It’s going to be an interesting week ahead. Breaking News : a terrorist attack in China, Russia invades Ukraine, and there’s the Red Carpet for the Oscars 🙂 that might be enough to further confuse if not dampen the already soaking-wet economic prospects of the US and the world. I’m also wary it’s already tail-end of earnings season, with the US GDP also reported lower (here), so, my sentiment is on the cautionary side.

I mean, what’s left to cheer about?! My short position on BHP. (Tadaaa — entered at the last 5 minutes on Friday — 38.43 on BHP a Put option with strike price of 37.50 expiring March – tell you the code later!) Like what I previously posted, today is the day — the stock goes ex-Dividend (sched here), so watch out guys, this is a magic trick — the stock price will drop today! And I get this question a lot “what does “ex-dividend mean” so here’s the official blurb from the Australian Securities Exchange website :

” Ex dividend date

The ex dividend date occurs four business days before the company’s Record Date. To be entitled to a dividend a shareholder must have purchased the shares before the ex dividend date. If you purchase shares on or after that date, the previous owner of the shares (and not you) is entitled to the dividend.

A company’s share price may move up as the ex dividend date approaches and then fall after the ex dividend date.
—

Happy now? Note the number of days (prior to Record Date (the 4 business days they are talking about above) may be different to the market you are trading.

And, let’s see how the world reacts to the “geopolitical crisis” courtesy of Russia for a few days. I’m hoping it won’t be too bad, Russia just hosted and should still enjoy basking on the glow of the Winter Olympics (and spent billions on this PR machine) so methinks they are just wanting a little more “attention”. Anyway, hope you’ve got protection on the downside, invested in oil 🙂 or otherwise prepared emotionally for this wild ride.

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I had a pleasant surprise from Cherry Diaz who is based in Singapore, a lady who won my book in a stocktrading game. She is currently number 1 in the standing and she posted an excerpt from my book that was of particular help to her.
Here:

It’s quite timely too because the market is doing funny things in the last few months, there was the US Fed tapering, weeks before it actually happened, markets plunged, only to recover before the end of the year (the early “January effect”), then when January came, emerging markets came crashing down , the Asian stocks fell from China market moves, only for the markets (particularly S&P 500) to reach record highs again. It’s confusing, I know!
So for those wondering how far there is to go, don’t! The market does what it does. Like you can’t simply make someone like or love you. It’s up to them. Now, it’s a bull market in the US — and with a low GDP number coming out treated as “bad news is good news” with the Fed remaining on investors’ side. (For a while, watch out for another panic attack! So better have exit strategies ready). I’ve also written a post at InvestorPlace.com (USA) – this is particularly useful for those trading Options, but even if you are not, I think there is a benefit to understanding the discussion of the technical levels.

Speaking of exits, I’ve sold all my BHP shares yesterday, mainly because it goes ex-Dividend on Monday and the stock is expected to go down in price and want to redeploy my capital. The result is quite good, I bought at 35.40 and sold at 38.43 or roughly $3 per share profit before tax. I had a 50cents Initial Risk (or Stop) in this trade so that amount to a return of 6x my Risk. Pretty good huh!

If you want to learn the Low-Risk and High-Reward Strategies – Entry, Exits, Trading Psychology and how I managed this trade join me in my upcoming discovery workshop that I will be holding in several cities this March-April. Further dates and venues / webinars will be announced,

Manila – March 22 Megatrade Conference Center, Megamall in Manila, Philippines
Sydney – April 21 1pm (venue to be announced later)
Singapore – April 23 6pm (venue to be announced later)

More details on the workshop here . Places are filling fast. Register now!

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Hello all, this week has been jampacked with activities — most of it unplanned! I planned to do my taxes the other day but since it was a holiday, I ended up doing all sorts of mommy duties becoming flat out to do taxes. I summoned the strength to get up early and it is no small miracle that after doing the taxes, I came upon Dr. Van Tharp’s newsletter *(Dr. Tharp my trading coach). If you haven’t already, please sign up to get his free newsletter. I received his newsletters for years and I remember getting so much inspiration and lessons on trading from them. Find the latest one here.

