2020 will be remembered as a very difficult year for both traders and investors.
No two ways about it.
For example, it’s not often we see the market crash 35% in less than 3 weeks… only to then rally 50%+ in just a few months.
Therefore, how does one (a) limit the damage prior to the crash; and also (b) have the conviction to buy the upswing early?
That’s hard.
When we see the Dow Jones Industrial Average lose just under 1,000 points or ~3.5% in a day – it should not be surprising. If anything – it’s expected. For several weeks I have shared my thoughts on the technical warnings and macro risks… these are now coming into sharper focus.
It’s very important we balance the near-term ‘optimism’ in equities with what we see with leading macro indicators such as gold, the US dollar index, treasury bonds and credit default swap spreads.
For example, whilst bond investors are typically early, over the long-run they are generally right.
The formula for success in trading is very simple: your average winning trade percentage should exceed that of your average losing percentage. That’s it. But for some reason – some traders find this concept difficult to grasp.
This post explains a popular income generation strategy known as a “credit spread”. If you are not familiar with options trading, it will sound complex at first… however it’s actually pretty simple and highly effective.
A review of 4 key indicators which help us make an informed decision on economic (and market) risks.
Major investment strategists are worried about how far the market has come – saying “this is nuts”.
The VIX has been trading at very low levels the past few months. Typically this is a sign of high complacency from traders. The question is how long will that last?
Negative yields are not something to take lightly. Part of the problem is many see low (or negative) yields / rates as just a benefit for potential borrowers. And it is… however longer-term negative yields will lead to bankruptcy for creditors like banks, insurance companies, pension funds and pensioners themselves (i.e., those who lend money)
