That was the week that was

The Chinese authorities seem determined to distract their citizens from the Hong Kong security law clampdown by juicing their stockmarket. The Shanghai Composite and the ChiNext indexes both went up over 7% (these are roughly the equivalent of the S&P 500 and the Nasdaq 100 US indexes). In an entirely unrelated development, the Chinese authorities loosened monetary conditions at a record pace. For the gory details, check this weekend’s Credit Bubble Bulletin. ChiNext is up 54% this year. Just imagine where it would be if we hadn’t had a global pandemic that has destroyed 20% of jobs on the planet.

The Bulletin has an excellent summary of the week’s market’s developments. The general tone was risk-on helped by authorities being quick to apply extra monetary and fiscal stimulus. The disease is still a serious problem and it’s politically impossible for authorities to neglect it entirely, but essentially all measures which slow the disease are damaging for the economy, so it’s hard to see markets continuing to grind higher, at least in real terms.

The White House seems to be continuing to pump out news about a Phase 2 Trade Deal and an imminent development of a cheap and widely available vaccine. Fewer and fewer people are paying attention. Certainly, I’ve stopped some time ago, except in that I’ll try never to be short of risk assets when I see another news conference coming.

, from Compound Advisors.

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Styles

I was reading some post the other day when an investor said, basically, that as an investor one had to decide on one’s own strategy and follow it, religiously and not be influenced by what other investors say their are buying and selling.

Most successful investors in interviews seem to emphasize how important it is to stick to a single set of trading rules, or strategies, and not be swept along with the flow of news or other information that constantly is being published. Obviously, most big investors will have an incentive to pretend they are selling when they are in fact buying, or at least wait until they’ve established their position before they reveal what they’ve bought, especially when their are a big player relative to the size of the market.

I understand that this is the received wisdom, but if traders had perfect hindsight they’d all execute the same strategy and make a lot of profits. If someone could decipher the Rosetta Stone of the tape, and decided to share it with you, you’d be mad not to follow it. Of course, such a solution doesn’t exist, because the stock market is a voting machine, which responds to the popular vote. Trader Vic, interviewed on the Market Huddle podcast, explained how over his long and successful trading career he’d seen various “dead cert” trading strategy collapse as the arbitrage eliminated the inefficiency.

At the moment, the style seems to buy momentum and trade like Dave Portnoy. This too will pass, but it seems it’s going to run for a while yet.

Trading ideas

I don’t really have anything very convincing. It seems to me that with the wild ride that copper has been on lately the miners must eventually benefit. A handy thing about copper miners is that they usually also produce silver and gold, so you get a bit of commodity diversification thrown in for free. One that might be worth a second look is $TECK. I’ve created a watchlist of copper miners on Koyfin. This might be worth looking at alongside some precious metal miners that have been mentioned by Fleck himself. Note that I might have got the tickers messed up for this list, so please tell me if you spot any non-miners there.

(Image shamelessly hotlinked from Kuppy’s Blog)

After weeks of drifting perilously close to the rocks, the “Incredible Hulks” stocks seem to be staging a minor rally. Stock prices seem very sensitive to the price of oil. In a theoretical world, it might be worth trying to hedge this risk of holding these stocks. Investing in these stocks is pretty risky. For more info, read Kuppy’s blog, of which this is one of many entries on tankers .

Intel

It’s funny how some stocks just sink gently without anyone noticing them go. In the 90’s everyone was moaning about the “Win-Tel” monopoly that $MSFT and $INTC had over personal computers. Wind forward a decade or two, and now other players are much more important than half of this duo. I wonder when $MSFT will follow its partner.