Tuesday, 31 December 2013

31-Dec-2013 CSE Trade Summary

Crossings - 31/12/2013 & Top 10 Contributors to Change ASPI

Following Stocks Reached New High / Low on 31/12/2013

Quote for the day

“Good traders know that opportunistic speculation is a process. Ignore any one single outcome, focus on the methodology that can consistently avoid catastrophic losses, manage risk, preserve capital. A good process can be replicated, a random spin of the wheel cannot.” - Barry Ritholtz

What Motivates Investors?

We are not as rational as we think we are. When it comes to money and investing, people do some pretty strange things.

Ever wonder why we do the things we do with our portfolios?

Well, there's a whole field of study that explains our sometimes-strange behavior.

Where Do You Fit in?

Much of the economic theory available today is based on the belief that individuals behave in a rational manner and that all existing information is embedded in the investment process.

This goes hand in hand with the efficient market hypothesis. In fact, researchers have uncovered evidence that rational behavior is not often the case.

Behavioral finance attempts to understand and explain how human emotions influence investors in their decision making process.

The Prospect Theory

It doesn't take a brain surgeon to know that people are risk averse and prefer a sure investment return rather than an uncertain one.

We want to get paid for taking the extra risk. That's pretty reasonable.

On the other hand, here's the strange part:

Prospect theory suggests that people react differently to equivalent situations depending on whether it's presented as a gain or a loss.

Individuals get more stressed out by prospective losses than they are happy by equal gains.

Sounds silly, but it is definitely true!

You?ll never hear an investment advisor tell you that he/she got flooded with calls because he/she reported, say, a 100,000 gain in a client?s portfolio.

But, you can bet that phone will ring when a similar report posts a 1,000 loss! A small loss always appears larger than a gain of a larger size.

It?s funny how when it goes deep into our pockets, the whole perspective changes.

How many times have you held onto a losing stock because you couldn't bring yourself to sell it at a loss? People end up taking more risks to avoid losses than to realize gains.

Gamblers on a losing streak behave in a similar fashion, doubling up bets to try and recoup what they?ve already lost.

By having the following misconception, "I know the stock price will bounce back, then I?ll sell it," investors pile on more risk to avoid realizing a loss.

If these seem like inconsistent attitudes toward risk, well, they are! What we find are people set a higher price on something they own than they would normally be prepared to pay.

An alternative to the loss aversion theory is that investors might choose to hold their losers and sell their winners because they believe that today?s losers may soon outperform today?s winners.

Investors often make the mistake of chasing the action by investing in stocks or funds that receive the most attention.

In support of this notion, research shows that money flows in more rapidly to investments that have performed extremely well than flows out of from investments that have performed poorly.

The Regret Theory

"Fear of Regret" or "Regret Theory" deals with the emotional reaction people experience after making what they think is an error of judgment.

Investors become emotionally affected by their original purchase price of a stock when they are going to sell it.

So, they avoid selling the stock in order to avoid the regret of having made a bad investment and the embarrassment of reporting a loss.

We ALL Hate to Be Wrong ...Don't We?

What investors should really ask themselves when faced with a similar situation is:

"What are the consequences of repeating the same mistake and if this security was already liquid, would I invest in it again?"

Chances are that you would not!

Regret theory also holds true for investors who did not buy a stock they had previously considered and which subsequently went up in value. By following the conventional wisdom, some investors avoid the possibility of feeling regret by rationalizing their decision with:

Everyone Else Is Doing IT!

Although it does not make much sense, some feel it?s much less embarrassing when you lose money on a popular stock that half the world owns it.

On the flip side, losing on an unknown or unpopular stock is a little harder to swallow!

