Daily Archives: May 14, 2012

Free-Floating Anxiety

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I am, by nature, a worrywart. Sometimes this is good, and sometimes it is bad. When I was father to very young children, my ability to walk into a room and instantly assess any potential dangers was very valuable. As a trader, though, my worrisome nature can sometimes be costly.

A good example over the past few months has been with miners (symbol GDX), which I have mentioned 0514-worried something like fifty-thousand times this year. I was very vocal about my bearishness on the miners last year. I got a lot of nasty emails about how loony I was to think such a think. Precious metals kooks can be a passionate bunch, and they were firmly convinced not only of gold's imminent lift to $5,000 per ounce but, naturally, the value of miners following right along.

Well, my bearishness on miners was bold, visionary……….and poorly executed. I have worried myself out of that position countless times. In retrospect, simply shorting the holy hell out of miners and then just updating stops from time to time woudl have been a very profitable approach. Instead, I've tried to capture nickels and dimes along the way, sometimes winning, sometimes losing, and – in the end – making dramatically less than I ever would have just staying put.


Reviewing the Macro ‘Play’

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There are signs in the recent jobs and ISM reports that the previously inflated economy is decelerating. Late last week, the clown running JP Morgan said stupid things about the smart [read: talented] people he has running his high risk trading operations. Europe is of course front and center as it continues to fall apart, with Gilts and Bunds rising on ‘safe haven’ buying and the bonds (debt) of Greece and other Euro basket cases declining toward their value, which is less than zero.

The precious metals appear to be watching for signs of outwardly promoted QE policy. But NFTRH has remained cautious on the timing of this pending a crack in the US stock market, so let’s review the big index.












My Lil’ Options Account

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I trade actively every market of the day of the year, and that trading is within the confines of a hedge fund I manage.

A month ago, however, I opened up a tiny ($10,000) options account for a personal trade here and there. I haven't traded options in a long, long time – – but, for whatever reason, I decided it was time to give it a shot, and I deliberately did so with an amount of money I didn't need to care about.

I'm glad I did, because I find myself in this situation:

+ I started off with a $10,000 account on April 11th;

+ I built it up to a 50% gain last week and, out of the blue, I decided to wire myself back those $10,000 in original funds.

+ Thus, I am left with "pure" profit in the account (which currently is just a shade under $7,000, meaning about a 70% gain in a month's time).

I've only placed a handful of trades in the account, and most of them have (obviously) worked out. I trade conservatively, purchasing deep in-the-money options that don't expire for a while. The irony here is that my "conservative" trading has yielded results like this. It's a nice feeling.

But the far better feeling is this: no one can hurt me in this account. Abby Joseph Cohen can't. Mark Zuckberberg can't. Lloyd Blankfein can't. And, most of that, that disgusting waste-of-life Benjamin Bernanke can't. Because I've got my principal back, you blood-sucking leeches.

I've never done this little "trick" with an account before, in which I extract the principal. And, yes, I realize it's probably a rookie mindset to think of this as "house money". But the cold fact of the matter is that my disposition toward this account is marvelously detached.

I shall keep you posted, from time to time, as to my continued progress on this little psychological experiment of mine.