OFFICIAL STOCK MARKET & ECONOMY THREAD VOL. SCHOOL'S OUT

[secretzofwar]

Inteligent Investor is a great read. My top 5 investing/trading books (I've probably read 40-50 over the past five years)...

1. Intelligent Investor - for obvious reasons.

2. You Can Be a Stock Market Genius - Joel Greenblatt

Greenblatt's a legendary value guy,, and this book focuses on how you can outperform via spinoffs, arbitrage, and special situations.

3. The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market - Pat Dorsey

Dorsey's a very intelligent guy, as he developed some of Morningstar's stock picking methodology. This book is great for understanding competitive advantage, free cash-flow valuation, and repeats margin of safety.

4. Trading in the Zone - Mark Douglas

This book focuses on establishing the right mindset for trading and sticking by your defined rules.

5. Fooling Some of the People, All of the Time - David Einhorn

Einhorn's an awesome long/short hedge fund manager. This book in itself can be kind of boring/repetitive, but I think Einhorn shows you how and why his research is so respected. For other reference, see his presentation on Green Mountain from late 2011.

Peter Lynch's books are also a great read, IMO.

 

[jc08]

Originally Posted by nocomment6

Thanks for all the info! Very informative.

I pretty much agree with all points, the complexity of forex trading is amazing, yet again in so many ways it is more simple then stock trading.
I haven't done it much, only bought CHF last summer, when it had it's run and USD when it was cheap due to all the questions about the debt ceiling...but those situations were predictable.

Where'd you get your charts from? I can't find one's as complex on forexpros or yahoo finance...

Well I'm thinking of buying USD, because I'm expecting a slight drop-back from markets, after such a good QE1, yet again Europe will most likely drop into recession, except for Germany who can produce a very small growth, prediction is 0.4. In addition, well I think Italy should be ok, because debt is kept mostly within the country, but Portugal and Spain. I wouldn't be sure and of course the Greek problem isn't solved just yet...All-in-all the USD seems more stable in the long run.

Why would you play the JPY short? If I may ask, it's economy and markets have been doing pretty good.

I get my charts from Reuters but there are a few good places where you can get nice charts for free. Metatrader 5 is excellent for FX charts and so is Ninjatrader 7. You could also open a demo account with OANDA and use their charts too. Some other free tools I use are:
1) Ransquawk (a squawk box for every asset class and covers North America and European hours)

2) Forex Factory (an economic calendar)  

3) Reuters FX commentary subscription. It is free and comes out 3x daily and basically recaps events that happened on prior shift. Link to subscribe below:

http://www.hihifrds.com/topnov/mu-fx-daily-briefing.aspx 

I do like USD as well but am hesitant to go all-in because you just never know with the Fed. I don't have a clear sense of direction, but I do think 2012 could be a repeat of 2010 and 2011 where risky assets rallied first half, but then pared gains in the second half. 

As for why I would short JPY long term:

1) Debt to GDP ratio of ~220%. If interest rates were to rise just 1% to 2% interest payments will be greater than all tax revenues. This means the government either has to take on even more debt to finance budget deficit (much like in US) or Japan will have to cut government spending and/or increase taxes. The latter option is net negative for economic growth so in all likelihood could lead to a debt spiral where rising debt > rising interest rates > government spending cuts> downward pressure on economy > government revenues fall as incomes fall >repeat. Japan has suffered with deflation every year for past 20 years so the real rate of interest is greater than the 1% on 10 year government debt so Japanese investors are willing to buy and foreign investors are willing to buy Japanese debt because they can take advantage of JPY appreciating against home currency. Who knows if this trend can continue into the future.

2)  Deterioration in trade balance (exports-imports) and current account (value of goods, services, income and current transfers). Think of these two components as a cash flow statement where a floundering company can stay alive for time being if they're cash flow positive. The trade balance is like the operating cash flow and current account encompasses all operating, investing and financing cash flow. Right now as Japanese trade balance is decreasing (historically it has always been positive, except during financial crisis) due to flat global demand and strong JPY their "operating cash flow" is negative. Japan just posted a record current account deficit and a big reason is Japan is trying shutting down all its nuclear reactors where it gets around 30% of its energy from and in turn this is causing energy imports to surge. Japan has always had huge overseas investments in companies and foreign assets (cash flow positive once they repatriate earnings) so they were able to finance their deficit.

