No6's Financial Markets Thread

[No6]

Nice for some.

 

Shares in London's biggest-ever listing rose strongly on the start of conditional trading - indicating great demand for a slice of Glencore International.

 

The world's largest commodities trader confirmed a price of 530p-per-share ahead of the flotation, which will create almost 500 paper millionaires and five billionaires as its owners benefit from the stock sale.

 

It aims to raise £7bn for the company and it will give it a value of £37bn when it goes straight into the FTSE 100 index of leading shares next Tuesday, when full public trading begins.

 

But while Glencore saw a 3% rise in its share price on opening this morning, celebrations over the apparent success of the flotation to date may be tempered by the realityof the scrutiny it now faces as a publicly-listed company.

 

http://news.sky.com/skynews/Home/Glencore-Listing-Opens-Secretive-Commodities-Trader-Up-To-Greater-Scrutiny/Article/201105315994971?lpos=Home_First_Buisness_Article_Teaser_Region_3&lid=ARTICLE_15994971_Glencore_Listing_Opens_Secretive_Commodities_Trader_Up_To_Greater_Scrutiny

[littledavesab]

Hmmm Glencore International very nice for some. Will be interesting to see how they do.

 

Have heard some suspicious fund manager types suggesting this is a sign that we might be nearing the top of the commodity bull market - insiders selling out! Didnt Foxtons (UK Estate Agents) also sell close to the top.

 

On its own I might ignore those suspicions but also on TaklSport (radio) I hear adverts looking for experienced drilling workers to join a new drilling ship.

 

Combined with the end of QE2, makes one stop and think. Oh well see where we go from here I guess.

[No6]

Hmmm Glencore International very nice for some. Will be interesting to see how they do.

 

Have heard some suspicious fund manager types suggesting this is a sign that we might be nearing the top of the commodity bull market - insiders selling out! Didnt Foxtons (UK Estate Agents) also sell close to the top.

 

On its own I might ignore those suspicions but also on TaklSport (radio) I hear adverts looking for experienced drilling workers to join a new drilling ship.

 

Combined with the end of QE2, makes one stop and think. Oh well see where we go from here I guess.

 

Not just Glencore, but the smaller IPO Linkedin had its debut in the US and doubled in price at one stage. Just like the tech boom days almost.

 

As for commodities I can only see continued demand everywhere. Not sure why it would stop given the desire for growth as it is around the world. The main question will remain one of supply, but it is inevitable that there will be speculative sell offs from time to time.

 

LinkedIn Corp., the largest professional-networking website, more than doubled in the first day of trading after its initial public offering.

 

The stock surged as much as $47.99 to $92.99 and traded at $81.76 at 10:18 a.m. on the New York Stock Exchange. The Mountain View, California-based company sold 7.84 million shares at $45 each, according to a statement released yesterday. The company had raised the proposed range for the share sale on May 17, to $42 to $45 each from $32 to $35. The sale raised $352.8 million. The ticker symbol is LNKD.

 

http://www.bloomberg.com/news/2011-05-18/linkedin-raises-352-8-million-in-ipo-as-shares-priced-at-top-end-of-range.html

[No6]

Markets flagging again today, but the FTSE100 looks like it is developing an extended inverse head and shoulders formation. Probably needs to hold around 5800 and then move to the upside with volume to confirm it. Right now looks unlikely, but the market has been in gloom mode since early May so a move towards the upside isn't totally out of the question as oversold conditions set in.

 

 

Inverse head and shoulders.

 

http://www.investopedia.com/terms/i/inverseheadandshoulders.asp

[No6]

Weekly round up that's worth a look.

 

http://www.youtube.com/watch?v=qkj-cD7A31c

[No6]

Dogs share watch 2011 update:

 

HMV - 25.50p now <b>24.75</b>

Dixons Retail - 23.71p now <b>21.01</b>

Cable & Wireless Communictions - 49.61p now <b>48.28</b>

Debenhams - 73.80p now<b> 65.05</b>

Punch Taverns - 76.05p now <b>66.20</b>

 

Added

 

Yell Group - 10.00p

 

I've somewhat neglected the Dogs Sharewatch so it's about time for an update.