Source: http://www.greekshares.com

Monday, 30 December 2013

Linda Bradford Raschke – 50 Time Tested Classic Stock Trading Rules

1. Plan your trades. Trade your plan. 
2. Keep records of your trading results. 
3. Keep a positive attitude, no matter how much you lose. 
4. Don't take the market home. 
5. Continually set higher trading goals. 
6. Successful traders buy into bad news and sell into good news. 
7. Successful traders are not afraid to buy high and sell low. 
8. Successful traders have a well-scheduled planned time for studying the markets. 
9. Successful traders isolate themselves from the opinions of others. 
10. Continually strive for patience, perseverance, determination, and rational action. 
11. Limit your losses – use stops! 
12. Never cancel a stop loss order after you have placed it! 
13. Place the stop at the time you make your trade. 
14. Never get into the market because you are anxious because of waiting. 
15. Avoid getting in or out of the market too often. 
16. Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action. 
17. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success. 
18. Always discipline yourself by following a pre-determined set of rules. 
19. Remember that a bear market will give back in one month what a bull market has taken three months to build. 
20. Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point. 
21. You must have a program, you must know your program, and you must follow your program. 
22. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable. 
23. Split your profits right down the middle and never risk more than 50% of them again in the market. 
24. The key to successful trading is knowing yourself and your stress point. 
25. The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding mistakes. 
26. In trading as in fencing there are the quick and the dead. 
27. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success. 
28. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long. 
29. Accept failure as a step towards victory. 
30. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don't let ego and greed inhibit clear thinking and hard work. 
31. One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity always lies through the open door. 
32. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed. 
33. It’s much easier to put on a trade than to take it off. 
34. If a market doesn't do what you think it should do, get out. 
35. Beware of large positions that can control your emotions. Don’t be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts. 
36. Never add to a losing position. 
37. Beware of trying to pick tops or bottoms. 
38. You must believe in yourself and your judgement if you expect to make a living at this game. 
39. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be – up or down. 
40. A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss – that is what does the damage to the pocket book and to the soul. 
41. Never volunteer advice and never brag of your winnings. 
42. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss. 
43. Standing aside is a position. 
44. It is better to be more interested in the market’s reaction to new information than in the piece of news itself. 
45. If you don't know who you are, the markets are an expensive place to find out. 
46. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word – Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen. 
47. Except in unusual circumstances, get in the habit of taking your profit too soon. Don’t torment yourself if a trade continues winning without you. Chances are it won’t continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost. 
48. When the ship starts to sink, don’t pray – jump! 
49. Lose your opinion – not your money. 
50. Assimilate into your very bones a set of trading rules that works for you. 
Source: http://www.tischendorf.com

30-Dec-2013 CSE Trade Summary

Crossings - 30/12/2013 & Top 10 Contributors to Change ASPI

Following Stocks Reached New High / Low on 30/12/2013

CSE Listed Companies - Public Holding

Quote for the day

"When one door closes, another opens. But we often look so long and so regretfully at the closed door that we do not see the one which has opened for us." - Alexander Graham Bell

Sunday, 29 December 2013

The Sentiment Cycle – An interesting perspective

“The Market is a mechanism for messing as many people about as it can, as often as possible”. 

Sounds a bit cynical, but I believe a firm knowledge of the sentiment cycle and an understanding of where we are within the cycle could help us guard against being messed about and give us a clue as to where we're heading (like a ‘roadmap’).


Justin Mamis sums up nicely what the Sentiment Cycle represents “What we have is essentially a graphical representation of the manic depressive moods typically experienced by market participants as a function of time and price in one complete sentiment loop.”

See the chart above, taken from Mamis’ “The Nature of Risk” book.

Before we go any further, let’s take a quick glance at the different phases and the market psychology behind them.

Returning Confidence
By the time confidence is fully restored the markets have been rallying for some time. They start to get choppy and retracement moves get consecutively more fierce, each one more intimidating than the last.

Buying the Dip (the big dip)
A huge pullback now gets underway, even larger than the scary one you may have witnessed last month or so. After such a dynamic bull run, investors are willing to take on a phenomenal amount of risk and the smart money buys the big dip. Also, money is still flooding in from the general public, who likely read in The Sun that stock markets will remain strong for all eternity.

At this stage all economic data still supports the idea of higher prices. Traders that didn’t get involved in the last dip-buying opportunity now have hard evidence that it worked before. All of the traders that wanted to be long, are long (there are no more buyers), causing prices to decelerate. Distribution starts to take place, i.e. stock transfers hands, from smart money to stupid money…. Strong to weak.

Traders start to get that gut wrenching feeling that something may be changing but the fundamentals still don’t back this up, and people cling onto hope alone. Analysts start to get subtle warnings. Maybe previous market leaders start to break below important support levels or Moving Averages.

Overt Warning/Panic
Typically there’d be a catalyst here (i.e. big banks like Lehman brothers start to file for bankruptcy… sound familiar?). The index will break below a previous reaction low or maybe the 200 day Moving Average. News readers will be telling the world that the fun is now over. Intelligent investors start to sell rallies, giving stock prices little/no chance of any recovery.

Discouragement and Aversion
Prices have been rattling off for some time now, as the general public start shedding stock and the short sellers are stronger than ever. There’s no good economic news flow and everyone thinks that stock markets will go down forever.

