Home > General Topics > Trading > Flame all you want but I've started buying...

Flame all you want but I've started buying...

  1. ... I know this is a trading arena and I'm as short-term a trader as anyone but some of these valuations are absolutely ridiculous so I have decided to put on some longer term positions. I will leg into these trades in 3 phases but would be very comfortable buying at these levels in one phase.

    I am long the following. I have long term targets but if we get some sort of mega dead cat bounce rally of 20-30% in a quick fashion I may just take profit.... I'm still a trader at heart


    USO from 24.55 target 47 and 60

    RSX from 10.83 target 25 and 30

    XHB from 8.92 target 19 and 22.50
     
  2. I don't trade stocks (anymore).

    What are those symbols? :confused:

    P.S. Oil, Russia and Homebuilders.

    They're ecelectic to say the least.
     
  3. Whether you're joking or not.. USO is oil, RSX is Russia, XHB is homebuilders

    I expect these to go lower as the trend is so definitively down, I'm not leveraged and am looking as these as very long term plays. Furthermore I only have 5% of my portfolio in these because I still need the majority of my portfolio for trading, I just wanted to point out the absurdity in the valuations IN MY OPINION of these ETF's.. just my opinion
     
  4. google it you lazy buffoon
     
  5. I knew USO was oil, but I don't know the other two.

    I really just wanted to spur discussion on why you're catching the falling knife ... good luck. :)
     
  6. It's an investment based on valuation with a small portion of my portfolio. I would never catch a knife for a trade.
     
  7. Good trading to you Mandy!


    suds'
     
  8. russia (the country itself) is on the verge of bankruptcy. already used most of their currency reserves to prop up the ruble but it didnt prevent a huge currency haircut, which is still underway. they need oil price to increase two fold just to balance their current account. like i said, they're bust and the only way out of this is using their military power to secure some new sources of wealth. stay out of their currency and their stressed companies which can be nationalized anytime soon.

    oil is finished as a prime commodity. economies are shifting towards renewable environmental friendly fuels. i expect that within 10 years, most big cities around the globe will ban the use of fossil-fuel vehicles and many industries will have in place plans to phase out fossil fuel dependancy. dead cat bounce maybe but why risking money in doomed asset class? the amount of capacity put in place during the last years of the commodity boom is so overwhelming that most of these OPEP countries that fed on this bubble will be flooding the market with cheap oil just to feed their starving populations and prevent civil unrest. with the global economy on the brink of disaster and the environmental shift, oil will never return to its golden years and will suffer from a slow and painful death until its final demise (which will inevitably occur in less than 30 years).

    truth is, home builders are not necessary anymore. there are plenty of housing everywhere and no population growth. thus, they'll be stuck with no work in the near future. imagine the cost of scaling back their operations to cope with the present reality and the equally depressing future. in case the economy recovers sooner than later (an unlikely event), it is pretty obvious that other sectors such as technology or consumer products will be better positioned to benefit from it.

    IMO, if one wants to get some market exposure (which might be a good idea given the latest selloff), the prudent approach would be to buy the S&P500 rather than any of the above. the political risks and long term trends that are being shaped by the actual recession (energy shift and international turmoil) puts those assets in the junk area.
     
  9. Just buy EWZ, which is a play on falling dollar and rising oil

    RSK isn't going to triple anytime soon. A 30% rally is feasible though.
     
  10. Everything you said is already known and is why each of these indices are down in excess of 70%
     
  11. too much capital stuck in USD cash. which idle capital.

    as far as i'm concern, these gov'ts will kep interest rates at 1% until the economies improves or pump up cash into the economy and get som inflation just to get the economy going if they are force to.

    so two years of 1% on cash basically cash can be making nothing in interest. that is what you call unproductive capital when you no returns on capital.

    right now the US has 1 trillion in defict, 1 TRILLION deficit.....that new money will be circulating in the economy.








     
  12. This kind of disagreement is what makes a market.. simple as that.


    It's very nice to see a thread with disagreements that are civil, hopefully it can be kept that way so we can evaluate and possibly help each other without the useless bickering.
     
  13. I read this line and didn't read any farther. If you had been to a developing country, you would know that we are at least 50 years away from fossil fuels being 'banned'. They won't be banned in America for 30 years, much less Mumbai. Even that's a stretch. Cars will be running off of propane for the next 50 years at least. Having said that, I am not yet biting on the long side of oil.
     

  14. I hope it goes well for you.

    I have been shorting the USO puts myself in the thought that oil may not go higher soon but that its starting to hit the floor.