3) Japanese demographics are one of the worst in the world with a rapidly aging population and declining birth rate. This is bad because when more people retire payouts from pensions, healthcare expenses, etc. become greater. But if there aren't as many people coming up to replace those workers than economic growth tends to suffer and in turn places even more strain on those working through higher taxes (if they can't finance deficit) to pay for these aforementioned benefits. 

4) 90-95% of all Japanese debt is held by Japanese people, financial firms, insurance companies, businesses, etc. This is good because it exposes a country to less foreign capital flight risk at the first sign of trouble. But as more and more Japanese people retire they most likely will sell Japanese debt and equity investments to finance their retirement life. This puts a strain on these markets and most likely bond and equity performance will suffer. This is where I'm paying the most attention to in the future. 

5) A strong JPY is not good for Japanese businesses as it makes them less competitive against other foreign businesses 

Maybe I'm being too pessimistic and history shows being short JPY has been a losing trade for past 20 years, but I think the fundamentals have changed this time around. But don't take my word for it, everybody has to do their own research and come up with their own conclusions. One also has to be able to admit when they're wrong and can't get married to a trade idea as markets can be illogical longer than one can be solvent.

 

[nocomment6]

Wow, thanks for the thorough answer and the tips!

Regarding Japan, I can see were you're coming from. I fully agree on the demographics, Japan will probably be the first victim of the modern welfare state. People are living too long, but can't work enough and the state simply can't finance every aspect they have done in the past. Privatization of many things public until now may become more popular in the future...just a guess.
MOst technicals point to the USD weakening a little more against the Euro, i think I'll wait a bit more, but thanks for the tip on the JPY.

The GBP should also rise over the summer compared to other currencies, with the olympics coming up, no?

 

[freakydestroyer]

I took a closer look at BAC because a few have been asking, it looks just fine to me. The next test is $10, and hopefully it breaks out this time around. Just my .02. 

 

[freakydestroyer]

Originally Posted by JC08



Anyways, what's your background freakydestroyer? Do you trade for yourself as your primary job?

Thank you for sharing your experience and insight. I learned a couple new things today to say the least. I first dabbed into the financial markets in 2008. I started off trading penny stocks and wasn't very successful at that (not many are as you might know). Then I took some time off from trading and studied extensively. I began studying the markets and different strategies and styles of trading and investing. Slowly but surely I found my niche in trend following/ swing trading. Then I studied basic chart patterns and things began to really click. That's what has brought me here today. I have no formal education in finance or economics nor have I worked in this field. Everything I know I learned online and from reading books. My goal is to not only trade for a living, but to become quite well off from it. That's my story in a nutshell, not quite as extensive as yours.

 

[dajoka004]

Monday bump. Hot start to the week for me. Same thing happened last week and I flat lined the rest of the way.

 

[freakydestroyer]

SAVE

UBNT

TSLA and LNKD are basing a recharging for a major move.

 

[xkrispyeli]

Originally Posted by freakydestroyer

SAVE

UBNT

TSLA and LNKD are basing a recharging for a major move.

so true.
but what do you think about VVUS .... they have a big decision coming up in april 17 from the FDA on the approval of a diet and ercitle disfunction drug.  If they get approved they could double the stock value.

 

[xkrispyeli]

what happened to groupon ? 15% loss ?

 

[johnnyredstorm]

They somehow failed to take into consideration returns with their accounting. Stock and company as a whole as joke. Couple of people on SeekingAlpha said it could go to 0 in 36 months and I believe them.

OVTI with a nice move today. Best knife I ever caught.

 

[nocomment6]

When do you think it's a good idea to buy LNKD? MACD and RSI would suggest a slight correction...

BUt I must applaud SAVE and UBNT, I have no idea how you stumble upon these great companies, but props!

Disney looks pretty good as well.

 

[dajoka004]

Best non-earnings/non-news day I've ever had. Thank you AAPL.
+2.4% ($917.86) 

 

[johnnyredstorm]

What you guys think about Harry Winston Diamonds HWD?Molycorp MCP looks like a decent chart. Thinking about buying some $31 April 21 calls. Morgan Stanley gave this thing an $81 price target not too long ago.

 

[shake n bake718]

Originally Posted by XkrispyELI

Originally Posted by freakydestroyer

SAVE

UBNT

TSLA and LNKD are basing a recharging for a major move.

so true.
but what do you think about VVUS .... they have a big decision coming up in april 17 from the FDA on the approval of a diet and ercitle disfunction drug.  If they get approved they could double the stock value.