Wall of Worry
Certain market sectors will now start to bottom out as everyone that wanted to sell has done so. The smart money now starts to move in slowly, resulting in the market pausing for breath or drifting along sideways for a few months. There are no sellers left, so despite the bad news flow markets start to creep higher. Short sellers start to cover their positions, adding fuel to the fire.

Aversion to Denial
Markets start to trend upwards. Short sellers start to get concerned that sentiment has changed. With no sellers above the market, these sorts of moves can be fast and sharp and tend to leave people behind.

This brings us back to ‘Returning Confidence’.

Edited article from http://www.futurestechs.co.uk

Saturday, 28 December 2013

Some Important Lessons I’ve Learned

Extracted from Article written by Adam Grimes (Author of  'The art and science of technical analysis')
I saw so many people struggling, and witnessed so many abuses in so many forums, that I wanted to try to put down the lessons and truths I had found in a concrete format. True, there is no one way to trade, and many different approaches can be successful in the market, so long as they are aligned with some fundamental truths. These are some of those fundamental and undeniable truths, as I have come to understand them over the course of my trading career:
  • Most of the time, markets are very close to efficient (in the academic sense of the word.) This means that most of the time, price movement is random and we have no reason, from a technical perspective, to be involved in those markets.

  • There are, however, repeatable patterns in prices. This is the good news; it means we can make money using technical tools to trade.

  • The biases and statistical edges provided by these patterns are very, very small. This is the bad news; it means that it is exceedingly difficult to make money trading. We must be able to identify those points where markets are something a little “less than random” and where there might be a statistical edge present, and then put on trades in very competitive markets.

  • Technical trading is nothing more than a statistical game. The parallels to gambling and other games of chance are very, very close. A technical trader simply identifies the patterns where an edge might be present, takes the correct position at the correct time, and manages the risk in the trade. This is, of course, a very simplified summary of the trading process, but it is useful to see things from this perspective. This is the essence of trading: find the pattern, put on the trade, manage the risk, and take profits.

  • Because all we are doing is playing the small edges as they occur in the markets, it is important to be utterly consistent in every aspect of our trading. Many markets have gotten harder (i.e. more efficient, more of the time) over the past decade and things that once worked no longer work. Iron discipline is a key component of successful trading. If you are not disciplined every time, every moment of your interaction with the market, do not say you are disciplined.

  • It is possible to trade effectively as a purely systematic trader or as a discretionary trader, but the more discretion is involved the more the trader himself is a key part of the trading process. It can be very difficult to sort out performance issues that are caused by markets, by natural statistical fluctuations, by the trading system not working, or by the trader himself.

  • There is still a tremendous bias in many circles toward fundamental analysis and against technical analysis. The fundamentalists have a facile argument because it is easy to point to patterns on charts, say they are absurd, and point out that markets are actually driven by supply, demand and fundamental factors—the very elements that fundamental analysis deals with directly. However, many times the element of art involved in fundamental analysis is overlooked. How much does your valuation change if your discount rate is off by a percentage point? How dependent is your model on your assessment of some manager’s CapEx decisions in year 4? Do you really have a good sense of how the company’s competitive position will evolve with the industry over the next decade? Does everyone else? There’s a lot more “wiggle room” in fundamentals than most people realize.

  • One advantage of technical trading is that, done properly, it clearly identifies supply/demand imbalances from their effect on prices. This is a form of look-back analysis, but good technical tools force you to deal with the reality of what is happening right now. There is no equivocation, wishing, or emotional involvement in solid technical trading. The best risk management tools are technical, or are based on patterns in prices themselves.

  • Most people (and funds) who try to trade will not be successful, and I believe this is because most of them are simply trying to do things that do not work. Taking a good, hard look at your tools, methods, and approach can be scary, but there is no other way to find enduring success in the market.

Friday, 27 December 2013

27-Dec-2013 CSE Trade Summary

Crossings - 27/12/2013 & Top 10 Contributors to Change ASPI

Following Stocks Reached New High / Low on 27/12/2013

Quote for the day

"If the market's behavior seems mysterious to you, it's because your own behavior is mysterious and unmanageable. You can't really determine what the market is likely to do next when you don't even know what you'll do next." -  Mark Douglas

A trader has to study trends and reversals in the market the way a sailor studies the ocean

