21/2012 7:15:00 PM

Just using BAC as proxy , the "boyz" did play it beautifully off another one of those "fateful mondays" Dec 19th as the Euro dillemma coupled with the slowing Chinese/Brazil growth story had played out for just a little too long . Am absolutely sure these periods of negative headlines are tacitly disseminated & concerted effort to some degree .

For no sooner did BAC hit $5 again that day just as previous fateful monday october 3rd , they have loaded up & in both cases just several weeks before earnings runs start this is when they move in together buying up the cheap bargains and known winners into earnings , they had already bid up every divi stock & safe haven and anyone couldn't miss the rebound in the rails & homebuilders which started oct .

Still find it so humorous on even on dec 19th how few traders (not here ) was teasing that day when BAC hit $4.94 to step in & buy refused to do so the negativity had been so well played out . There's nothing in the world , not shipwrecks or Greek defaults that is going to let them not get their bonuses & earnings rally , short of another Tsunami or nuclear war ! Speaking of wrecks a prime example was the CCL tank on the news but look at that reset low of $28 , be sure i was buying up plenty there that morning it fell . Many & most of what i call "Reset Lows" were all 25-35% gainers recently in short order .

Just like the october monday 3rd event that saw BAC near $5 & market get bought huge the next day , what is notable is how the news out of europe though still bad takes on more hopeful tones all of a sudden as if someone has been on the horn saying , OK now we need some positive chatter please ! The bailout fund is being increased , China might aid with some of the debt , the Fed is funneling liquidity and always right after things are reaching the brink ....

And the market ran from that monday oct 3rd into earnings , and so it did again & thats all one needed to know ...so many beaten down good stocks that were bottomed trading sideways were the good buys , especially some of the mostly hugely beaten down even NFLX & FSLR or Eddie Lampert's manipulating SHLD back up $800mil worth of value making it the hottest stock of the new year .

Around dec 29th when BAC tanked some were still good shorts but was tracking those i knew would do well especially MON that fired off the October rally and the best of breed in the fertilizers CF which i was playing dips then off $128/29 . If any stock was going to clearly rebound earliest it would be CF for Dave Tepper was in before & would again and ofcourse MON reports first in the season crushed shorts again as in Oct and flew .

Once market bounced off dec 29 monday , it was look for the beaten down basing stocks or the ones that tanked far too much that will always rebound , take ORCL as one example after miss =$25 low . Other nice momos GMCR off $40 area (what great short too ) NFLX , PANL , MAKO LNG and tese little bios INHX ,IDIX & ACHN as these big druggies are looking for new pipeline . AMGN GILD have just been unreal bidding up and of course this bidding up everything home related see chart for HD , TOL LEN etc .

FHA loans right now are around 3.5% down and under 4% and 10yr loans some going 35 or under 3%.....and they ran them seeing this right off that Oct 3rd monday tank low . Kudos to the boyz they banked then & banked it now right into AAPL's earnings tues followed by big Oils end of month , that should signal top for sure and an entire new group of people get stuck up at the top .

As we see the SP just tagging the overbought , should i be so bold to call a top here ...any higher and they are just asking for it .

[Eric P] Would be nice to see some real volatility again. The markets were awesome for...

Eric P — 1/21/2012 8:04:57 AM

[2MAR$] Such huge voilitility yet in such a well defined channels , how often does it ge...

2MAR$ — 12/29/2011 7:09:40 AM

Such huge voilitility yet in such a well defined channels , how often does it get this easy if one played the themes and the long & the short from those pivots >

Now the volitility winds down but hope resumes in the new year , been a tremendous time of opportunity for the saavy trader not afraid to see the obvious ...market has simply been trading in a channel .

[CraigNZ] I figured you might be enjoying the past couple of weeks :)

CraigNZ — 8/15/2011 4:38:05 AM

[Eric P] Similar to the markets from May of last year, we have been seeing some phenomena...

Eric P — 8/11/2011 9:26:04 PM

Similar to the markets from May of last year, we have been seeing some phenomenal volatility this month. For example, for the first time in history, the Dow has had four consecutive days of 400+ point moves (up or down). I hope remaining traders that follow this thread are managing to thrive in this market. These are the market conditions which offer the most opportunities for the traders I know, and I've been enjoying the market action we've been seeing. Previously, I was finding my golf time was beginning to exceed my screen time, but that reversed very quickly in recent weeks.

Good luck, folks. Cash in while the trading is good.