Most professional and non-professional trader/investors do not have a clue on how to look at market data and make choices without cognitive biases rationalizing insignificant information.
Investing is not easy. Improving the probability of success in
trading and investments requires having strategies which are adaptive to
price direction. Shortcuts and attempts to simplify wealth management
by herding investors into passive ETFs is part of a narrow approach.
Broader more adaptive algorithmic solutions improve the probability of
success.
The lack of success of most investors is due to perceptions of risks
and misconceptions on how they apply to investments. Most investors are
risk adverse. They would rather avoid a loss than seek a gain. Most
investors act as if small risks are the same as big risks. This near proportionality identifies the flaw in modern portfolio theory where notions of market efficiency expose investors to large downside events.
Tuesday, August 26, 2014
Thursday, August 14, 2014
Stock and Interest Rate Markets
Where are we. Stocks, interest rates.
Still uncharted territory as far as Fed intervention. Bears in both markets have been repeatedly face planted and have had to rely on global macro events to rescue them from bull charges.
Somethings are obvious however and consumers have developed a supported bias where they perceive the future economic world to be one full of jobs that don't pay. Economies of declining opportunities blunted by advancing technologies reshaping traditional employment.
Random events will intersect at the point of where investments seeking return will reach well beyond where risk has value.
Still uncharted territory as far as Fed intervention. Bears in both markets have been repeatedly face planted and have had to rely on global macro events to rescue them from bull charges.
Somethings are obvious however and consumers have developed a supported bias where they perceive the future economic world to be one full of jobs that don't pay. Economies of declining opportunities blunted by advancing technologies reshaping traditional employment.
Random events will intersect at the point of where investments seeking return will reach well beyond where risk has value.
Saturday, August 9, 2014
Volatility like 2011
There is a similarity between our strategic model performance currently and that of the same period in July - August 2011. In 2011, the SP500 had started out at 1253, ran up to 1373 in the first week of May only to fall over 21% to 1077 into the first week of August. While the volatility is not nearly as dramatic as 2011, strategic model performances can pick up patterns in price discovery where chart patterns look comparatively different.
The pick up in recent volatility may have to do with the potential significant impact anticipated from the Jackson Hole conference stating August, 21.
Back in 2011, the market had rolled over and was gaining downside momentum. Bernanke's speech from the conference then was the hand tipping in front of the Fed's September move in what would come to be known as Operation Twist. And while the markets initially reacted negatively to OT, new lows (1068), that low became the foundation of the current rally.
Yellen is facing a different market with much higher price levels in the SP500, yet she has used much of the same dovish analytics as Bernanke did back in 2011. Rates at that time had just fallen to around 2% in the 10 year so the game of choice in yield then as now favored equities.
Look for volatility to pick up with swings from one end of the range to the other beyond Yellen's speech. Direction will come in October.
The pick up in recent volatility may have to do with the potential significant impact anticipated from the Jackson Hole conference stating August, 21.
Back in 2011, the market had rolled over and was gaining downside momentum. Bernanke's speech from the conference then was the hand tipping in front of the Fed's September move in what would come to be known as Operation Twist. And while the markets initially reacted negatively to OT, new lows (1068), that low became the foundation of the current rally.
Yellen is facing a different market with much higher price levels in the SP500, yet she has used much of the same dovish analytics as Bernanke did back in 2011. Rates at that time had just fallen to around 2% in the 10 year so the game of choice in yield then as now favored equities.
Look for volatility to pick up with swings from one end of the range to the other beyond Yellen's speech. Direction will come in October.
Friday, August 8, 2014
Where you should be on your investment return today?
Markets have been tentative with a big bear tease going on since July 24th. Global events beating up the bulls but any good news brings in short covering. The underlying bid has been there just like the past which shows continued interest in owning the Bernanke/Yellen carry trade.
Hedge boys continue to have tough time in general.
So where should you be on each $20,000 slice of your investment equity index pie; net +30% to +45%.
CoverRisk, the business arm of QRiskValue and this blog says that it where you should be, not much different than the last 6.5 years.
Hedge boys continue to have tough time in general.
So where should you be on each $20,000 slice of your investment equity index pie; net +30% to +45%.
CoverRisk, the business arm of QRiskValue and this blog says that it where you should be, not much different than the last 6.5 years.
Tuesday, August 5, 2014
Q8 Latest
|
|
AAPL | BAC | GOOG | GS | IBM | MSFT | F | PFE | |
| Last | 95.12 | 15.00 | 565.07 | 169.42 | 187.10 | 43.08 | 16.87 | 28.41 | |
| Change | -0.47 | -0.05 | -8.08 | -2.27 | -2.54 | -0.29 | -0.15 | -0.34 | |
| YTD | 14.97 | -0.57 | 4.72 | -7.84 | -0.47 | 5.67 | 1.44 | -2.22 | |
| %YTD | 18.68% | -3.66% | 0.84% | -4.42% | -0.25% | 15.16% | 9.33% | -7.25% |
Q8 once again has 4 of the 8 stocks lower on the year with GOOG hanging on.
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