We come to the market from different walks of life and bring with us the mental baggage of our upbringing and prior experiences. Most of us find that when we act in the market the way we do in our everyday life, we lose money.
Your success or failure in the market depends on your thoughts and feelings. It depends on your attitudes toward gain and risk, fear and greed, and on how you handle the excitement of trading and risk.
Most of all, your success or failure depends on your ability to use your intellect rather than act out your emotions. A trader who feels overjoyed when he wins and depressed when he loses cannot accumulate equity because he is controlled by his emotions. If you let the market make you feel high or low, you will lose money.
To be a winner in the market you must know yourself and act coolly and responsibly. The pain of losing scares people into looking for magic meth­ods. At the same time, they discard much of what is useful in their professional or business backgrounds.
Like an Ocean
The market is like an ocean - it moves up and down regardless of what you want. You may feel joy when you buy a stock and it explodes in a rally. You may feel drenched with fear when you go short but the market rises and your equity melts with every uptick. These feelings have nothing to do with the market-they exist only inside you.
The market does not know you exist. You can do nothing to influence it. You can only control your behavior.
The ocean does not care about your welfare, but it has no wish to hurt you either. You may feel joy on a sunny day, when a gentle wind pushes your sailboat where you want it to go. You may feel panic on a stormy day when the ocean pushes your boat toward the rocks. Your feelings about the ocean exist only in your mind. They threaten your survival when you let your feel­ings rather than intellect control your behavior.
A sailor cannot control the ocean, but he can control himself. He studies currents and weather patterns. He learns safe sailing techniques and gains experience. He knows when to sail and when to stay in the harbor. A successful sailor uses his intelligence.
An ocean can be useful -you can fish in it and use its surface to get to other islands. An ocean can be dangerous - you can drown in it. The more rational your approach, the more likely you are to get what you want. When you act out your emotions, you cannot focus on the reality of the ocean.
A trader has to study trends and reversals in the market the way a sailor studies the ocean. He must trade on a small scale while learning to handle himself in the market. You can never control the market but you can learn to control yourself.
A beginner who has a string of profitable trades often feels he can walk on water. He starts taking wild risks and blows up his account. On the other hand, an amateur who takes several losses in a row often feels so demoralized that he cannot place an order even when his system gives him a strong signal to buy or sell. If trading makes you feel elated or frightened, you cannot fully use your intellect. When joy sweeps you off your feet, you will make irrational trades and lose. When fear grips you, you'll miss profitable trades.
A professional trader uses his head and stays calm. Only amateurs become excited or depressed because of their trades. Emotional reactions are a luxury that you cannot afford in the markets.
Emotional Trading
Most people crave excitement and entertainment. Singers, actors, and professional athletes command much higher incomes in our society than do such mundane workmen as physicians, pilots, or college professors. People love to have their nerves tickled - they buy lottery tickets, fly to Las Vegas, and slow down to gawk at road accidents.
Trading is a heady experience and can be very addictive. Losers who drop money in the markets receive a tremendous entertainment value.
The market is among the most entertaining places on the face of the Earth. It is a spectator sport and a participant sport rolled into one. Imagine going to a major-league ball game in which you are not confined to the bleachers. For a few hundred dollars you can run onto the field and join the game. If you hit the ball right, you will get paid like a professional.
You would probably think twice before running onto the field the first few times. This cautious attitude is responsible for the well-known "beginner's luck." Once a beginner hits the ball well a few times and collects his pay, he is likely to get the idea that he is better than the pros and could make a good living at it. Greedy amateurs start running out onto the field too often, even when there are no good playing opportunities. Before they know what hit them, a short string of losses destroys their careers.
Emotional decisions are lethal in the markets. You can see a good model of emotional trading by going to a racetrack, turning around, and watching the humans instead of the horses. Gamblers stomp their feet, jump up and down, and yell at horses and jockeys. Thousands of people act out their emotions. Winners embrace and losers tear up their tickets in disgust. The joy, the pain, and the intensity of wishful thinking are caricatures of what happens in the markets. A cool handicapper who tries to make a living at the track does not get excited, yell, or bet the bulk of his roll on any race.
Casinos love drunk patrons. They pour gamblers free drinks because drunks are more emotional and gamble more. Casinos try to throw out intel­ligent card-counters. There is less free liquor on Wall Street than in a casino, but at least here they do not throw you out of the game for being a good trader.
In Charge of Your Life
When a monkey hurts its foot on a tree stump, he flies into a rage and kicks the piece of wood. You laugh at a monkey, but do you laugh at yourself when you act like him? If the market drops while you are long, you may double up on your losing trade or else go short, trying to get even. You act emotionally instead of using your intellect. What is the difference between a trader trying to get back at the market and a monkey kicking a tree stump? Acting out of anger, fear, or elation destroys your chance of
success. You have to analyze your behavior in the market instead of acting out your feelings.
We get angry at the market, we become afraid of it, we develop silly superstitions. All the while, the market keeps cycling through its rallies and declines like an ocean going through its storms and calm periods. Mark Douglas writes in The Disciplined Trader that in the market, "There is no beginning, middle, or end - only what you create in your own mind. Rarely do any of us grow up learning to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way."
We try to cajole or manipulate the market, acting like the ancient emperor Xerxes, who ordered his soldiers to horsewhip the sea for sinking his fleet. Most of us are not aware how manipulative we are, how we bargain, how we act out our feelings in the market. Most of us consider ourselves the center of the universe and expect every person or group to be either good or bad to us. This does not work in the market which is completely impersonal.
Leston Havens, a Harvard University psychiatrist, writes: "Cannibalism and slavery are probably the oldest manifestations of human predation and submission. Although both are now discouraged, their continued existence in psychological forms demonstrates that civilization has achieved great success in moving from the concrete and physical to the abstract and psychological, while persisting in the same purposes." Parents threaten their children, bullies hit them, teachers try to bend their will in school. Little wonder that most of us grow up either hiding in a shell or learning how to manipulate others in self-defense. Acting independently does not feel natural to us-but that is the only way to succeed in the market.
Douglas warns, "If the market's behavior seems mysterious to you, it's because your own behavior is mysterious and unmanageable. You can't really determine what the market is likely to do next when you don't even know what you'll do next." Ultimately, "the one thing you can control is yourself. As a trader, you have the power either to give yourself money or to give your money to other traders." He adds, "The traders who can make money consistently . . . approach trading from the perspective of a mental discipline."
Each trader has his own demons to exorcise on the journey to becoming a successful professional. Here are several rules that worked for me as I grew from a wild amateur into an erratic semiprofessional and finally into a professional trader. You may change this list to suit your personality.
•  Decide that you are in the market for the long haul -that is, you want to be a trader even 20 years from now.
•  Learn as much as you can. Read and listen to experts, but keep a degree of healthy skepticism about everything. Ask questions, and do not accept experts at their word.
•  Do not get greedy and rush to trade - take your time to learn. The mar­kets will be there with more good opportunities in the months and years ahead.
•  Develop a method for analyzing the market-that is, "If A happens, then B is likely to happen." Markets have many dimensions-use sev­eral analytic methods to confirm trades. Test everything on historical data and then in the markets, using real money. Markets keep chang­ing-you need different tools for trading bull and bear markets and transitional periods as well as a method for telling the difference.
•  Develop a money management plan. Your first goal must be long-term survival; your second goal, a steady growth of capital; and your third goal, making high profits. Most traders put the third goal first and are unaware that goals 1 and 2 exist.
•  Be aware that a trader is the weakest link in any trading system. Go to a meeting of Alcoholics Anonymous to learn how to avoid losses or develop your own method for cutting out impulsive trades.
•  Winners think, feel, and act differently than losers. You must look within yourself, strip away your illusions, and change your old ways of being, thinking, and acting. Change is hard, but if you want to be a professional trader, you have to work on changing your personality.
Source: http://bivib.com

