Does this fall under speculation.
With the unfortunate assassination of a potential leader of Pakistan, the market increased the feeling that there is possible instability in the country with a lower currency that has actually not gone up along with just about every other currency while the dollar declined.
Pakistan has a stable enough climate to have a good economy.
Also it is a nuclear power. Who is going to let this go in the hands of ayatollahs?
Friday, December 28, 2007
Saturday, December 22, 2007
Learning from mistakes
There is a quote James Dines put in his newsletter "wise men learn by other men's mistakes, fools by their own" by HG Bohn and today I feel like the fool.
Now I am admittedly trying to rationalize this statement with the mistake I made last week betting that Goldman would ramp during options expiration.
The quote is a rather tough luck approach to life, but Mr. Dines in an earlier newsletter mentioned that the price of tuition in the stock market is expensive in hopes of garnering outsized gains which would imply mistakes. I am curious to Mr. Dines approach to the matter. Is it fair to say that the quote is more along the lines of saying “don’t try to reinvent the wheel but create a more environmental friendly car!”
With this introduction I am going to try to analyze my mistake in gambling on Goldmans Sachs last Monday.
First, when one trades, he has to be sure his mental state is 100% since time is of the essence.
I have been pounding this into my mind the past year and have tried to apply a rigorous discipline in order to excel in this field of endeavour.
The subtle emotional background in this trade on reflection is: my success in gambling Saturday night, my string of profitable trades, a slight sense of envy after reading the WSJ journal article covering GS, and jealousy concerning my succesful friends which I only realized after seeing why yesterday afternoon.
The logic behind the trade was that it was obvious that Goldman would blow out their earnings which was made even simpler by the article in WSJ. The article was there to attempt to keep the price stable as buyers will prop the stock up. I knew that. I also new that everyone said it was a suckers bet to back the truck up on this stock ahead of earnings. With such pessimism, I thought that was enough to overweight the positive spin with the WSJ article. The stock was around 208-209 when I purchased 210 options for around 7 bucks. I felt that a good half hour in the morning would boost the options price by 15-20% easily. To hedge I shorted the futures market since if GS shocked to the downside the market would collapse. This would have worked if I didnt go overboard and buy GS 230 options which I thought was a possibility since the market was oversold and the last time the market surged GS went up over 20 points. I paid over a 1 a share which again was overpriced (after the fact), but the sellers knew what the buyers were expecting and charged accordingly. The overweight on out of the money options blew my spread wide open and exposed me if GS went down and it did.
GS opened up for about 5 minutes but the options never opened up or at least I didnt receive a price above what I paid for. I said that I would then wait for the conference call which I did and then saw no buyers for the option as GS dropped 10 points at one time during the day.
It was a gamble that I lost. I do feel like an idiot, but then again I would probably do it again just not with that much leverage. And by the Cramer even said it wasn't a great bet. In fact, he has been very acute the past month.
I tried telling everyone I know how I gambled inappropriately. Not sure why. I think it has something to do with some ethical credos I have. Anyways, my friend told me that several of his trader friends say the same thing. So maybe I should just suck it up and say nothing. A trait I will attempt.
But this didn't effect the rest of my week since I isolated the problem and didnt allow it to effect the rest of my week. But come the weekend I kept dwelling on that mistake. And now I'm writing about it.
And another friend who is a doctor mentioned how he had to handle patients dying. "You just have to block it out of your mind." There's nothing you can do. He's right.
But I like to say a prayer or think about that moment before burying the past.
Now I am admittedly trying to rationalize this statement with the mistake I made last week betting that Goldman would ramp during options expiration.
The quote is a rather tough luck approach to life, but Mr. Dines in an earlier newsletter mentioned that the price of tuition in the stock market is expensive in hopes of garnering outsized gains which would imply mistakes. I am curious to Mr. Dines approach to the matter. Is it fair to say that the quote is more along the lines of saying “don’t try to reinvent the wheel but create a more environmental friendly car!”
With this introduction I am going to try to analyze my mistake in gambling on Goldmans Sachs last Monday.
First, when one trades, he has to be sure his mental state is 100% since time is of the essence.
I have been pounding this into my mind the past year and have tried to apply a rigorous discipline in order to excel in this field of endeavour.
The subtle emotional background in this trade on reflection is: my success in gambling Saturday night, my string of profitable trades, a slight sense of envy after reading the WSJ journal article covering GS, and jealousy concerning my succesful friends which I only realized after seeing why yesterday afternoon.