The article in today’s newsletter is very special. It talks about miracles and I remember my own. Extra money is always a miracle, and especially back when I was struggling to become a profitable trader, it is kinda hard to believe that one day, I will be trading for a living and won’t have to leave my babies to go work long hours. Everything just felt right when I tell myself that even if I haven’t become the success that I wanted to be, I keep on praying, keep on learning, keep on improving. One day, as I’ve done my quarterly transactions, I noticed that I have been hitting my targets of generating 3x what I risk per transaction, and so I have become,  a better trader. It then emboldened me to ask God to send me a big amount of money to increase my capital, I felt I had earned “the right” to ask this money because, even with small amounts of money, I am able to use it wisely at last!

Lo and behold, an earthquake struck. And that earthquake became a real blessing. We got a “windfall”, an insurance payout (no tax! 🙂 ) from our damaged property and I’ve used it as my trading capital, profiting many times over.

So I’ve resolved of just praying for what I want, with trading,  I can CREATE OPPORTUNITIES for myself and believing that it is for me and for good, it comes.

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Nice uptrend in most stockmarkets in the last few days,,,, how did you feel about it?

Nervous?
Ecstatic?
Bored? (you’re sleeping on the job!)
Angry? (you probably sold too soon!)

Among the three possible answers I’ve given, probably the best one is being “ecstatic” or happy, and the worst is being nervous. Being happy about rising stock prices is natural — because you are profiting. And naturally, you want more, so the excitement is there. Some people call this “being greedy”. I don’t agree with that. I also know a lot of traders suffer from this psychological handicap in trading. The trader’s business is anchored on the philosophy “cut your losses short, let your profits run” and if you are steadily profiting, doing your homework and that’s what I call receiving your REWARD. It’s cool, it’s right. It’s not greed. Remember that if you don’t take your profits – somebody else will! In my seminar, we discuss trading psychology that makes a big difference in profitability. Profitability that is based on the correct investment psychology, market understanding and sound exit strategies plus a way of doing your business as you go about your daily life.

This is what I call Low-Risk High-Reward Stocktrading, and I am doing a seminar to help people achieve profit objectives which let them live the life they want. This will be at

Megatrade Hall in SM Megamall – Manila
March 22, 2014 from 10-3pm.
(Webinar version to be announced later!)

This is organized by Learning Curve from the MoneySummit and the fee is 2,500 pesos with discount code HHT20 for readers of this blog!

More details and sign up page here!

Low-Risk High-Reward Stock Investing

This will include pre-event exercises, handouts and webinars that will make the best use of your time, money and energy.
Remember – take your profits correctly – or somebody else will. See you there!

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Since yesterday, I was weighing whether or not to sell my position and take my profits, after all, it’s been 3 days of gains from my entry price of $35.40 and the stock is now at $36.50 for a gain of $1.10. But the all-time trader’s wisdom “let your profits run” is on my mind — and while it is difficult to think of losing profit already made, one has to “let go” and follow one’s rule or system for exiting or selling to profit. I personally look at the following whether to sell or not (yet!)…

Market Understanding
> increasing volume of buyers – check!
> expectation model – it has a $2 range and we’re still at $1 with room to move further
> checking economic calendar – the new US Fed Chair Janet Yellen speaks Tuesday this week, she is expected to continue to be “friendly” to the markets.

Trading Psychology
Last night, as it is my habit, I was tracking the stock price at close and saw that it is already at Resistance of 36.51. I remember on my previous blunderous years ( hehe) I would be shaking already to take my profit, and add to that reading news that S & P Futures is on decline. I did feel a little nervous, but knowing that stocks could still fluctuate through the session, I immediately started some techniques to relax and “think away” from the market. After all, there’s nothing I could do till my trading day opens.

So let the trade move along. If it’s moving in your favor, keep sailing.