 

HMV - 8.44p.

Dixons Retail - 19.28p

Cable & Wireless Communictions - 43.82

Debenhams - 71.05

Punch Taverns - 72.45p

Yell - 6.52

 

Debenhams and Punch are up around 10%ish since the last update but all are still barking loudly.

 

HMV looks like it is fighting the last line of defence now. There is still hope, but much will depend on whether it can survive the now rapid decline in cd and dvd sales while it transitions into a more entertainment technology store and live music provider.

 

Here is one of the few good things they are clinging to.

 

The most alarming disclosure Friday was that group debt has rocketed to £170m – £40m more than some analysts were expecting. The first explanation was the shocking performance of HMV's UK music chain, where like-for-like sales fell 15.1pc in the last 17 weeks, even worse than the 14.8pc drop over the full year.

 

The second was the group's soaring working capital – the result of jumpy suppliers demanding far quicker payment in case HMV went bust.

 

Fox is probably right that a refinancing would alleviate those fears. But what about the sales?

 

He says raising the amount of shop space reserved for technology – such as iPods and game consoles – from 8pc to 25pc has delivered "spectacular" sales growth in six trial stores. But other retailers already specialise in that. And while the concert wing, HMV Live, grew like-for-like sales by 15.7pc last year, it's a small part of the business.

 

Neither initiative seems radical enough for a company Fox has led since July 2006 when the shares stood at about 160p. Today they are 11p – testimony not only to the tough business of music retailing but Fox's inability to make HMV sing in the digital age.

 

http://www.telegraph.co.uk/finance/comment/alistair-osborne/8527297/The-not-so-fantastic-Mr-Fox-does-not-seem-to-have-a-plan-to-save-HMV.html

[No6]

Violence Cost World Economy $8.1 Trillion.

 

Steve Killelea, founder and executive chairman at the Institute of Economics and Peace told CNBC that by channelling resources into controlling violence and away from other resources, economic productivity is limited.

 

“If you can improve the peace you can move these resources into other areas that then unleashes trapped productivity, which improves the economy,” Killelea said.

 

The world is a less peaceful place for the third year running, with the ‘Arab Spring’ central to keeping world peace at bay, according to the Global Peace Index.

 

The IEP stated that violence cost the global economy $8.1 trillion in 2010.

 

http://www.cnbc.com/id/43164175?__source=ft&par=ft

[No6]

Are stocks cheap at the moment? After the run up of the last 3 years or so it would be easy to say no, but there is evidence to suggest otherwise. I happen to think that in the UK there are some pretty cheap sectors out there which are a little unloved like insurance, good banks and good retailers, while some that are booming, like mining and commodities may be due a pullback which ultimately will represent excellent value considering that what they sell is needed across the world. Add in the fact that many companies have produced excellent results recently and outperformed expectations then it might be reasonable to expect more gains ahead. However, it is the bigger picture worries that are holding back the markets again and it would appear that the market goes into these cycles of bigger picture worry, followed by things are not so bad at the corporate level right over and over again.

 

This guy thinks that US stocks are cheap.

 

Stocks are Actually the Cheapest They've Been in Decades

 

By Dr. Steve Sjuggerud

 

Tuesday, May 24, 2011

 

With the exception of the bust of late 2008-early 2009, U.S. stocks are now the cheapest they've been in 20 years.

 

It might be hard for you to believe... But it's absolutely true.

 

It might be hard for you to step up to the plate and swing... but with history as our guide, that's the right thing to do. Stocks are cheap, and interest rates are low. It's a recipe for gains. Let's take a look...

 

The classic measures of stock market value are the price-to-earnings (P/E) ratio and the price-to-book (PB) ratio.

 

Right now, the stock market (as measured by the S&P 500 Index) is trading at a forward P/E ratio of 13.5... With the exception of the bottom in 2008/09, we haven't seen a P/E ratio that low since 1990-91. And on a P/B basis, stocks are trading at a ratio of 2.3... Once again, except for the 2008/09 bottom, this is a level not seen in 20 years. Take a look:

 

========================

 

So stocks are nearly as cheap as they've been at any time in the last 20 years. But it's actually much better than that...

