China data not bad... potential fodder for bulls... bears fumbled the ball on Thurs, USTs and dollar looking toppy, equities held where they needed to. Small caps (IWM) particularly impressive turnaround. Could be a short bonds opportunity on Friday.
Sometimes, though, buying "the market" (or a large segment of it) can present a fantastic opportunity, with none of the specific company risks that individual securities always bear. And even more so w/ shorts... and embedded leverage available in liquid macro vehicles etc... But then, one man's meat is another man's poison and all that.
I didn't say there was an incongruity in doing both - I am sure there are many decent at one and mediocre or average at the other. I said it is unlikely to be very good (i.e. serious outperformance) at both. There are a tiny handful of exceptions, Julian Robertson was a good stock picker who then became good at global macro for example.
To me it looks more like gold/silver are in a trading range. Yes, it looks bearish after a down move within the range - but it looks bullish after an up move within the range. That's how trading ranges sucker people into buying the rips and shorting the dips. As long as people keep looking for a big move in PMs, they will probably continue to range and frustrate traders. The time to prepare for a breakout will probably be after a few months, when everyone is frustrated and has thrown in the towel after repeatedly being stopped out on their directional PM bets. Until then, just get long at the support lows (1500-1525) and short at the highs (1640-60), use options or wait for reversals back into the range and use a close stop, to limit your risk; book profits once it's back in the middle of the range.
I don't agree you can 'fire and forget' on any quant system. Every easily replicable strategy eventually erodes its own returns as new capital floods in as a response to superior performance. We saw this with the 'commodity indexing' as diversifier and return booster in the 2000s, or with quant 'value' blowups in 2007-2008. All systematic approaches need monitoring and ultimately significant alteration in order to adapt to market changes over the long-term. You can't do that effectively as a part-timer, compared to someone who is spending all their working hours on it.
Some currency performance against the Euro since 2009. Yen up 36% AUD up 35% CHF up 25% USD up 23% NOK up 13% REAL up 4% I have a bond expiring in AUD later this month but beats me what currency I should put it in now...
We perceive things rather differently. First off, "gold is in a trading range" is not a forward looking statement, but rather a statement about the present. Activity within a range is defined by observable price movements in the recent past. In that sense, to say gold looks bullish when it moves higher within the range is either a contradiction in terms, or a poor definition of what a range is. If something is trading in a range, then the price action is neither truly bullish or bearish until you get a breakout one way or the other. You can use your own definition of what a range is, and what price action within it means, but the way Livermore roughly defined it still seems the most logical. (Also, the whole point about a range, which Livermore made explicitly, is that it does not make sense to get bullish or bearish within its confines, unless you have heavily overriding fundamental reasons -- in which case you no longer care whether it's in a range or not, do you?) As for this statement: Think about the implications if that statement were actually true. To suggest that gold is ranging specifically because people are looking for a big move in it, is to anthropomorphize a market (give it human motives and incentives) and to suggest PMs are behaving poorly out of spite. That doesn't make a lot of sense. While I think it is true that gold could frustrate people for a long time -- and that a significant washout is possible, and somewhat telegraphed if it happens -- I think this because the charts seem to be confirming the macro. Ultimately, the price of any reasonably freely traded instrument is going to go where it will go because of fundamentals. In the case of gold, which cannot be valued in traditional terms, those fundamentals include human psychology and political action. I think Kovner had the best view of how to use charts: - He firmly pointed out that a chart does not tell you what will happen in the future, only what traders have done in the past; anticipating what happens next (or rather risk/reward probabilities for a favorable bet on such) is a matter of skill and judgment. - He pointed out that charts are well worth paying attention to, but more as a medical diagnostic tool than a crystal ball. The price chart is like the clipboard chart for the patient at the end of the hospital bed. You still have to understand the fundamental diagnosis of the patient -- charts are just an additional (and powerful) layer in helping get the diagnosis right. I further think there is much to be said for Charlie Munger's "Too Hard Bucket," which applies to trading as well as value investing. Right now, the risk to reward for being long gold or gold stocks is exceptionally poor in my view; the macro backdrop does not support higher gold or gold stock prices in the near to intermediate term. Except, at the same time, the fundamentals don't favor shorting either, because gold stock valuations are too compressed and there is always the tail risk of a surprise central bank move that gold finally latches on to, some unsettling political development, etcetera. There is nothing wrong at all with looking at a potential trade or investment idea, deciding the risk to reward is poor / variables too complex, and throwing it in the "too hard bucket." In fact, this should be done with the majority of potential opportunities analyzed. If you don't routinely come across ideas that look promising at first, but fail the test of closer examination, you either aren't being discriminating enough or aren't looking hard enough in the first place.
Of course not; it's a nonsense statement anyway to say "one can do even better than value investors using rules and formulas for investing." Do better than which value investor? Whitney Tilson maybe; Seth Klarman or David Einhorn, probably not. Value investors are not a monolothic group any more than "hedge funds" constitute an asset class, and in terms of benchmarking etc., it is only the top tier of performers, say the top 20% or so, who matter (from a logical competitive perspective -- who cares about outperforming losers).