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Quick update on my positions. I mentioned the bargain hunting theme early this week and that one should enter understanding the risks and rewards. While I have been lessening my interest on miners, nearly saying good bye to them, I bought again into BHP on Wednesday, when US ended higher but BHP still went lower. BHP is a widely held stock, and diversified well-positioned for growth and financially sound. I was in two minds on whether to buy since I usually wait for a confirmation at close but I saw that there was increasing volume and also slow pace of decline. All other things in my decision tree point to a price below 35.50 as a good entry point so I placed a buy order on 35.40.
After yesterday’s positive Payrolls increase , less jobless benefits claims and good earnings, BHP has rebounded above 36.00. I am monitoring the stock looking at the one-week high of 36.50 Resistance (the highest price for the week). Considering that it’s the reporting period for BHP, barring anymore “emerging market” dramas, I am looking at BHP to continue its uptrend with only a little bit of volatility (rise and fall in the price).

http://www.bloomberg.com/news/2014-02-07/asian-stocks-rise-third-day-on-jobless-claims-earnings.html

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I did say at the last post that I was loving the volatility. For the last few days I’ve definitely getting a good exercise at patience. It was quite tempting when I look at the prices and they are looking cheap enough to buy. But before any buying, I am looking at volume, which had been decreasing following the steep selloff, if they are starting to recover or still even getting thinner, that’s a good indicator. Bargain-hunting is not my strongest suit, but I’ve been enjoying so far, seeing that the values like PE ratios are lower (than 17 – usually an indication of fair value). I can buy more shares or just keep extra cash for future positions.

Now about that question on whether or not “the sky is falling” — here’s an opinion from Larry Fink, one of the co-founders of BlackRock (who invests over $4.3 Trillion in assets) says, this is an old-fashioned correction. (For the US market most importantly and affects everyone one else) I’d tend to believe him, in a similar vein, I believe the financial market is transitioning from the “sugar high” of central bank stimulus, to something more organic and sustainable economic growth from the exchange of goods and services, of each one of us making up modern society.

We do have to make sure whatever we are getting into is well-within our risk profile and timeframes.

Here’s the full article and videos.

http://www.bloomberg.com/news/2014-02-05/blackrock-s-fink-calls-market-decline-old-fashioned-correction-.html

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I had coffee with a lady friend this week,  as soon as we’ve sat down, talk immediately went to stocks and it became immediately apparent that she has a lot.  I mean, a lot of different companies, like maybe 10, and one that her broker recommended, that she thought was not liquid, but was persuaded anyway to buy.

I recommend instead to focus. Shopping gives us a treasure trove of lessons here. Know what you want, and assess the potential “candidates” against that criteria. So strike out any candidates that fail on:
> Liquidity – how I can easily get in and out of the position (this is a deadly one if you are not careful – if prices are falling, you may only get out at rock bottom prices)
> Volatility — the rise and fall of prices (avoid highly volatile stocks if you don’t have the time and temperament to monitor it)
> Strong Sector – it’s the trade with the least risk, even if you can’t do anything at some point, it will take care of itself by riding the uptrend.

For every stock I trade I want to understand as much as there is to know about it, especially how it moves in the current market, every single trading day. Like everyday. For example, with BHP – a diversified miner with oil and metals:

Supply and Demand – the customers and competitors
Price trend – historical charts for 1yr, 6mos, 3 mos, 1 month
Composite data – data sets that are related to the stock
Geopolitical – news about countries that supply / buy the product
Weather – weather disturbance
China economic news – demand picture
US economic news (I look at 15 kinds of reports)
and others (there’s more!)

There are major considerations but if you want to do your best, you have to be thorough with the data THEN crunch it down to a decision on whether you buy, sell or hold the stock. Do that for every single holding. I know it’s hard, it’s a little tedious when you are starting, but TRY, and I am sure you will find a way that you can analyze it to arrive at a good decision.

Also then you could realize the reward potential of this stock and how much you should be buying. What’s the point of having a winning stock if you only have a handful of it?

I got a few more points about stockholdings in this guest post I’ve written previously.

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MARKET Wisdom

January is at its end …looking back, the “January Effect” actually happened in December hahaha.  So like I was telling you all, be aware of the anticipated moves and here  we have some more coming. Before the US Fed started to taper, the markets fell, when it actually tapered / cut the bond purchases, the markets rallied and that all seemed fine, until, we got to this month when the effect of the tapering to the wider, financial markets began to spread out affecting the emerging markets.  And I hope you got wind of my warning of capital moving away from the emerging markets. If that warning hasn’t sunk in,  it’s “Don’t fight the Fed”.  See all their actions since the recession has moved the markets in a big, big way.  All we got to do is ride the wave, so it’s important to keep tabs with them.