    Bob
     
  15. It doesn't matter how cheap it is. It can always get cheaper. The trend is your friend, until it ends. I just talked a friend out of putting $50k into USO yesterday. It went down 9.5 % today! I know so many people who are bottom-fishing USO right now, figuring that it has to be near a bottom and is going back to $75-100 again in the next few years. They don't realize that oil never got above $45/barrel until 2000 and that with our economic turmoil, it could stay less than that for some time. I will definitely buy oil eventually, but not until the commercials are long according to the COT report and not until it starts making higher highs and higher lows. USO may also have it's own problems:
    http://ftalphaville.ft.com/blog/2009/02/25/52879/a-self-propelled-pyramid/
     
  16. When I did used to trade stocks and ETFs I would use PnF charting to analyze the security and to determine my potential price targets.

    Looking over your selection here:

    USO is a downtrend and currently in O's (selling) with a price objective of 15 and resistance is at 64.

    RSX is in a downtrend, currently in O's (selling) and has a price objective of 4.5 and resistance is at 35.

    XHB is in a downtrend, currently in O's (selling) and had a price objective of 9.0 (which has been met) and resistance is at 12.5.

    I hope you're ready to scale into your trades, AND hold them for the medium-to-longterm.
     
  17. I respect many of the responses in the thread thus far, but all of you are looking at this from a traders mindset and living by the rules of trading which is terrific but catching a falling knife is what is done when seeking extreme value, and also this is a very SMALL portion of my portfolio and I am fully prepared for these securities to fall by another 30-50% and I will buy more but I will never let these investments become more than 13% of my overall portfolio, my bread and butter is still very much intraday.
     
  18. In your friends case it sonds like he was throwing $50k on red and hoping for a lucky roll, and his real luck was that he had you there to talk him out of it.

    Whereas the OP has already told us that these ETFs represent an extremely small (almost negligible) part of his portfolio and he is ready to hold on to them for a few months (at least).

    Completely different situations, you're comparing apples to oranges.
     
  19. Correct, it's an extremely small part of my portfolio (the % will likely grow if the downtrend really does continue and I leg in a bit more) and I'm willing and able to hold for years although I expect a bounce in which I can sell into.
     
  20. Feel like I've seen several of these posts each month since October. Maybe the ~11th post is the charm?

    Bottom fishing is an interesting sport to watch, but never understood the fascination in blind anticipation of bear market bottoms and bull market tops. You do realize the indices just made the next leg down into open air? Good luck, you will need it.

    "The market can often remain irrational longer than one can remain solvent."
     
  21. Nothing wrong with investment right now, what was the saying buy when others are fearful, sell when others are greedy etc.. but those are bad choices.

    1) USO is ok at current valuation, despite the major push for renewable energy most industrial operations still require oil. Once things pickup, it is guaranteed to bounce off the current level. In addition, it's a good hedge against the onslaught dollar inflation, as many are predicting (with good reason) that's coming.

    2) RSX, not sure exactly what you are smoking here... buying into russia? Do you know what is happening in russia right now.....

    3) XHB, again not a good choice in term of risk/reward. Real estate market is not stock market, it has long memories, i dont expect the country to start building real estate again any time soon even after economy starts to pickup. 1) Still tons supply 2) everyone has a memory of what happened, real estate is not the stock market 3) It will most likely be dead money, just not worth the risk/reward.
    ----------------------

    Here's some of the ones i am buying in additional to oil:

    DBB: mines closing all over, base metal is a core supply for the economic turnaround, current valuation.

    DBA: same deal as dbb, not so much dependent on economic turnaround but it is a core staple.

    PBW: pretty clear clean energy will the huge, but as with any emerging technology, it is complete chaos - many companies will go under, some will become market leaders. Way too early to tell, so you better off investing in the index. Current valuation is a gift.

    NVDA/INTC: both solid companies with complete market dominance, and an almost impossible entry barrier.

    CAT: solid company that will benefit the most once the turnaround happen. But i am still waiting, $20+ is still a bit too risky for me.

    -----------------

    HIGH RISK PLAYS: below are the ones i fully expect to go bankrupt but with a good chance they might make a lot of money too.

    ETFC: penny stock now, but market leader with excellent product, core business profitable, excellent management. Bottomline, needs to work through the toxic shit on its balance sheet before going bust.

    DRYS: needs to not run out of cash before shipping tuns around.

    AUTH: excellent balance sheet, strong technology geared towards future growths (fingerprint security on cellphones, laptop, etc..)