 

You see, back in 1990-91, stocks had a whole lot of competition for your investment dollars. Interest rates were ridiculously high... Junk bonds paid 20% interest. High-quality corporate bonds paid 10% interest. And you could earn 8% on a CD at the bank.

 

Back then, why would people put money in the stock market when you could earn 8%-10% and take on next to no risk? A lot of people did put their money in the bank, so stocks stayed cheap.

 

Today is a much better story for stocks. Yes, back in 1990-91, stocks were just as cheap as they are today... But today, interest rates at the bank are basically zero. As for corporate bonds, well, Google just borrowed money at 1.25% for three years.

 

In short, stocks have no competition like they did back then. And that's the crucial thing to understand.

 

http://www.dailywealth.com/1741/Stocks-are-Actually-the-Cheapest-They-ve-Been-in-Decades

[No6]

FTSE100 now approaching a key trend line point. Index seems to have settled down in the last few days, but the trend is still down. However, indicators do look better for an upside move from here, just needs to break through that declining trendline.

 

[No6]

Mentioned a few posts ago the IPO's of Glencore and Linkedin. Robbie Burns, The Naked Trader, has gone short on both of them. Wonder if he will be right?

 

There have been a lot of really crappy floats in the last few months the worst of which was Betfair which I made a fortune shorting.

 

Two new to my mind crappy floats have come up which were really to me just begging to be shorted, so I did.

 

First off was Glencore (GLEN). It's massive and will go straight into the FTSE but to my mind the reason it's being floated is those who have made their mega millions out of the float are doing it because they think the commodity boom for now is near the top. And based on that I shorted.

 

I got a tenner short at 531. Spreadbet firms luckily traded it before the official launch. Of course FTSE funds will have to buy in so maybe this short is a bit too early but I'd be surprised if over the summer it didn't fall below 500. Of course I could be totally wrong and it is a gamble. Target 450 stop 570.

 

I never get involved in USA shares. It's not my scene, and in any event I like to shut off at 4.30 and i don't want to worry about what shares in the US are doing at 9pm...!

 

However I have done my first (and probably last) which is short the ludicrous Linkedin which was given a valuation of something crazy in the billions. Crazy for a company making diddly squat.

 

Also I'm sick to death of getting dozens of these frigging mails in my box every day asking me if I want to link to someone I don't know. No I don't, life is short and I really have better things to do. Then more emails reminding me about the invitation I didn't want in the first place. So I must admit to some pleasure in shorting it.

 

I didn't think I would be able to short but was delighted when I typed the company into Tradefair and there is was, I could short! So I did. Quite honestly having never done US shorts before I wasn't totally sure about the staking but as Tradefair seemed to kick off with 0.5 I started with that then cautiously edged it up. So I have a short of 1 at a tad under 102. I'm too lazy to figure out the staking but right now I'm in profit by a bit so we'll see. I guess it if heads over the 106 figure and more I've got it wrong for now and take a small loss.

 

I tried to short it a bit more this afternoon with Tradefair close to 100 but it came back with "This share is prohibited from being shorted". No idea what that is about but hey I already shorted it so there! Possibly it's because the Americans maybe give a new issue a few days before it can be shorted.

 

If that is so, then I would imagine once people can short properly it ought to go down?

 

Hey I thiink I figured it out, Linkedin is facebook for ugly people with no friends, right? (What do you mean that ought to suit me, bloody cheek.)

 

http://www.nakedtrader.co.uk/

[littledavesab]

Mentioned a few posts ago the IPO's of Glencore and Linkedin. Robbie Burns, The Naked Trader, has gone short on both of them. Wonder if he will be right?

 

Hmm not sure if I would want to be short of Glencore for very long even if he did echo my thoughts from a couple of posts back. Still he may catch a market downdraft.

