Wednesday, June 3, 2020

Do you remember the time.. When you fell in love..



The above chart is of Dow Jones Index from 1st Jan 2020 to now. The market almost has a V shaped recovery and everybody is talking about how it can happen with the man on main street  fighting pandemic, fighting racial abuse, scared of losing his/hers job. etc etc.  

VIX the fear index which was almost at its bottom at 11.80 something rose to 85.47 on March 18 showing the fury of the viscous down move. But since March 20 it has been on the down move and as of June 3 its trading at 24.47 right at the 200 day moving average. As you can see from the above chart, Dow Jones Index is right at the 200 day Moving average. 

But as Goerge Santayana has said those who forget their past are condemned to repeat it.. 
So here's some history for all of us that we should remember and be wary of. The below is the chart of Dow Jones Index from 1929-1930. You can see that DJI crashed in October 1929 and bottomed out in November of 1929 and had very similar looking recovery for next 4 months and then came and kissed the 200 day moving average on April 16, 1931 and sold off and finally bottomed out on July 8, 1932. 

I am not saying that will happen this time too with such a huge Federal stimulus and pending Presidential election but once should be wary of any sell off as the situation on Main street is very ripe for repeating that situation. 



Monday, December 5, 2016

Cell Phone Saga

Last few months have been phone switching saga that it would be worth telling my grandkids when I grow old.

The saga began after I saw the new Samsung Galaxy S7 edge that my friend Sunil Sharma showed me on a lovely Saturday afternoon. I was totally impressed with the screen of the phone and the Camera capabilities. Hence I decided to trade in my lovely loyal note 4 phone.  I went to Best Buy to buy S7 edge but Samsung that day had a launch of their new Note 7 phone.



Note 7 phone was love at first sight. The stunning looks of its brother S7 edge plus tons of other features including a new sharp Note Pen that I have got so much used to and have ditched books and pen.

Note 7 worked flawlessly for me but I was forced to return if for the first recall. So I got S7 edge as a loaner and then finally after 10 days or so the new N7 fixed phone (with black dot). We Indians know the black dot story…. You know what I mean...  Nazar na lag jaye...

But my joy was very very short-lived, the new phone started heating up in just less than an hour.. a short ride from Best Buy back to work..  It was a super-hot cake by the time I reached office. The phone cooled down a bit once I was at work, but in 3 hours it was dead, the fully charged battery was discharged to less than 5%. The previous N7 I had lasted to more than 38 hours. So I went to Best Buy next day morning complaining about the so called “Fixed Phone” but Best Buy managers as usual even did not want to acknowledge the problem and instead said talk to “Samsung Rep”. After a quick chat with Samsung rep, the phone was reset and was brought back to Factory settings and guy asked to me see if it fixes my problem.

Again a drive from Best buy back to home made the phone like a hot cake... It was so hot that I thought it would burn up my leather car seat or leave a mark... so I actually stopped the car and placed the phone on napkin (like a coaster) and drove back home. I called Samsung that reps over there were more stupid then anyone I have ever talked to. They kept of saying that phone is fixed phone and kept on checking serial numbers. After talking to 3 different departments in Samsung, the last rep advised me to send the phone in for a repair.

So next day, I went to Bestbuy again told them that I want to return the phone but they said that I cannot return the phone as the phone is passed  the 15 day period. I was aghast as I had just bought the phone a day ago but according to them the phone was bought a month ago and this recall switch of phone does not count.

After frustrating experience with all these people on returning my phone, I called my AMEX my credit card company and after answering few questions, they asked me to called Verizon with them on the phone as the phone payments were going to Verizon. Verizon’s initial phone rep mentioned that since the phone was bought at Best buy, they have nothing to do. At that time, the AMEX rep stepped in and told the Verizon guy that he would like to speak to some Supervisor. The phone call was promptly transferred to a Supervisor and Verizon’s supervisor also had the same verbiage as if they are reading from the some written directives.