    FEED: pig farm of china :D
     
  22. I hope everyone is aware of the effects of contango on the USO and the fact that moves in crude oil may not result in commensurate moves in USO, as USO is only invested in the front month and negative roll yield robs the instrument of return as long as contango is in effect.

    http://www.marketfolly.com/2009/01/how-contango-affects-crude-oil-etfs-and.html
     
  23. USO isn't too bad but you should have waited for oil to test recent lows atleast. You are very premature.

    RSX....Russia? I don't think this is a good idea at all....but I am no expert on russia. Way too much uncertainty in their economy and so much corruption.

    XHB...terrible investment. There isn't going to be much home building going on for quite a while. Many in this etf will be filing for bankruptcy dragging down this etf.

    You should be Short homebuilders not long.
     
  24. Agree on oil, think you're rather early on homebuilders and quite insane if you think Russia is a good buy. We could be looking at another default in Russia, so I wouldn't touch RSX with a ten foot pole.
     
  25. As a native russian (living in canada though) I would NOT recommend buying into russia. There are many reasons but the simplest is VALUE of anything russian = VALUE OF OIL. Period.
    So USO is the same story with much less political and other risk.
    ERX - good triple ETF for energy. I would prefer that.

    Hope it helps
     

  26. How about UYG and DXO pass on RSX.
     
  27. For all of you that are saying Russia or Oil or the Homebuilders are terrible investments, every single reason you cited is priced into these instruments which are down at least 70% from their highs, we all know the horrific problems in Russia, the extreme pressure homebuilders face and the contango in the USO... many of you are struggling to disconnect your trading mentality with any sort of longer term view, which is totally understandable.
     
  28. Having said everything I already said, with futures getting a nice bounce tonight, if I'm up some money in the morning I will probably trim my positions to only 2% of my portfolio as my mentality is refined as a tick by tick trader, my personality is not suited for longer term investing, but these prices are way too good to pass up.
     
  29. I totally agree with you in a sense of buying when fear dominates. But my point is just delete russia from you buying list and stick with oil instead. It's virtually the SAME THING
     
  30. I agree, and if there is somewhat of a bounce tomorrow then I will be selling the majority of my RSX holdings which will reduce my longer term exposure. Russia is my smallest holding by far as it is.
     
  31. Take care, Sir.
     
  32. OK, big deal, 5% of your portfolio. Let me know when you make an important financial move. 5% of your money doesn't make any difference at all. "unleveraged" at that. Let me know when you put 1/2 your money to work. That way we know you're committed, you got something to lose AND something to make. You're aren't just playing a game with 5% of your money. Sheesh.

    OldTrader
     
  33. I guess it was only a matter of time until a thread with very productive responses had a reply by a grumpy old man that had nothing better to do with his time
     
  34. OK

    You've gone from ...
    ... to ...
    Talk about a lack of conviction, LOL.

    You know what, you let these guys talk you out of your position.
     
  35. Yes I do have a lack of conviction, I'm a trader, not an investor, I just see these prices as absolutely absurd, but it is not my arena of expertise.
     

  36. Stick to what you feel comfortable with. You won't do yourself any favors fitting yourself into the wrong round hole.

    (heheheh - I'm laughing because I was really thinking of the square peg metaphor.... That came out well...)
     
  37. Evidently if you have nothing to say about the point that was made, just personally attack.

    5% is like betting one chip son. You lose it all, your portfolio is down 5%. In fact, if I understood correctly, you put 1/3 of your 5% to work. LOL! So like I said, big deal. When you get around to making a bold call, let me know.

    OldTrader
     
  38. 10 years? Highly unlikely. You know how much it takes (effort and money-wise) to change the existing infrastructure to support it?

    Diesel is a more efficient fuel than gasoline. How many gas stations have you seen that sell diesel? And how many vehicles have diesel engines? How long has diesel been around?

    Progress is usually driven by economic factors, not idealogies or brute-force regulations.

    United States of America may be the only country in this world which still uses English systems instead of Metric systems. Why?
     
  39. drukes, this market reminds me of the 90's tech bull market. Everyday I thought the market couldn't possible go higher, but it did. Now I think it can't possibly go lower, but it does. There's something wrong here, something has changed, I don't know if people don't like Obama in the White House, I don't know if they are scared of financial firm failures, but something isn't right here. Frankly, I almost want to post in agreement with you, that the bear market is over and it's time to buy. But everytime for hte last year I've thought that, I've been wrong.
     