 

Funny how the GoldmanSachs boys turned positive on the commodity market to kind of match the timing of the Glencore float

 

 

Ps I recently tried out LinkedIn - seems to be full of recuitment people looking to get people to change jobs. Might be a bit unfair as havent put much effort in really. Shorting LinkedIn might be a good move however?

[No6]

 

Hmm not sure if I would want to be short of Glencore for very long even if he did echo my thoughts from a couple of posts back. Still he may catch a market downdraft.

 

Funny how the GoldmanSachs boys turned positive on the commodity market to kind of match the timing of the Glencore float

 

 

Ps I recently tried out LinkedIn - seems to be full of recuitment people looking to get people to change jobs. Might be a bit unfair as havent put much effort in really. Shorting LinkedIn might be a good move however?

 

I haven't really paid much attention to either of these since floating. As Robbie is shorting it in the expectation that it might go to 500p, I don't think that is unreasonable as a trade as I think it has already been around 510 so maybe he cashed out already? I think this one is more likely to find a trading range while commodities in general decide which way they are heading. If commodities do have a big summer fall and I'm not convinced they will, Glencore will head south. As for Linkedin I imagine that this one will be quite volatile up and down, so shorting it could be a rocky ride and only for those with the constitution for it.

[No6]

FTSE having another go at 6000.

[No6]

 

Hmm not sure if I would want to be short of Glencore for very long even if he did echo my thoughts from a couple of posts back. Still he may catch a market downdraft.

 

Funny how the GoldmanSachs boys turned positive on the commodity market to kind of match the timing of the Glencore float

 

 

Ps I recently tried out LinkedIn - seems to be full of recuitment people looking to get people to change jobs. Might be a bit unfair as havent put much effort in really. Shorting LinkedIn might be a good move however?

 

Glencore 515

 

Linkedin below $80

 

So, Robbie's shorts looking good again.

[No6]

FTSE looks to have faltered at the 6000 level again.

[No6]

Well, well, not a very good market debut.

 

Glencore now around 508p

 

Glencore in the spotlight as EIB freezes lending

 

By Nikhil Kumar

 

Thursday, 2 June 2011

 

The European Union's financing arm has frozen all lending to the Swiss commodities trading giant Glencore, citing "serious concerns" about governance at the FTSE 100 listed firm.

 

The European Investment Bank had loaned $50m (£30m) to Glencore's Zambian subsidiary Mopani Copper Mines for the renovation and modernisation of the Mufulira copper smelter in 2005. It said it would "decline any further financing" requests from the company, or one of its subsidiaries, as it conducts an internal investigation into allegations of tax irregularities at Mopani stemming from a leaked draft of an audit report by the accountancy firm Grant Thornton and Econ Poyry.

 

The EIB said that, as well as launching its own investigation, it had informed Olaf, the European anti-fraud office.

 

Glencore denied the allegations and said it looked forward to the results of the investigation. "We welcome the EIB taking a close look at Mopani since we are confident that we will be completely exonerated," the company said. "The allegations are based on an incomplete, draft desktop study that was circulated in Zambia several months ago. We publicly refuted the draft 'conclusions' of this document at the time."

 

http://www.independent.co.uk/news/business/news/glencore-in-the-spotlight-as-eib-freezes-lending-2291962.html

[littledavesab]

Seems as Thorium got a mention earlier, may as well make this a double post:

 

 

The whole concept does interest me and i've thought it's an answer to energy needs for a little while now, but needs some serious money throwing at it and political will. The likes of Kirk on the E.F.T site are the real inspiration.

 

Riggers is just an avid follower.

 

A very good interview with Kirk this week on FSN. Laid out the Thorium case quite succinctly, would expect a lot more people to be aware of it now. Of all the various possible "silver bullets" for energy, Thorium does look the best,.

 

Thorium advocate Kirk Sorensen explains how thorium reactors can change the world through the use of a safer, cleaner and more available energy source than uranium.

 

http://www.financialsense.com/financial-sense-newshour

[No6]

FTSE100 still in that downtrend, but now looking a little oversold and heading towards that key lower trendline.

