Daniel Mankani "DynamicTrader – Trend Trading Dynamics" Trading for a living, systematically profiting from longer term trends.

14Mar/12Off

The New Trends

The New Trends - 1st Quarter 2012.

Lets analyze what are we witnessing thus far.

1. In the previous quarter, consumer spending was still bid based on availability of cheap deals and deal based sites were the master of the day, it seems the deals sites in the current interim have now started to bleed, with lack of availability of any new loss making deals, which didn't go well with merchants and with reluctance of merchants and retailers to go down this path, the deals have not only dried up, as they realize the very little value additions by deals based websites to their business.  Case in point, low numbers of groupon and various other deal sites.

The consumer is more cautious and will not pay for anything that he doesn't need and involves in extensive research in an event he needs anything, be it a product or service. A tight market in general, with uncertain conditions, inability to determine tomorrow. Therefore save for a rainy day, mentality presets.

2. Volume has never been so bad in the markets, bearish bets have declined to almost a five year low, with the Vix breaking down below 15 yesterday, the same remains with retail sales figures across most markets, yet somehow government reports differ, on the dry bulk market, shipping is in a very bad shape.

The above two factors are sufficient to suggest that growth is missing in this stock market rally and till that is fixed, it hard to see how else will the situation turn around.

16Nov/08Off

HERD MENTALITY

HERD MENTALITY

DynamicTrader.org/Nov 15 2008/       In today’s day and age, the most important socialnomics lesson is Herd Mentality. We simply can’t have enough of what the next individual is doing. The place to start to understand our affliction is in the stock markets.We simply can’t stop creating enough Bubbles.

The Subprime Crisis first made notoriety in August 2007, at a time when bullish indicators were already at the extreme. However, despite the subprime announcements and fears from industry veterans and hedge fund professionals (George Soros, Buffet, etc), the market defied all odds and continued to move to new highs. In October 2007, so bullish was the herd that they convinced the “best traders of all times to go long”. Temasek and various sovereign funds went long in the face of adversity, calling it a trade of a lifetime.

Here was a pattern emerging: “How the best traders of the world were making the worst trades of their times”. Similarly, this has happened before and always will - in end 1999, just by the DotCom Collapse, when Tiger's Fund Julian Robertson, George Soros and even Value Warren Buffet went long tech stocks before their demise, after being short Nasdaq in general for three years in a row, this pattern of Herd Mentality is so strong that in 1998, the Monetary Authority of Singapore and Taiwan’s Central Bank publicly announced that they were moving most of their reserves from other currencies into US Dollars. This is when they initiated long carry Yen traders at 130/145 ranges just two weeks before the Great 20% Collapse in US/JY to 90 Yen per Dollar. So it isn’t surprising to note that this time around, they are caught on the wrong foot again.

It is this Herd Mentality that makes conservatives into extreme gun-slinging, risky, adventurous traders, and this change in perception is created by a very strong emotion known as greed. Society tends to create hidden benchmarks of expected performance from a fund/trader/investor/individual. This benchmark is usually driven by GREED or FEAR; fear of losing out to the next and greed of making more than the next. HOPE only kicks in when either of the perceptions go wrong. So in emotional studies, it would be that hope is the consolidating phase before the turn back into fear or greed.

Just as the markets are flirting around with the lows, a look at the charts of the DOW/SP/Nikkei or any of the world indices clearly demonstrates that consolidation is underway. We have not had significant lower low, lower highs for the past three weeks, but rather a swing up to the highs and a swing back down, on both sides. There is fear – fear of losing out a bottom, fear of not having enough cash during the down turn. Interestingly the market closed midway of the week, suggesting hope that the G20 and the weekend will bring about some relief.

Somehow it seems that the herd is dumb, stupid and has no mind of its own. Emotions run so strong that the animals don’t looks up and see the reason of running – they do not know the reasoning of the run. Is it to a slaughter house or towards greener pastures? One thing however is sure – the only way to profit from the markets is through contrarian approaches. In all probabilities, 80% of the time, results should end up favorably albeit at times after a prolonged wait. But the nearing turn always comes when the “best traders of all times initiate the worst trades of all times” and you don’t have to worry, they usually announce their trades with a Big Bang!

Recent Announcements:

  1. Fed Bailout 700B (BEARISH)
  2. Buffet says buy American (NEUTRAL)
  3. Jim Rogers, Long Commodities, China. Short US (Analyst view not fund)

Notes:

  • Of the above, it seems Jim has three options open and as usual, he will emerge in time to call his trades Right.
  • Fed changes plan of not investing in Toxic assets anymore. They seem to have seen the light!

