Posts Tagged ‘Circumstance’
Spying on Elite Funds – Part 1
Wednesday, May 25th, 2011
by Leo Kolivakis, Pension Pulse
It was a beautiful long weekend in Montreal. I tried to enjoy it as much as possible getting out of the house every chance I got. Even went out with some buddies of mine on Saturday night and came back in the wee hours of the morning. Haven’t stayed up that late in a long time and of course, paid the price on Sunday as I was in a zombie state pretty much all day. One thing about turning 40, you can’t party like your 20 anymore, which is something my trainer reminded me of tonight as he trained me hard and screamed “TO STAY LEAN AND MEAN, NO ALCOHOL!!!”
I promised a follow-up on a few comments I started over the last two weekends, a brief intro to secrets of elite funds and keep on dancing till the world ends. This week, we’re going to delve deeper into this mysterious, secret world of elite funds as we analyze some of their recently released 13-F quarterly filings for Q1 2011. After reading this comment, and the follow-up in Part 2, you’ll be in a better position to understand what elite funds are buying and selling, and more importantly, how to use this information to your advantage.
Let me state flat out, my goal is to educate many investors, not spoonfeed them stocks to buy. Never, ever under any circumstance buy a stock blindly, even if elite funds are loading up on it. All major banks and institutions analyze 13F filings and quite often, these stocks are targeted by naked short sellers, large hedge funds and big bank prop desks which love to manipulate them up and down.
Moreover, as you will see in my follow-up comment in Part 2, I’m a heavy risk-taker. That’s me. I have no risk manager breathing down my neck and do whatever the hell I want with my money. I will ask other people’s advice, but at the end of the day, the buck stops with me and nobody else, just the way I like it (even elite funds have constraints on the positions they take on any one stock) I’ve been beaten, battered, bruised and enjoyed ups and downs, but that’s part of the game when you take inordinate risk in a very concentrated portfolio. I do this because I truly believe that over the long-term this is the way elite funds consistently beat the indexes.
Having said this, just because I am taking huge risk with my money, doesn’t mean I’m always right. I can stomach large swings in my personal portfolio and would never manage an institutional portfolio the same way or advocate that others do the same. For me, sitting in front of a computer all day trading was an extremely humbling and “real world” educational experience. Lots of senior pension fund managers have never traded for a living and they don’t understand the ins and out of trading or managing money. For them, it’s all about theory and the Efficient-Market Hypothesis (EMH). Worse still, some senior managers blindly believe in their risk models and leave no room for Black Swan events (which are occurring more frequently; instead of once every 100 years, it’s once every five years).
Tags: 13f Filings, Buddies, Circumstance, Constraints, Desks, Elite, Hedge Funds, Leo, Q1, Quarterly Filings, Risk Manager, Risk Taker, Saturday Night, Short Sellers, Turning 40, Ups, Ups And Downs, Wee Hours, Weekend In Montreal, Zombie
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Dennis Gartman’s ‘Not so Simple Rules of Trading’
Saturday, January 12th, 2008
DENNIS GARTMAN’S NOT-SO-SIMPLE RULES OF TRADING
1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position… not ever, not never! Adding to losing positions is trading’s carcinogen; it is trading’s driving while intoxicated. It will lead to ruin. Count on it!
2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.
3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.
4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.
5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.
6. “Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent.” These are Keynes’ words, and illogic does often reign, despite what the academics would have us believe.
7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.
8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.
9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In “good times,” even errors turn to profits; in “bad times,” the most well-researched trade will go awry. This is the nature of trading; accept it and move on.
10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we’ve known have the simplest methods of trading. There is a correlation here!
11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, “When they are cryin’, you should be buyin’! And when they are yellin’, you should be sellin’!”
12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.
13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow… usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.
14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year… and our profits grow accordingly.
15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a “secret” to trading (and of life), this is it.
16. All Rules Are Meant To Be Broken…. but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
Tags: Academics, Agriculture, Bear Market, Bear Markets, Blog, Bull Markets, Canadian Stocks, Carcinogen, Chart, Circumstance, Commodities, Complete List, Correlation, Currency, Dennis Gartman, Economics, Gartman, Greatest Weakness, Greenlight, Ground Experience, Illogic, Investment, Investment Strategy, Investment Wisdom, John Mauldin, Keynes, Markets, Mental Capital Trumps Real Capital, Mercenary Soldier, Miscellaneous, Paper Sacks, risk, Rocks, Simple Technician, Strength And Weakness, Trading, Trumps, Weakness Weakness, Winning Side
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