 

 

 

United Kingdom

 

The FTSE 100 found support at 5850, indicated by long tails and rising 21-day Twiggs Money Flow. But the longer-term picture for Twiggs Money Flow is bearish and failure of support would signal a test of the primary level at 5600.

 

http://www.incrediblecharts.com/tradingdiary/2011-06-06-markets.php

[jerpy]

Checked in here expecting to see some comment on HMV. Don't tell me you missed it No6

 

Some turnaround the last few days!

 

http://www.fool.co.uk/news/investing/company-comment/2011/06/07/hmv-steps-back-from-the-brink.aspx

 

Another one reporting last week was SVT, long been a follower. Although it seemed a steady report, quite a muted response for the utility in s.p.

[No6]

Checked in here expecting to see some comment on HMV. Don't tell me you missed it No6

 

Some turnaround the last few days!

 

http://www.fool.co.uk/news/investing/company-comment/2011/06/07/hmv-steps-back-from-the-brink.aspx

 

 

Did see it, but the turnaround on this one is likely to take a lot longer than a few days. The "recovery" in the share price of the last day or so may have more to do with covering shorts than faith in a genuine turnaround. Having said that, I think the comments made here about the company were more in line with what actually happened than the doom and gloom view that it was going under. Mamut the Russian did come in and buy part of the company and the banks that had previously supported HMV with money to expand into live music decided on this occasion to step up and back the new changes. Not sure that HMV's management have the answers, but the new store format that has reportedly been successful in 6 trial stores will be in place by later in the year and if it works 2-3 years down the line this could be a major recovery stock. I wouldn't touch it with a bargepole just yet mind you. Still one for traders or those that are happy to just sit and wait and can afford to lose if it were to go under. The risk/reward here is probably the equivalent of an all in bet in poker when you are holding aces high after the river.

[No6]

From the How 12 Private Investors Made Millions New FB&B: Author Guy Thomas interviewed

 

THE SIZE of your Trading Pot matters / say posters on Advfn...

 

Horndean Eagle - 6 Jun'11 - 14:43 - 78 of 80

davydoo,

I wasn't referring to the psychological aspect of having a larger pot of capital. My point was about liquidity. Much harder to enter and exit less liquid stocks. Speaking from experience here.

 

davydoo - 6 Jun'11 - 14:49 - 79 of 80

Fair point. As a small cap investor I'm already facing substantial liquidity issues on some stocks and have relied on bids to get me out. I face a similar thing now with a large holding in YGH.

 

davydoo - 6 Jun'11 - 14:09 - 77 of 80

I disagree horndean, my trading performance has been transformed since i reached a level that wasnt all or nothing decisions, I might not have a million to invest yet, but the position I'm at gives me confidence I could manage it more rationally and with less emotion than days gone by when my invested capital meant buying a house or staying rented.

 

(PRICE DISTORTIONS by institutions trading low liquidity stocks create opportunity):

 

Invisage - 30 May'11 - 18:58 - 67 of 80

Free capital from all the small caps you have invested in what would you say are the top criteria each one should have met ?

 

The ones I can think of are

 

-Profitable

-low pe

-potential high growth rates in future years

-low debt

-ideally a dividend

-ideally directors hold a decent chunk of the stock

-good institutional backing

-track record of delivering share holder returns

 

I can't think of another 2 reasons.

 

 

davydoo - 30 May'11 - 19:14 - 68 of 80

freecapital, very good point about counterparties with 'non-financial' motivations. Whilst i agree that you'd rather your counterparty was a 'muppet' than an institution, sometimes small caps can benefit from arbitary selling by institutions being 'corporate muppets' I am currently observing this with DWN, a once much larger company, that is now a very small but profitable company, the previous largest holder Schroders, appear to be on an automated exit strategy regardless of news. Its like the fund manager has made a decision to get out, largely i suspect because their loss is so great and any future gains will have a minimal impact to the future performance, and their dealers are just exiting as instructed into any buying. Ive been buying a lot of their sells. davydoo v goliath.