  40. OldTrader, going into an overnight trade with a big % of your capital is a great way to blow up. I've had longevity in this business and I'm not planning on changing my conservative style. I'll be here trading in 40 years... your responses lead me to believe you will blow up before then... unless of course you trade paper money and judging by the number of posts you have I can assume you spend more time on ET than trading
     
  41. I salute you for trying to "invest" in this market. It's the American way to be optimistic and invest for the future... but unfortunately these markets currently aren't for investing.

    They are for trading. Buy and hold is over. It doesn't really matter what ETF or index you invest in... they will all bounce around and likely get a lot lower than where they are now. You can still keep your trader hat on even while investing and buy assets that are in uptrends (not much at the moment).

    Investing is just trading with a very long holding period. You still want to keep the short to medium term in mind and if the potential for further 50-75% declines in the indexes and various ETF'S is still in the cards... your investment really isn't a prudent one.

    Short the rallies and you'll likely have much better capital appreciation than watching your investments drop over the next 6-12 months.
     
  42. drukes1234


    Registered: Aug 2002
    Posts: 637


    03-02-09 11:45 PM

    Yes I do have a lack of conviction, I'm a trader, not an investor, I just see these prices as absolutely absurd, but it is not my arena of expertise.

    .................................................

    Drukes1234, come on give us a break. You are not a "TRADER" either, not by a longshot. If you were a trader and making real bucks you would stick to your knitting and take your profits and set them aside in something safe and not to worry about.

    You just said you just see prices as absolutely absurd, but it is not your arena of expertise. NO SHIT Dick Tracy.

    For those that believe you, dream on suckers. Keep funding those accounts, some of us will thank you as we spend your grocery money.
     
  43. oil is finished as a prime commodity. economies are shifting towards renewable environmental friendly fuels. i expect that within 10 years, most big cities around the globe will ban the use of fossil-fuel vehicles and many industries will have in place plans to phase out fossil fuel dependancy.
    ----------------------------------------------------------------------------------


    Laughing my Arse of as We raise 45 Million in Joint Venture Placements to Drill in the Bakken Shale Region.

    Laughing my Arse off as all those who think Private Manufactures are gearing up to run their Machines on Tree Bark and Sun Shine.

    Laughing my Arse off at the total ignorance that hydrocarbons will be replaced by Renewable Energy.

    Agreeing that Cars will run on Hybrid systems.

    Agree that Homes in certain regions will use both Sun and Wind power for individual use but that will not replace "Your Electric Company", it will reduce cost only.

    Laughing at the OBAMA FANS as their world starts to turn upside down.


    Sit back and enjoy the show, it's OBAMA NATION!!!!!
     
  44. The OP has a good point, imo. I don't think anyone can time a bottom perfectly (especially this "bottom"). Scaling in makes perfect sense. Its not like he's throwing all risk control out the window.

    Good luck
     
  45. OP, I give you credit, you got stones and i'm right behind you on teh buying, just not on those companies. I've been buying and going to continue to keep buying for a while. All you fairies that are scared are the people that will never make money. So keep banging your head against the wall for you nickel and dimes while you churn your profits away. You are sheep. I'm positioning myself in this market on specific tier companies and when the market snaps back, which it absolutely will, those assets will increase substantially.
     
  46. You are certainly welcome to invest in whatever you want. You came here for opinions, and that's what we're giving you. But don't go on about how we're struggling to disconnect our trading mentality with a longer term view after you ask us for thoughts.

    Yes, many of these are down 70%. But they could easily go down another 50% from here! Does that make it a good buy? I dunno, I suppose if you held for 30 years, it might.

    But Russia? No thanks.
     
  47. It is time to start scaling in. We're near a bottom on all markets, but the QQQQ has some more room to the downside. Until all lows from all markets during the last 10 years are taken out we'll continue to drift down. We'll recover in spite of gross incompetence at the helm of the government and corporate America
    <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2330179
     
  48. This has nothing to do with a trading mentality v a long-term view nor with finding a bottom nor with how "cheap" these may be. Rather it has to do with the likelihood that these choices will rise, at least to an extent that buying them turns out to be worthwhile.

    If you're looking for a longer-term investment, buy something that is a reasonable price and that also pays a dividend. At least you'll be paid while you're waiting. (Just make sure that the dividend is not too high as a generous dividend will likely be cut, as GE's was.)
     

  49. I'm not a trader? I will compare my trade sheets to yours ANY DAY, bring it on buddy, put up or shutup, child.
     
  50. bighog, drukes - let's not get into a flame war otherwise I'll toss this into chit chat where it can rot.
     
  51. LOL! So that you know, I've already been trading over 40 years. IF you manage to make it to the 40 year mark, I'll likely be dead.