Amex rep was very professional and told the Verizon supervisor that Amex will be filing a bad device case and will be taking legal steps. At that point Verizon supervisor brought in a real supervisor on phone and the real supervisor was more than willing to understand the issue and put in a request to exchange out the device at Verizon store.  So we ended a phone call on a happy note, everyone thanking each other for their services.

In the afternoon, I went down to corporate Verizon Store and Verizon rep there also had the same verbiage like the phone rep. I was him politely so see the account notes before giving me run of the mill answer. He reluctantly pulled up my account and was very surprised to see some notes asking them to replace the device.  Now they did not have the N7 in stock, so they requested I take a loaner phone till they have a new N7 for me.

So I wanted the S7 edge as a loaner again but they said I can’t have that they gave me some Galaxy J3. After 4 days, my “ New fixed fixed N7” came in… and hence I rushed back to Verizon store to get my N7 back as I missed so many things that Note series offers.  I stayed in store for an hour to make sure that this N7 was not a hot cake like the previous one. Finally after an hour of testing everything, I happily took it home. The phone did not heat up and after 3 hours it was barely down to 97% on battery. 

The phone worked fabulously, the picture were amazing. The battery life was one of the best seen around. I got around 42 hours on a single charge.  The love for the phone grew as I used it every day, in spite of people ridiculing me at work for the phone being a firebomb.

After 3 weeks, someone reported that there was fire incident on some flight and the phone was reported to be the fixed note 7.  After that the downfall of N7 started, Samsung swiftly decided to shut down the N7 production and announced Global recall of all the devices.

It became so difficult for me to give up my beloved device. Some of the problem areas were:
 1)      Need a note phone with pen... so have to go to Note 5 which is 2 year old phone tech.
       2)      Nothing on the market that comes close to N7 in photos, the screen quality, the features.


So finally made a jump back to Apple world, which I had left since IPhone 4 with a hope that IPhone 7 plus would be a matching contender for the N7.

Wednesday, July 15, 2015

Friday, February 27, 2015

Where are we?

Office and coffee areas  are abuzz with stock market chatters. Some folks keeps on talking about Top is eminent and some folks keeps on saying that market will put in another record year as we are in super bull cycle.  I also get pulled into those conversations once in a while. 

When to come to ask me my answer is as follows:
 Lets look at some charts on weekly time-frame and one can judge for yourself what is going on and at levels one say say that Bull market is over. 

As you can see from the below charts that all indices are making new highs. The last lows in all the indices were around Feb 2 2015.




Tops normally takes 2 to 4 weeks to form where we don't go anywhere and just chop around at the same levels. The professionals are systematically selling to the amateurs who are hoping that new highs will be there soon and eventually market runs out of buyers.

As of now we are not seeing that type of phenomena in the market. The stocks are making new highs, we also see some sort of rotation from one group to another.

So for now the market is in a healthy state. One has to keep an eye out for any sort of corrections. If the corrections gets strangled at the levels shown by dotted line then the bull market is intact and expect the trend to continue and markets to go higher. If for some reasons, if the markets decides to take a bearish mode and one of the buried ghosts comes alive(there are lots of ghosts buried under namely, Greece, Russian war, Chinese deflation, Oil Crisis and mother of all Federal rate increases)
then you should expect the above dotted lines breached and good 10 to 20% correction should be expected.

Wednesday, September 3, 2014

Apple reminds us of Doji at Top

Apple today reminded again why Doji at the top should be watched very carefully.

This signal has more than 400 years of history. Japanese rice traders developed the system 
period.  In mid 1700,  Kosaku Kato (1716 - 1803) was born in the city of Sakata, now Tamagata
His mastery of the rice market price movements was popularized in verses such as: "When it shines in Sakata (the growing region) it’s cloudy in Dojima."  English translation means when there is good weather in Sakata, the prices fall on the Dojima exchange. "And in Edo (Tokyo), it rains." Rice prices plummet there.

