Well I have entered new positions this week after a long time on the sidelines.
During this time I have read many different stock market blogs and reports as well as news events to try and get a sense of what traders are up to.
Like me some traders have also been in cash citing that ‘deciding not to trade is trading’. Interesting concept which deserves a post all on its own.
My point is that not trading just forms part of my risk management strategy; if I think my money is at a higher degree of risk than normal due to volatile market conditions, then I will sit it out in cash listening to the griping and sniping. Why give myself headaches and seasickness watching the equity swings in my trading account going up and down?
I also feel (and enjoy) a sense of smugness when I hear traders going on about what a difficult month August was and how some got creamed.
That sentence could come back to haunt me but the point is if there are choppy waters out to sea, then don’t set sail. If you are at all interested in my my own trading results in August check out the monthly report for August.
Stock Markets This Week
Obama.
He speaks and then the stock markets decline. This is a trade that people have been making since the crises began.
It also goes to the route cause of what is currently making stock markets go down; they have lost faith in politicians to resolve the economic crises.
A 50/50 split means there is no true leader
Barak Obama talks a good talk but he still needs to get his proposals passed into law and not having control of both Houses of Congress is making his job of fixing the US economy very tough indeed.
Politicians from the G7 will be meeting this weekend to see what they can come up with to save the global economy from another meltdown.
Christine Lagarde, the newly installed IMF chief said today that ‘countries should act now and act boldly to steer their economies through this dangerous new phase of the recovery.’
I love political rhetoric. I mean talk about stating @*#=ing the obvious.
And its comments like this that will fuel market participants’ belief that politicians talk the talk but cannot walk the walk, either because they have run out of money, ideas or will power.
Hide your money wisely or else politicians will come knocking
Speaking of ‘this dangerous new phase of the recovery’, most people feel that there is no recovery at all and what is really meant by ‘dangerous new phase of the recovery’ is ‘oops, sorry, we allowed the banks to take you for a ride and now we have run out of money to fix the mess that they have caused. By the way, we still have not done anything about the global banking system either because our friends are (w)bankers and they say that if we prevent them from doing it again, they will not donate to us, lend money to you or go offshore. They still hold the purse strings. So now we are trying desperately hard not to tax you yet again to fix their mess because we have already taken away incentives for you to raise a family or start a business and you will vote us out of office. Sorry about the petrol prices, but we still need the tax revenue so that we can send your kids to a failing school. Which by the way is why we decided to charge £30,000 for university after all, you get what you pay for.’
On a more serious note, the UK central bank this week decided not to inject cash into the global economy due to the fragility of global markets. Economists are also edging ever nearer to calling another recession with Germany expected to contract by about 1.4% in the last quarter of 2011.
Troubles at the European Central Bank hardened investor’s lack of faith in bankers and politicians in being able to resolve the debt crises in Europe. This and Barak Obama’s speech made stock markets go down at the end of this week.
Is there any good news out there? Anyone?
My Trades
I initiated some positions this week which was unfortunately spurred on by a lack of action in the stock markets.
Boredom trading is unprofitable.
Now I’m in, I will manage the trades in the normal way. In some ways it would be bad for me if the markets did not punish me next week. If they do then it serves me right.
I don’t think that the volatility has gone away. The G7 meeting this weekend could provide the catalyst for more volatility. It seems that any price of economic data makes the stock market go up or down quite wildly. It is certainly testing the limits of my abilities. Don’t be surprised if next week’s update will contain lots of losses.
The Simple Trader
Newsletter subscribers get additional commentary about my closed trades – its free.
Any trades listed above are closed trades as I do not make public open positions.
- SIGN ME UP! for notifications of updates/podcasts by email.
- You can also get the RSS feed as well.
- Check out the podcasts
Please use the ‘leave a reply’ form below to agree/disagree or to comment on this post. If you really enjoyed this post, you can always use the Facebook ‘like’ button above.
Leave a Reply