Thursday, 26 December 2013

Gold Faces a Volatile Road Downward in 2014 For These Key Reasons

- Gold has posted its first annual decline in 13 years

- We see key fundamental headwinds that may put further pressure on gold prices

- Technical studies suggest XAUUSD may continue recent losses

We've argued since the beginning of the year that gold was positioned for weakness as the fundamental drivers of investment demand receded. Gold's appeal is that of an alternative store of value, sought at times when inflation threatens to debauch paper currency or a major crisis undermines structural confidence in financial markets.

Anchored price growth expectations in the face of aggressive monetary stimulus and ebbing fears of another global market shakeout left gold without fundamental support on either front. Prices responded as expected, dropping over 26 percent so far this year. Looking ahead, a broadly unchanged thematic backdrop argues for more of the same.

Gold Prices Tracking Inflation Expectations

On the inflation front, 2013 proved to be the year when investors let go of the notion that global stimulus efforts were doomed to imminently unleash runaway inflation. Indeed, global price growth expectations (as tracked by a Bloomberg survey of economists) persistently declined despite the introduction of “Abenomics” in Japan and the Federal Reserve’s aggressive $85 billion/month asset purchase effort through its “QE3” program.
The outlook for the first quarter of 2014 looks less forgiving still. Most notably, the Fed is preparing to “taper” the size of its stimulus effort. While speculation about the precise timing of the first cutback has produced considerable volatility and looks likely to continue to do so, the overall trajectory of FOMC policy appears to be firmly in place. US economic data has increasingly outperformed relative to market forecasts since the beginning of November. Meanwhile, bond markets have started to price out disinflation, with the 1-year breakeven rate (a measure of the price growth outlook as reflected in Treasury yields) surging in late November to the highest level since mid-April.

