Posts filed under “Trading”

Market Sentiment Screams Crash! Or Buy! Or Something…

Today, let us briefly address sentiment what it is, what it means and how to use it in your everyday trading. There is no piece of market data that is more misused, misunderstood or misapplied than sentiment.

The spark for today’s diatribe was a State Street study of cash allocations in investment portfolios. The study found that investors worldwide had as much as 40 percent of their holdings in cash in 2014, up from 31 percent in 2012. In the U.S., cash rose to 36 percent in 2014 from 26 percent in 2012.

This led to lots of news media coverage (see “Fear of Equities Drives More Investors to Cash” and “Investor distrust drives rise in cash holdings”). Huge cash holdings aren’t what we typically think of when discussing investor complacency. The always-savvy Michael Santoli pointed to this as an example of bullish desperation.

I am less convinced. Most of the time, sentiment data contains a lot of noise and not a whole lot of actionable information.

We can break sentiment data into two distinct groups: survey and market. Survey data is what we get when we ask someone a question about related market issues. It has an anecdotal component in which someone describes what they are doing in the markets. Market sentiment is some measure of price based on actual buying and selling. This includes a wide variety of indicators ranging from put/call ratios, percentage of stocks higher than their 200-day moving average, money flow, etc.  Continues here

Category: Psychology, Sentiment, Trading

Investing/Trading Rules, Aphorisms & Books (Summer 2014)

A few years ago, I started pulling together my favorite Trading Rules & Aphorisms. It turned out to be a popular post, and so we added “Rules” as a new category. Since then, I have taken to updating this sporadically (see this).

We are overdue for an update.  What follows are the smartest and most insightful perspectives from traders, analysts, economists and investors on what to do — and what not to do — when it comes to markets that have been previously published on TBP.

Here is the latest update:

Trading & Investing Rules, Aphorisms & Books

Jeremy Grantham: Investment Lessons Learned Over 47 Years (Mistakes Were Made)

Sir John Templeton 16 Rules For Investment Success

Bernard Baruch: 10 Rules of Investing

10 Lessons from 1987 Market Crash

Livermores Seven Trading Lessons

Bob Farrell’s 10 Rules for Investing

James Montier’s Seven Immutable Laws of Investing

Byron Wien’s 20 Rules of Investing & Life

Richard Rhodes’ 12 Trading Rules

John Murphy’s Ten Laws of Technical Trading

Six Rules of Michael Steinhardt

Warren Buffett Favorite Investing Quotes

Nassim Taleb’s 5 Rules of Volatility

Morgan Housel’s 9 Financial Rules

David Merkel: The Eight Rules of My Investing

Art Huprich’s Market Truisms and Axioms

DENNIS GARTMAN’S NOT-SO-SIMPLE RULES OF TRADING

Rosie’s Rules to Remember

Louis Ehrenkrantz’ 7 Golden Rules for Investing

In Defense of the “Old Always” (Montier)

Lessons from Merrill Lynch

Gerald Loeb’s Market Wisdom

Lessons Learned from 37 Years of Futures Trading

Richard Russell’s The Power of Compounding

Doug Kass: 10 Laws of Stock Market Bubbles

The golden rules of investing (India)

25 Common Sense Money Tips

Dan Bunting’s Laws of Investing

Cassandra’s (Not so) Golden Rules About Investing (& Not Investing)

These are more general rules, not necessarily about investing:

50 Cognitive Distortions

Todd Harrison’s 12 Cognitive Biases That Endanger Investors

Lefsetz’s Business Rules

If you have any suggestions for any good lists of rules I may have missed, please link to them in comments. If they are worthy, they will get added to the list.

My own trading rules and favorite Trading Books are after the jump

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Category: Investing, Rules, Trading

Why Is It So Hard to Call a Market Top?

Each morning, I go through a similar routine: I wake up (no alarm clock), go to the kitchen to get a cup of coffee (this is my machine of choice lately), launch a script that opens 40 or so Firefox tabs. As part of my morning research, I quickly scan this series of websites to…Read More

Category: Investing, Sentiment, Short Selling, Technical Analysis, Trading

How Much is a Tulip Worth

Category: Psychology, Think Tank, Trading

The VIX, Variance Premium and Stock Market Volatility

Category: Options, Technical Analysis, Think Tank, Trading

Beware of Hedge Fund Managers Bearing Stock Tips

This week was the 19th annual Ira Sohn conference. It is an opportunity to raise money for a good cause (pediatric cancer research and treatment), and hobnob with rock star hedge-fund managers. It has become a must-attend event. Just remember one important thing: Ignore the stock tips. It is true that the picks and pans…Read More

Category: Hedge Funds, Trading, UnGuru

Wall Street Animals

Hat tip Creators.com

Category: Humor, Markets, Trading

Managing Assets for Billionaires

Alexander Friedman, global chief investment officer at UBS AG’s wealth-management unit, talks about investment strategy. Friedman speaks with Stephanie Ruhle and Barry Ritholtz on Bloomberg Television’s “Market Makers.”

Friedman: `Not a Bad Time’ to Take Risks in Russia

Source: Bloomberg April 16, 2014

More video after the jump

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Category: Investing, Media, Trading, Video

Flash Boys Rules

ADVANCE PROMOTION IS DEAD Your anticipatory hype is forgotten in the endless tsunami of new data. It makes no sense to build anticipation, it just dissipates. Now you pounce when the story is hot. Radiohead started it, Beyonce improved upon it and now Michael Lewis is taking it to the book business. The new watchword…Read More

Category: Books, Think Tank, Trading

Michael Lewis on Charlie Rose

Michael Lewis discusses his latest book: “Flash Boys: A Wall Street Revolt.”

Category: Regulation, Trading, Video