I've been sitting on VVUS for a couple years and I'm hoping it gets approved so I can dump it. An FDA advisory panel voted 20-2 in favor of it recently and usually the FDA goes along with them, but you never know.

 

[freakydestroyer]

Originally Posted by XkrispyELI

Originally Posted by freakydestroyer

SAVE

UBNT

TSLA and LNKD are basing a recharging for a major move.

so true.
but what do you think about VVUS .... they have a big decision coming up in april 17 from the FDA on the approval of a diet and ercitle disfunction drug.  If they get approved they could double the stock value.

It looks like it's basing and waiting for the decision like you said. I really don't pay any attention to pharmaceutical stocks. But if you want to roll the dice on that one I'd buy some Out of the Money Calls

 

[freakydestroyer]

GRPN is a joke, I never fell for it. It should be a penny stock.

As for LNKD, I think now is the time to buy. Same goes for TSLA. We can see some nice gains in TSLA very soon, but I also think it is great long term. 10 years from now I think it can become the Apple of cars.

 

[degenerate423]

Kicking myself for not buying Apple when it dipped just under $600 last week

.  It's gonna hit $700 pretty soon 

...

 

[freakydestroyer]

Originally Posted by JohnnyRedStorm

What you guys think about Harry Winston Diamonds HWD?Molycorp MCP looks like a decent chart. Thinking about buying some $31 April 21 calls. Morgan Stanley gave this thing an $81 price target not too long ago.

They look ok. I don't really look at that sector, so I can't really tell you much. However, I remember you were talking about SLV and GLD, I think those are set up for a slow, but steady run.

 

[freakydestroyer]

Originally Posted by Degenerate423

Kicking myself for not buying Apple when it dipped just under $600 last week

.  It's gonna hit $700 pretty soon 

...

Tell me about it. I wanted to buy some AAPL calls last week. But everyone is counting the days that the market corrects and I know that AAPL is the one that will get hit the hardest and fastest. I do think that AAPL will go up a few points tomorrow and maybe the day after too.

 

[xkrispyeli]

i might have to take the gamble on VVUS

but apple is not stopping to grow

 

[nocomment6]

Originally Posted by JohnnyRedStorm

What you guys think about Harry Winston Diamonds HWD?Molycorp MCP looks like a decent chart. Thinking about buying some $31 April 21 calls. Morgan Stanley gave this thing an $81 price target not too long ago.

HWD doesn't look bad, although technicals may suggest a slight correction when the 5day MA crosses the 20 day MA. Although surprisingly this didn't happen, when the 5 day MA crossed the 10 day MA. I think shareholders have confidence in the company.
MCP looks very good actually.

 

[freakydestroyer]

Something just reminded me about SKUL. Haven't been watching it, but now I see it likes to rise 1-2% almost everyday. I would like the big buyers to step it so that it can take off. It's been setting up nicely. 

 

[nocomment6]

Topeka Capitol Markets suggests that Apple will be over 1000 in 12 months, possible?

Maybe.
New TV sets in addition to the iTV, new line of MBP's due in april or June. iMac should get a refreshment as well, sales of iPads and most importantly iPhone 5 should be introduced in '12.
Personally I wouldn't be surprised if we'd see a slight drop in AAPL stock prices and then a steep hike towards the end of QE2. All this is dependant on the introduction of the new MBP line.

 

[dajoka004]

AAPL about to cross $625 pre-market. Looking at news highs again. I have a feeling this week is going to be fun.

 

[e3lal]

Originally Posted by nocomment6

Topeka Capitol Markets suggests that Apple will be over 1000 in 12 months, possible?

Maybe.
New TV sets in addition to the iTV, new line of MBP's due in april or June. iMac should get a refreshment as well, sales of iPads and most importantly iPhone 5 should be introduced in '12.
Personally I wouldn't be surprised if we'd see a slight drop in AAPL stock prices and then a steep hike towards the end of QE2. All this is dependant on the introduction of the new MBP line.

imagine if their computers gain market share...

Also consider that this 15-year old and younger generation will probably think of Apple of "the" computer, not the PC.  I remember having the swivel screen white imac (were they called imacs 10 years ago?) thinking they looked cool, but that was about it.

No way it reaches 1,000 in only a year.