Apple yesterday wrote a new all time highs at 103.74 and formed a doji at the top signal. It was not a red candle doji but was a doji and if one had watched it carefully, the way Apple opened today would have stopped them out. Apple opened at 103.2 today and then within few minutes started selling off.
I had my stops at 102.49 and I was immediately taken out. That trade triggering me woke me up as I was busy watching other stocks gapping higher up.

Once again Doji at the top should not be ignored.




http://bigbullandbigbear.blogspot.com/2011/05/doji-at-top-pattern-to-burn-in-your.html

Thursday, May 22, 2014

2014 Summer Mentorship Program

I will be starting 2014 Summer Mentorship Program on June 15.

Please e-mail me on marketing1977@gmail.com  with subject line "2014 Summer Mentorship Application".

The course is free of cost. 

Tuesday, March 25, 2014

Risk of Ruin

This material is copied from my premium service: bigbullbigbear.net.
Understanding Risk Of Ruin.
Lot of times, we try to be successful and try to hit a home run and we get out or miss out on smaller opportunity and end up losing. Now logically if you turn the scenario on its head, and start thinking that we want to lose everything, we might end up hitting the home run.
Perry Kauffman developed this theory of Risk of Ruin exactly on these principles.
The risk or ruin (also known as the probability of ruin) is the probability that you will lose sufficient trading capital that you deem it impossible or unwise to continue trading. This point does not need to be bankruptcy (it often is) but is where you throw in the trading towel and close your trading account.

What is the PROBABILITY?

If you pursue any occupation or endeavor for long enough you may witness events that are once-in-a-lifetime or at least very rare events. A bird watcher, may for example, rarely if ever see an Spoon-billed Sandpipers on Michigan Lake. However, the chances of him/her seeing an Spoon-billed Sandpipers increase the more bird watching he/she does.
Trading is no different. If you pursue a trading career for long enough and you execute a sufficiently large number of trades you will most likely see long losing and wining periods. The longer you expose yourself to trading the more likely you are to see those extreme events.
Perry Kauffman considers the following 2 premises:
  • In real trading, once profits accumulate, the chance of ruin decreases. The greatest risk is at the beginning.
  • If we plan to withdraw profits, thereby maintaining the same relative commitment to the market then the risk of ruin must be greater than if we accumulate profits and keep the trading position the same.
Kaufman gives us the following formula for calculating the risk of ruin:
risk_of_ruin = ((1 – Edge)/(1 + Edge)) ^ Capital_Units
Edge is the probability of a win.
We can see that the mechanics of the formula are such that the larger the value of Edge the lower will be the risk of ruin. This is also intuitively logical because the greater your edge in any strategy the more likely you will have more winning trades. Also, the greater the number of capital units employed the lower the risk of ruin. Again this should be obvious: The smaller the amount you risk for any one trade relative to your capital base the lower the risk of ruin.

 Risk greatest at the beginning why?

As mentioned above, the risk of ruin is greatest at the beginning.
One reason is because your capital base is smallest at this point and if you immediately hit a string of losses it will take a smaller string of losses to wipe out your account
There is another reason why risk might be greatest at the beginning. This may be because of lack of experience. An experienced trader who has survived for a long time will have overcome losing habits that a new trader may still have. These losses may be from simple things such as not operating the trading platform correctly to more complex discretionary decisions about when to override the system.

Conclusion

The risk of ruin is greatest at the beginning. The risk of ruin also increases the longer your remain a trader because the risk of experiencing a series of losses increases.
When one hits a losing streak, or when market is not behaving the correct way,  by scaling to smaller trade sizes as the portfolio is reduced one lowers the risk of ruin and improve the survival rate.
Hence for new traders, they should really think about how much they want to risk, once they start making a bit, then increase the risk appropriately. Starting with 0.5% of total portfolio risk and then increasing it by 0.10%  is a very prudent way to start.