    By the way, I according to the ET data, I make 1.18 posts per day. At the rate I doubt it will hinder my trades. Of course, I'm not a tick f*cker either. Good luck with that "call" son. If you're wrong, you won't lose much. If you're right, you won't make much.

    OldTrader
     
  52. The OP started the thread off with the premise of being flamed, a very good discussion was started showing how wrong he was on his trade(s) from numerous different perspectives, and he ultimately chickend-out of his this trade(s).

    After that he proceeded to flame oldtrader and bighog (not smart if you want to appear smart), no doubt as a means of distracting attention from the fact that he had just done a compete about-face on his trade that he had previously claimed he felt so strongly about.

    This thread is the oh-so-typical ET bullshit, and definitely belongs in chit-chat, so you would be doing everyone a favor if you sent it there.

    TIA :)
     
  53. Unfortunately, such fuel doesn't actually exist.
     
  54. Hey.....I even bought ES 692's/691's today in ET chat!!!

    for a scalp.....LOL! :D
     
  55. I suppose you are aware of contango in crude , heard there is a better vehicle, USL. But whyn buy crude now ? Same with Russia, they are untouchable imo . Own some in my portfolio, never again . With the KGB man in control, anything is possible.
     
  56. Can you give some valuation analysis showing "ridiculous" values out there? Your post didn't have any.
     
  57. He calls himself a short term trader so that when the position goes against him he can just say he 'sold' ahead of time.
     


  58. It's got some borderline good discussions. I'll give it another day before throwing it in the crapper in hopes something will come out of it.
     
  59. Russia has always represented a captialists dream in terms of the sheer potential the country represents.

    Unfortunately human nature prevails in most (if not all) things, and nobody can resist the oppotunity to play "King" in your own country.
     
  60. I took profit on USO and RSX today, yes it represented an incredibly small portion of my equity but a profit is a profit.
     
  61. SU high beta gets you in cheaper 52 week low around 14.50 or so.
     
  62. This thread is evidence as to how listening to people on ET can lose you an absurd amount of money.

    I posted that I wanted to buy for a longer term trade on March 3rd, we bottomed March 6th, yet everyone on ET said I was absolutely insane. Shows the trading ability of the majority here.
     
  63. I'm really sorry that it turned out that way, b/c I just happened upon this call and was looking at the date, and excited for you, b/c I knew you would have made a lot of money on those.

    I think it's a lesson to be very careful about who you pay attention to on these boards. It's a shame we don't all have 3rd party verification, but try to be a little more independent in the future. It does tell me you're a little new to trading. You were absolutely right in that median price to book ratios were far from their histrorical values, and this was the basis for recommendations to hold around that time and lever up. But, you know what, we're still dirt cheap by that metric, but due for a pullback.

    Again, it's a shame to have missed such a move, but stop to think about how much DD you would have had to go through to realize those trades. Ask yourself if the point you sold out at was really your "stop loss." I'm guessing you'll realize in hindsight it wasn't that bad of a DD, especially if you would have analyzed how much upside there was to the trade.

    If you weren't thinking I'll risk 15-20% on this trade to make what looked like 50-60%, which are decent ratios, you might have made a better choice then.
     
  64. Drukes, with "1/3 of 5%" of your capital that you said you were willing to put to work you could catch a 100% rally straight from bottom to top and it would provide you barely a + 1,5% absolute return. Good luck next time.
     

  65. You've learned too. I had to let them go.
     

  66. That's not the point, the point is 95% of this board had amazing reasons as to why we were going much lower, and all were dead wrong, like always.
     
  67. i'd bet that at least 50% of this board is college kids that don't even trade but wish they did and act like they know how to, there is the explanation for why the majority here is usually wrong simply.... inexperienced, underdeveloped, immature minds... incapable of rational behavior.
     
  68. So everyone's right at least once in their life. Did you follow Warren Buffet's saying "Be greedy when everybody's fearful...?

    Tell me, are you a seller at these levels. I need your wisdom.
     
  69. i know more than you do
     
  70. That's not saying much.
     
  71. it is you who is in the wrong for listening to advice on a forum.

    I was trading before with a trading chatroom open and was discussing all my trade live with numerous other trader...until I decided to grow up and trade on my own.....and began to make money.

    I never opened a live trading chat room again
     
  72. I have started to buy the UNG .. bought 1/3 of my position today and will buy more every 10-15% down... this time, no one on this board will talk me out of the position. Like the other positions, this is very long term, 1-5 year hold looking for at least a 50% gain but that # will be adjusted based on trading action