Elsewhere, most of the major central banks are in wait-and-see mode. The BOJ is likely to wait to assess the impact of the sales tax increase due in April before contemplating additional stimulus. The BOE is flirting with the enviable problem of having its policy objectives met sooner than expected. The SNB, BOC and the RBA are on hold while the RBNZ is actively aiming to tighten. That leaves just the ECB on the overtly dovish side of the outlook spectrum. Needless to say, this bodes ill for anti-fiat gold demand.

Gold Unlikely to Find Support from “Tail” Risk

After the Great Recession, the Eurozone debt crisis looked like the likeliest source of structural market instability.That risk has since receded. A Bloomberg gauge tracking financial conditions in the currency bloc now stands at highest level in over six years, pointing to a lack of meaningful funding stress.

Elsewhere, a sharp jump in the 5-year US credit-default swap (CDS) spread reflected jitters surrounding the debate to raise the so-called “debt ceiling” and subsequent government shutdown. As we wrote in our outlook for the fourth quarter however, this didn’t prove lasting. The shutdown turned out to be too much of a political albatross for everyone involved and a deal was struck to end it just two weeks after it began. The 5-year CDS rate turned dutifully lower, dropping over 27 percent from October’s peak. Since then, US lawmakers have secured a two-year budget deal that seems to ensure that another such episode will not transpire in the near term.

Gold Volatility Likely But Weakness Broadly Favored

The markets continue to respondto eroding fundamental support for gold prices. Data compiled by Bloomberg suggests that total known bullion holdings in gold ETFs fell30.9 percent year-to-date in 2013,bringing them to the lowest level since November 2009 and underscoring eroding investment demand.

Markets don’t move in straight lines, however. That means that some seesaw price action is almost certainty in the cards, especially as markets adjust to changes in the Fed’s policy mix. Still, as fears of US Dollar dilution dissipate along with the size of the QE program and “tail” risks fade, the desire to hold an alternative-value hedge ought to decline as well. This should keep rallies well-capped and maintain overall structural down trend firmly in place into 2014.

Gold Has Room to Bounce But Larger Trend Points Lower

Gold Weekly Chart - Created Using FXCM Marketscope 2.0

From a technical perspective, gold is set to post its first annual decline in thirteen years and the broader drop following the break below a multi-year triangle formation in April of this year remains in focus. Although the larger trend remains weighted to the downside, near-term metrics suggest the yellow metal is at risk for a correction higher heading into 1Q if prices mount the $1268/70 resistance range. That level represents the confluence of multiple Fibonacci ratios and has served as a clear pivot in price dating back to 2010.

Interim support rests at $1209, with a break below this level targeting more critical support at $1179/80. This level represents the confluence of the 100% Fibonacci extension taken from the decline off the August highs and the yearly low made back in late-June. Note that daily momentum has continued to respect trend line resistance dating back to the August highs. A breach and subsequent break above the 50-threshold would suggest a substantial correction higher may be in the works. It is also important to keep in mind that cyclically speaking, gold tends to perform well into the year-end with the 2014 opening range likely to offer further clarity on whether a rebound is on the cards early next year. Bottom line: gold remains at risk sub-$1268/70, with a break higher shifting our near-term focus to the topside with resistance targets eyed at $1286, $1305 and $1325. Look for a break and close below the yearly low to put the broader down trend back into focus, with such a scenario eyeing subsequent support targets at $1151-1160, $1125 and $1091.

Written by Ilya Spivak and Michael Boutros, Currency Strategists for DailyFX.com

26-Dec-2013 CSE Trade Summary

Crossings - 26/12/2013 & Top 10 Contributors to Change ASPI

Following Stocks Reached New High / Low on 26/12/2013

Quote for the day

"It's better to look ahead and prepare than to look back and regret." - Jackie Joyner-Kersee