 

 

freecapital - 31 May'11 - 11:58 - 69 of 80

davydoo I agree institutions sometimes have non-financial motivations. Or more precisely, motivations that are unrelated to the future prospects for the share. Some will sell arbitrarily if market cap falls below a certain level, eg £50m or £100m. Peter Gyllenhammar talked about this in the book.

 

I have also had cases where I bought a stake just under £250k off a very large institution and I had the feeling that because their stake was now under £250k, it was not worth their while to follow it, they just wanted to get rid.

 

== ==

 

I liked the LIST from Invisage

 

It is worth discussing how someone goes from investing/trading relatively small amounts of money to a larger amount once a level of success has been achieved. What is the attitude towards that money? Does it change once you can afford to lose a certain amount or does one always remain protective? It is not about not having respect for the money, but clearly some individuals are prepared to risk more and go on risking more, do they through good money management simply raise the amount at risk as the bank balance gets bigger? If you cannot handle investing or trading large amounts then you are never likely to make serious money in markets, especially if the aim is to do it in as short a period of time as possible. After all, the alternative is to simply hope to hit 10+ baggers all the time or pick the extreme winners of a bull market. More likely that most will lose as they hold on for far too long after the bull has gone.

[No6]

Further to the last post, here is a slightly old article about the self proclaimed infamous bear raider, Evil Knievel, who also has a reputation for being a high stakes gambler. It raises that old chestnut of the stock market as gambling, or at least trading as gambling.

 

Old CWR interview.

 

http://commoditywatch.podbean.com/2008/05/26/simon-cawkwell-evil-the-short-seller-knievil/

 

Although bear trader Simon Cawkwell is best known in the stock market - where his nickname is Evil Knievel, owing to his daring City gambles - he also wagers £1 million on horses. What are his gambling secrets? James Hipwell reports.

 

==============

 

Although the big man is something of a legend in the City for his antics as a bear trader [someone who makes their money from short-selling or 'shorting' stocks], it's less well known that he's a huge gambler on racehorses.

 

His obsession with finding equine winners goes back at least as far as the early 1970s, when he was working as an accountant in Zambia. Even then he was looking for an edge, rooting out ways to take the folding stuff off the bookies.

 

His most memorable bet from this period was on a Henry Cecil horse running over 1m5f at Newbury in July 1971.

 

'It was the first time out for the three-year-old, and I was delighted when a bookmaker I knew, a cocky young Greek fellow, offered me 12/1 on the beast. As we were in Africa, the prices came in via Telex, only someone had made a mistake inputting the odds, and they should have been 2/1.

 

'I had 300 Kwacha (equivalent to £200) at the 12s I'd been given, so when the horse won he owed me £2,400, a pretty useful sum back in the early 1970s. Of course, he didn't want to pay up, because thanks to Telex he had chalked up the wrong odds. I went to a solicitor who charged me £50 and was able to persuade the bookie to cough up, because Zambia is the only place in the world where gambling debts are enforceable. It was the best value I've ever had from a lawyer in my entire working life.'

 

Although Cawkwell had a terrible time in the late Eighties, he has bounced back very strongly. He told Inside Edge that every month last year he wagered an average of £1 million on horses, sometimes getting back £1.2 million, sometimes taking the odd £100,000 hit here and there.

 

==============

 

He said that the secret to betting on horses profitably is being well informed. You need to have access to people who know what's going on in training yards from Newmarket to Lambourn to Ballydoyle.

 

There's no difference between betting in the financial markets and betting on a horse. It's all about identifying value, and you do this by becoming well informed.

 

'Gambling on anything is about information. You either have to produce this information yourself or pay for it. I choose to pay,' he revealed.

 

He then recounted a story of how he was called by a top Lambourn racehorse trainer, who told him that an odds-on favourite in a race that day couldn't jump.

 

'I managed to get £14,000 on the second favourite at 5/2, so when it won I took £35,000, which is a good day's work by anyone's standards.'

 

==============

 

When he was asked about what essential characteristics a successful gambler needs to have, Cawkwell hit me with some psychology.