The logic behind the trade was that it was obvious that Goldman would blow out their earnings which was made even simpler by the article in WSJ. The article was there to attempt to keep the price stable as buyers will prop the stock up. I knew that. I also new that everyone said it was a suckers bet to back the truck up on this stock ahead of earnings. With such pessimism, I thought that was enough to overweight the positive spin with the WSJ article. The stock was around 208-209 when I purchased 210 options for around 7 bucks. I felt that a good half hour in the morning would boost the options price by 15-20% easily. To hedge I shorted the futures market since if GS shocked to the downside the market would collapse. This would have worked if I didnt go overboard and buy GS 230 options which I thought was a possibility since the market was oversold and the last time the market surged GS went up over 20 points. I paid over a 1 a share which again was overpriced (after the fact), but the sellers knew what the buyers were expecting and charged accordingly. The overweight on out of the money options blew my spread wide open and exposed me if GS went down and it did.
GS opened up for about 5 minutes but the options never opened up or at least I didnt receive a price above what I paid for. I said that I would then wait for the conference call which I did and then saw no buyers for the option as GS dropped 10 points at one time during the day.
It was a gamble that I lost. I do feel like an idiot, but then again I would probably do it again just not with that much leverage. And by the Cramer even said it wasn't a great bet. In fact, he has been very acute the past month.
I tried telling everyone I know how I gambled inappropriately. Not sure why. I think it has something to do with some ethical credos I have. Anyways, my friend told me that several of his trader friends say the same thing. So maybe I should just suck it up and say nothing. A trait I will attempt.
But this didn't effect the rest of my week since I isolated the problem and didnt allow it to effect the rest of my week. But come the weekend I kept dwelling on that mistake. And now I'm writing about it.
And another friend who is a doctor mentioned how he had to handle patients dying. "You just have to block it out of your mind." There's nothing you can do. He's right.
But I like to say a prayer or think about that moment before burying the past.
Thursday, December 13, 2007
NewYorkTimes
and a 5,5% dividend wow!
I do know that Mr. Buffett bought Washington Post in the 70s when everyone else had overlooked it.
What will happen there?
I do know that Mr. Buffett bought Washington Post in the 70s when everyone else had overlooked it.
What will happen there?
Following on Yesterday's Note
Why not have the Saudi's or some foreign entity buy Alcoa and DuPont.
If American want to sell them then I'm sure someone wants to buy it.
But will congress let that happen?
If American want to sell them then I'm sure someone wants to buy it.
But will congress let that happen?
Wednesday, December 12, 2007
Calm Before the Storm
Today was a big day if you weren't watching CNBC.
Oil was up 4 dollars today and Natural Gas was up over 20 cents.
USA Today had a front page article about nuclear power's resurgence, but focused on safety concerns; especially from the Union of Concerned Scientists.
WSJ has an article about Saudia Arabia and their intention of transforming themselves into a basic industries powerhouse from phosphate to aluminum using the more expensive crude oil to power these plants since this is what the country has in abundance. This of course would mean less on the open market. There was a side note how the Gulf countries want to delve in deep with nuclear power but I wonder how that will play out.
Bloomberg.com had an article how the big financial institutions are looking to invest heavily in the gulf region's stock market that outpaced other global markets during this current liquidity crisis.
Mr. Rudd's election in Australia will be interesting to see if he will allow Chinese ownership of mining companies.
Exxon Mobil want to build a multi billion dollar liquid natural gas terminal on the New Jersey shore citing an anticipated shortage of natural gas.
Mayor Bloomberg's op ed in Financial Times concerning a recomitment to infrastructure projects in this country which goes back to Saudia Arabia's commitment to general industries, it takes energy!
This tells me that if one is patient and can weather the turbulent stock market, stocks in the energy arena have further to run. And a possible mania ensuing.
ROSE, IPSU, AND MGAFF
Oil was up 4 dollars today and Natural Gas was up over 20 cents.
USA Today had a front page article about nuclear power's resurgence, but focused on safety concerns; especially from the Union of Concerned Scientists.
WSJ has an article about Saudia Arabia and their intention of transforming themselves into a basic industries powerhouse from phosphate to aluminum using the more expensive crude oil to power these plants since this is what the country has in abundance. This of course would mean less on the open market. There was a side note how the Gulf countries want to delve in deep with nuclear power but I wonder how that will play out.
Bloomberg.com had an article how the big financial institutions are looking to invest heavily in the gulf region's stock market that outpaced other global markets during this current liquidity crisis.
Mr. Rudd's election in Australia will be interesting to see if he will allow Chinese ownership of mining companies.
Exxon Mobil want to build a multi billion dollar liquid natural gas terminal on the New Jersey shore citing an anticipated shortage of natural gas.
Mayor Bloomberg's op ed in Financial Times concerning a recomitment to infrastructure projects in this country which goes back to Saudia Arabia's commitment to general industries, it takes energy!
This tells me that if one is patient and can weather the turbulent stock market, stocks in the energy arena have further to run. And a possible mania ensuing.
ROSE, IPSU, AND MGAFF
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