Wednesday, 25 December 2013

The Buffett Formula — How To Get Smarter


“The best thing a human being can do is to help another human being know more.” — Charlie Munger
“Go to bed smarter than when you woke up.” — Charlie Munger
Most people go though life not really getting any smarter. Why? They simply won’t do the work required.
It’s easy to come home, sit on the couch, watch TV and zone out until bed time rolls around. But that’s not really going to help you get smarter.
Sure you can go into the office the next day and discuss the details of last night’s episode of Mad Men or Game of Thrones. And, yes, you know what happened on Survivor. But that’s not knowledge accumulation, it’s a mind-numbing sedative.
But you can acquire knowledge if you want it.
In fact there is a simple formula, which if followed is almost certain to make you smarter over time. Simple but not easy.
It involves a lot of hard work.
We’ll call it the Buffett formula, named after Warren Buffett and his longtime business partner at Berkshire Hathaway, Charlie Munger. These two are an extraordinary combination of minds. They are also learning machines.
“I can see, he can hear. We make a great combination.” — Warren Buffett, speaking of his partner and friend, Charlie Munger.
We can learn a lot from them. They didn't get smart because they are both billionaires. No, in fact they became billionaires, in part, because they are smart. More importantly, they keep getting smarter. And it turns out that they have a lot to say on the subject.
How to get smarter
Read. A lot.
Warren Buffett says, “I just sit in my office and read all day.”
What does that mean? He estimates that he spends 80% of his working day reading and thinking.
“You could hardly find a partnership in which two people settle on reading more hours of the day than in ours,” Charlie Munger commented.
When asked how to get smarter, Buffett once held up stacks of paper and said “read 500 pages like this every day. That’s how knowledge builds up, like compound interest.”
All of us can build our knowledge but most of us won’t put in the effort.
One person who took Buffett’s advice, Todd Combs, now works for the legendary investor. After hearing Buffett talk he started keeping track of what he read and how many pages he was reading.
The Omaha World-Herald writes:
Eventually finding and reading productive material became second nature, a habit. As he began his investing career, he would read even more, hitting 600, 750, even 1,000 pages a day.
Combs discovered that Buffett’s formula worked, giving him more knowledge that helped him with what became his primary job — seeking the truth about potential investments.
But how you read matters too.
You need to be critical and always thinking. You need to do the mental work required to hold an opinion.
In Working tougher: Why Great Partnerships Succeed Buffett comments to author Michael Eisner:
Look, my job is essentially just corralling more and more and more facts and information, and occasionally seeing whether that leads to some action. And Charlie—his children call him a book with legs.
Continuous learning
Eisner continues:
Maybe that’s why both men agree it’s better that they never lived in the same city, or worked in the same office. They would have wanted to talk all the time, leaving no time for the reading, which Munger describes as part of an essential continuing education program for the men who run one of the largest conglomerates in the world.
“I don’t think any other twosome in business was better at continuous learning than we were,” he says, talking in the past tense but not really meaning it. “And if we hadn’t been continuous learners, the record wouldn’t have been as good. And we were so extreme about it that we both spent the better part of our days reading, so we could learn more, which is not a common pattern in business.”
It doesn’t work how you think it works.
If you’re thinking they sit in front of a computer all day obsessing over numbers and figures? You’d be dead wrong.
““No,” says Warren. “We don't read other people's opinions. We want to get the facts, and then think.” And when it gets to the thinking part, for Buffett and Munger, there’s no one better to think with than their partners. “Charlie can't encounter a problem without thinking of an answer,” posits Warren. “He has the best thirty-second mind I've ever seen. I’ll call him up, and within thirty seconds, he’ll grasp it. He just sees things immediately.”
Munger sees his knowledge accumulation as an acquired, rather than natural, genius. And he’d give all the credit to the studying he does.
“Neither Warren nor I is smart enough to make the decisions with no time to think,” Munger once told a reporter. “We make actual decisions very rapidly, but that’s because we’ve spent so much time preparing ourselves by quietly sitting and reading and thinking.”
How can you find time to read?
Finding the time to read is easier than you think. One way to help make that happen is to carve an hour out of your day just for yourself.
In an interview he gave for his authorized biography The Snowball, Buffett told the story:
Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who's my most valuable client?’ And he decided it was himself. So he decided to sell himself an hour each day. He did it early in the morning, working on these construction projects and real estate deals. Everybody should do this, be the client, and then work for other people, too, and sell yourself an hour a day.
It's important to think about the opportunity cost of this hour. On one hand you can check twitter, read some online news, and reply to a few emails while pretending to finish the memo that is supposed to be the focus of your attention. On the other hand, you can dedicate the time to improving yourself. In the short term, you're better off with the dopamine laced rush of email and twitter while multitasking. In the long term, the investment in learning something new and improving yourself goes further.
“I have always wanted to improve what I do,“ Munger comments “even if it reduces my income in any given year. And I always set aside time so I can play my own self-amusement and improvement game.”
Reading is only part of the equation.
But reading isn’t enough. Charlie Munger offers:
We read a lot. I don't know anyone who's wise who doesn't read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don't grab the right ideas or don’t know what to do with them
Commenting on what it means to have knowledge, in How To Read A Book, Mortimer Adler writes: “The person who says he knows what he thinks but cannot express it usually does not know what he thinks.”
Can you explain what you know to someone else? Try it. Pick an idea you think you have a grasp of and write it out on a sheet of paper as if you were explaining it to someone else. 
Nature or Nurture?
Another way to get smarter, outside of reading, is to surround yourself with people who are not afraid to challenge your ideas.
“Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.” — Charlie Munger