 

'Some people emerge from childhood as gamblers and others don't. I did, but my brother didn't. It has been argued that gamblers frequently experienced or think that they experienced absolute authority in childhood. I think that probably fits my own position.

 

'You have to be able to understand your own mental disposition towards gambling, because if you don't it will lead to losses.'

 

Cawkwell believes that if a gambler understands his own disposition, he has a priceless advantage over those (the vast majority) who are risk averse and simply can't bear the thought of losing.

 

'These people can only watch their capital match long-term trends and opportunities in the market. They're incapable of making bold decisions. As a result they make nothing or lose. Their brains tend to atrophy and they bore the pants off me.'

 

He seems genuinely intolerant of people who don't come with the mentality needed to succeed.

 

'With gambling, you must have the self-belief that you're going to win. People live in a miasma in which they're happy to be dominated and humiliated by bookmakers, and to maintain this state of affairs punters have to keep losing. Therefore, they ignore truths essential to winning. Even if they knew how to win, they wouldn't be able to handle it if they did.'

 

http://www.pokerplayer.co.uk/sports-betting/horse-racing/129/the_players_simon_cawkwell.html

 

[No6]

Interesting, FTSE100 looks like it is reversing, but the 250 and Techmark index still looks bullish.

 

FTSE100 - Inverse head and shoulders looks like it is failing here.

 

FTSE250 - Inverse head and shoulders looks like it worked out to the upside here.

 

TechMARK

[No6]

6 consecutive losing days in a row on the Dow, wonder if today will break it?

 

June 9 (Bloomberg) -- U.S. stocks advanced, snapping a six- day decline for the Standard & Poor’s 500 Index, as the trade deficit unexpectedly narrowed amid record exports.

 

The S&P 500 advanced 0.3 percent to 1,282.88 at 9:32 a.m. in New York. The benchmark gauge for American equities yesterday retreated to 12.1 times its companies’ forecast operating earnings, the cheapest valuation since August, according to data compiled by Bloomberg. The Dow Jones Industrial Average increased 30.27 points, or 0.3 percent, to 12,079.21 today.

 

“We’re due for a rally after miserable stock performance,” said John Carey, a Boston-based money manager at Pioneer Investments, which oversees about $250 billion. “People have been focusing on the negatives and have not been emphasizing the earnings momentum. Some stocks present good values again. It’s a good environment for investors to be positioning themselves.”

 

http://www.businessweek.com/news/2011-06-09/u-s-stocks-advance-as-record-exports-help-reduce-trade-gap.html

[jerpy]

From the How 12 Private Investors Made Millions New FB&B: Author Guy Thomas interviewed

 

 

 

It is worth discussing how someone goes from investing/trading relatively small amounts of money to a larger amount once a level of success has been achieved. What is the attitude towards that money? Does it change once you can afford to lose a certain amount or does one always remain protective? It is not about not having respect for the money, but clearly some individuals are prepared to risk more and go on risking more, do they through good money management simply raise the amount at risk as the bank balance gets bigger? If you cannot handle investing or trading large amounts then you are never likely to make serious money in markets, especially if the aim is to do it in as short a period of time as possible. After all, the alternative is to simply hope to hit 10+ baggers all the time or pick the extreme winners of a bull market. More likely that most will lose as they hold on for far too long after the bull has gone.

 

That may appear an hard psychological barrier, but IF you truly believe in a position, riding a bigger level(ie larger cash pile) of risk ought not faze anyone. The bigger consideration is as you play higher stakes, can you trade effectively because of liquidity issues. Size really does matter when you need to get out.

 

As for multi baggers, the difficulty is knowing when to let go. After all, they probably multi bagged whilst ignoring others that sold for smaller gains. Again why invest in the stock, until the reason changes, you simply ignore the noise and don't let go for true winners. But your last point is valid, no matter what the potential, if the whole market is negative against your long(or short) stance, I would suggest best to accept this and sit on the sidelines.

 

EDIT: Just remembering the article LDB put up by James Montier, just psychology