To tell you the truth, I am loving the volatility right now.  My sideways system is finding opportunities for quick wins in the rising and falling of the prices.   So it is wise to craft systems that ride the markets happening, and if you want to know what these systems are,  join my next webinar / event on low-risk high-reward investing happening in February.  Email charmel@highheeledtraders.com for the details of this event.

MY POSITION

The position I had leading up to Christmas was a covered call option on BHPGK9, which I’ve put in when the price was $35.50 (during the pre-taper selldown)  for a guaranteed profit of 75c per share to

1) cover the risk to my risk

2) I wanted a guaranteed income while

3) I sort out my workspace, transition and being busy with the children’s examinations just before their Christmas Pa and social activities.

It was very frustrating when the markets reacted positively to the tapering and the stock rallied to $38, but, I held on because that’s a trade I put in with the above reasons.  Its profits that gotten away, but that was still December and I hoped to buyback the stock in January, and possibly roll up the option to higher strike price.  I remember I had to get over being “too conservative with profits”.  But like what I said I had that situation so the trade is right at that time. Fast-forward to January and lo and behold!  The market had also fallen from the record highs, we were at $36.14 even below $36 level. So I am feeling pretty good, even if my worst case scenario happens (the option being exercised), I still pocketed my profits early on, and with the market volatility can still get back in at a price that is not far from my purchase price.

Traders Takeaway : Go with the flow while managing your risks. There’s plenty of market moves – choose your opportunity.

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2014 is on full swing at the financial markets. Yesterday. No, last year!  Yes, got some new positions already in preparation for the opening of the year.  Most of them are “bullish” bets or positions that ride on an uptrend.  We have seen stocks rise prior to the end of the year, but there is still a good chance that the rise will continue given the “January effect”  when investors go back to the market, fresh from holiday revelry and relaxation, to do, what else, but BUY and get back into the market, pushing prices up.

There are, however, people who may already be looking to exit the market so, just be aware that there could be a lot of short-term volatility from the actions of the profit-takers.  Anticipation wins. Always.

I wish I could say that we will have stellar year in the stockmarket, last year, the S & P (US market) rose 30% —  an indication also of the health of the world economy, so let’s look at the exciting moves for 2014

1. Gold – will never be the same again. Is the American economy getting better, yes it seems, so gold will definitely lose its luster to investors –but hear this, it’s not going to be smooth sailing.  Events like  US debt ceiling, budget negotiations, all add to the volatility in the market, but  I won’t take the “buy on dips” philosophy on this one, one has to ride the major trend, and the trend is down on gold.

2. China – OK, we know they are gunning for superpower status, but it is going to be a slowed-down version rather than the skyrocketing fashion of the last decades.  They said so themselves, they are trying to “spread” the financial gains in the threat of “rural uprising” so it seems, so the China bet is going to be a walk in the Great Wall, it is going to be a long, hard climb.  I’m going to lessen positions in miners and move on to stronger sectors.  Except if the said miner has  oil assets like BHP as increasing economic strength will help demand.

3. Strong sectors — which ones?  I think there is a lot of talk about tech sector, airlines,  healthcare, housing, retail etc.  Those that people do need to spend on and spend on big! I try and simplify my life though and just taking a bigger position in banking.  After all, banking is the same everywhere in the world (they make money from your money), and it is easier to monitor the bigger picture with it and has already seen strength and support (er, cleanup) from the government.

And what about “emerging economies” who were the darling of the stockmarket early last year.  Is there going to be yet another BRICS, CIVETS or TIPS  group of countries who will make a big difference in this world?  We’ll have to see.  If the country depends on China, you know the answer to that.  It appears that Japan is getting stronger and the currency is being weakened, so it has been attracting money.  Those that are exporting to the strengthening US and the EU countries will definitely attract attention, but beware.  Government instability shoos away money — that’s something to be aware of in Thailand.  I’d say it is wiser to put money to  less risky places.  US is it!

I will write more about “moving” on the investment psychology side of things in the next blog. That one requires deeeeepppp introspection and meditation and I have yet a few social engagements for the New Year! (And good food to finish!)

Happiness and Abundance!!!

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