Good luck investing!!!!

DTRADER

22Oct/08Off

FEAR GRIPS THE WORLD

These are the end days, the world is almost over and this may spell the end of the financial markets, mainly the stock markets for the world, investors who have lost money will not return ever! It’s a hopeless scenario! I am getting out!.

Scanning through various web forums, media channels and even the classifieds sections for real estate in traditional media are yelling, help me out here!, take my position!, I am losing money and I want you to lose some too.! But Caveat emptor! (Buyer beware)

Hello there! Hold on just yet. Haven’t we seen this move before!

In our book ”Technopreneurship – The Successful Entrepreneur in the New Economy”, Pearson Ed ISBN 0-13-046545-3, we had labeled, the first three chapters, The Greed, The (False) Hope and The Fear. The fourth chapter is called, The Opportunity, the start of a new dawn.

Fearful times just as this are actually the greatest opportunity for investors and it’s often referred to the changing of the guards. This collapse that we are currently witnessing had to happen and it has to be vengeful enough to liquidate the one’s on the Edge and trust me there are many; prices have to fall back to equilibrium to make it attractive enough for the new guards to venture in. These cycles are the greatest innovation of a market driven economy.

The book entails the three chapters and correctly labeled the cycles. The greed phrase was important and it just didn’t happen in Asia but the world over. To prove a point, here are the stats of the world’s tallest buildings and how they coincided with recessions there after.

Tallest Buildings of the world

Tallest Buildings of the world

This chart depicts of the tallest buildings in the world and has often coincided with major economic collapses and recessions. Its interesting to note;

1931 – Empire state building (The Great Depression)
1972-1973 World trade centre 1974 Sears Tower. (The 70’s Oil crisis)
1998-1999, Malaysia’s Twins/Shanghai’s JM Tower. (Asian Financial Crisis)
2003-2004 – HK – Two International Financial Centre / Taipei 101 (SARS)
2007-2008-2009- Under Construction. Shanghai WFC, Burj Dubai and Freedom Tower NY City.

All appeared in a timely fashion, where planning began just before the start of the crisis and completion occurring when the crisis is midway or near completion. For example the tallest building in Hong Kong, coincided with Hong Kong suffering the most during the ASIAN SARS crisis. Another interesting note, many mega projects planned in tandem with the greatest buildings of the world, hardly reach completion and if they ever do, they remain empty shells for years to come.

Mega Projects planned and under constructions.

Singapore has two major casinos under construction at the moment, there are reports of Las Vegas Sands in trouble at the moment and they being one of the bidders for the casino in Singapore.Dubai has the world palm islands under development and Burg Dubai, the Tallest Building in the world.

The correlation between these two markets is as follows. Both have no natural resources and are very much service oriented economies. Speculation was rife in both of these markets with highly leveraged transactions, Buyers requirements were simply, as low as 1-2% option money for a transaction and if delivery is taken, 10% and no money down till completion. Banks were lax in lending despite the values of underlying asset had already appreciated 300-500% from the last crisis (Singapore 2003 SARS / Dubai 2003 Iraq War). Both were eyeing to become the New Mecca of the world, with Dubai being at the epic-center of the oil kingdom and Singapore with its rhetoric of first world, cleanest, safest place in the world to do business, aptly called the Switzerland of Asia.

Just as the axe fell on rating agencies for not being prudent in the stock market, Banks are probably looking towards their respective property valuators in this scenario. There is still (false) hope prevalent in these markets and all that is required is, the local economy/stock market remains sideways for another two quarters and we shall see various sales liquidations coming to market.

While the stock market may see snap-back rallies from depressed levels, again its not a long term play as what most media channels predict, the excesses of the economy have to cleaned up for good, before chapter 4 unfolds.

Disclosure

  1. Our real estate fund has no position in any of these countries except in KLCC, Malaysia, we are long prime downtown properties with 100% tenancy.
  2. Our emerging markets equities fund, is long short term call options in India.

 

19Oct/08Off

Socionomics – Introduction.

Mr Robert Precther over the years has contributed enormously to the studies of waves, Eliottwave as they are known and the importance to Fibonacci numbers and how they relate and how they are ever present within science, cycles and even biology.

In this new documentary he explains the importance of Socionomics, which mainly states that its how the sociology mood of the general population that contributes to great booms in the economy and not the other way around. In essence if people are feeling down, the stock market will collapse, its not that people mood swings create stock market crashes.

This documentary tries to explain this ground breaking theory and research. It is in fact in line with the vedic studies of the past, for people who believe in spirituality, this should come as of no surprise.Watch the documentary and make your own conclusion. Very interesting stuff.