Tuesday, 24 December 2013

24-Dec-2013 CSE Trade Summary

Crossings - 24/12/2013 & Top 10 Contributors to Change ASPI

Following Stocks Reached New High / Low on 24/12/2013

C.R.E.A.T.E. your trading goals

Do you currently set goals for successful day trading or in fact for any type of trading?

How is that working out for you?

It is all very well setting goals but you need to make sure that you have some parameters around how you set your goals, in order for them to work for you.

As a trader you will want to have a trading plan and also goals that will come from working that plan. These will include financial and education goals around your trading and it is also a good idea to put in your personal, fitness and relationship goals as these have a huge bearing on your success as a trader. The better you are holistically, the better trader you become.

Following is a proven model for successful goal setting:

1. Concise - ensure that your goal statement is simple and easy for both your conscious and unconscious mind to understand and then act upon.

2. Realistic - when a goal is relatively easy for you to accept and is not too much of a leap from where you are currently, the unconscious mind can work with that and start having you put things in order for this to become a reality. E.g. If you are currently losing money in the market, it could be too big a jump for your unconscious mind if your first financial target goal was to make $1 million in the next 6 weeks. It could be far more effective to set this at $10,000.

3. Ecological - the execution of all goals needs to be safe to yourself and safe for others. This is just a step to ensure that what needs to happen does not include any possible harm coming to yourself, any other person, animal or the planet. I think you get the picture.

4. As now - always have your goal stated as if you have already achieved it. Nothing is more powerful for your unconscious mind than to have every part of you feel that the achieving of this goal has already happened.

5. Timed and toward what you want - attach a time frame to your goal statement. Think about a realistic time frame that you can expect to work with this goal and always make the statement towards what you want not away from what you don't want. You will see in the following goal statement example how to best do this.

6. End Step/Evidence - you will need to ask yourself ' What will I be doing when I have achieved this goal that will mean I KNOW that it has happened?' What do you have to see, hear or feel in order to know?

So, get busy and C.R.E.A.T.E. your trading goals from the process above

Edited Article Source: http://EzineArticles.com

CSE - 2013 Dividend Payment at a glance

Quote for the day

“In bull markets, people have faith; in bear markets, doubt. The other way around might be more profitable.”- James Grant

Monday, 23 December 2013

23-Dec-2013 CSE Trade Summary

Crossings - 23/12/2013 & Top 10 Contributors to Change ASPI

Following Stocks Reached New High / Low on 23/12/2013

Quote for the day

“Conventional thinking, particularly around important turning points, is usually not very helpful because it tends to focus on the extrapolation of past trends into the future.”
- Tony Boekh

Saturday, 21 December 2013

2013 Country Stock Market Performance


There are now just nine trading days left in 2013, so below is an updated look at the year-to-date performance (local currency) of the stock markets for 76 countries around the world.  
The average year-to-date change of the 76 countries highlighted is currently just above 12%.  Of the 76 countries, 57 are up (75%) in 2013 and 19 are down (25%).  The UAE has posted the biggest gains YTD, while Japan is up the most of any G7 country.  With a gain of 25.07%, the US ranks right up near the top of the list in 13th place.  Not bad for the largest country by market cap in the world!  Germany ranks third among G7 countries with a YTD gain of 19.35%, followed by France (11.74%), Italy (10.15%) and the UK (9.98%).  At the bottom of the barrel in the G7 is Canada with a 2013 gain of 6.28%.
While 2013 has been a banner year for many countries, the emerging market BRICs (Brazil, Russia, India, China) have had a rough go of it.  India is the best performer of the BRICs with a YTD gain of just 6.1%.  The other three BRICs are in the red.  China is down 5.2%, Russia is down 7.37% and Brazil is down 17.82%.  Brazil ranks second-to-last behind Peru, which is down 24.09%.  Brazil has two huge events in the years ahead with the World Cup in 2014 and the Summer Olympics in 2016.  So far investors have done nothing but sell leading up to these events.
Source: http://www.bespokeinvest.com/