High Heeled Traders

The Fed Awakens

December 16, 2015

It’s been a wild ride the last week but that has seemingly faded, how did you feel about your holdings. If you have been able to get out with a small loss and without panicking, you are well on your way to investing successfully. I have losses too stemming from my inaction- I have been sidelined last week with some deadlines so I had to forego trading opportunities, nonetheless, I went back and checked the fundamentals of the company and while it may not be the “favourite” when bargain hunters came, it still retained its ‘BUY’ rating among analysts and it is an undervalued stock so it has been getting some bounce.
I should have been nervous, that was some 5% drop I had to endure, good thing with my review of investment psychology materials by Dr. Van Tharp (and some of my fave snacks crispy glazed pili nuts LOL ) I was feeling very good, clear to get the right trade and profit on the move downside that still plagued the AAPL of my eye as of yesterday.

Today the US Fed is expected to raise interest rates, there will also be a forecast of the economy so I’m expecting some more volatility. Investors already know the rate rise will happen, and yes investors can also be fickle, get nervous, get too excited. So, IF you are waiting to get in, you can do so next week when “everybody” has come to terms with that rate rise. Also, while it is expected – the rate rise might give way to some selling in those unfortunate mining companies already suffering from price meltdown because they normally carry debt in that capital-intensive industry. Plus if the debt is in USD, that’s going to get stronger from the actual rate rise, then you have a bad (or even say worse) outlook for commodity producers, oil companies etc. In my view, this will make the market swing wildly, or even spread to the wider market so we have to be aware and prepared with some risk management / hedging strategies.

It’s not all doom and gloom though, we can get into the sectors / companies that move favourably with the rate rise, because it will be a reliable pattern to occur again in the future. ie. as there will be more rate rises as we are just starting this cycle.
Star Wars opens tomorrow and today …The Fed Awakens… May the Fed be with you…

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Mastery in Progress

December 4, 2015

I got an email from an experienced investor who is asking whether with all the training, books etc that I’ve digested to become a trader – is 3 hours (workshop session) enough? First, I want to tell you that it is a continuing process to be a master at what one does whether it is investing or whatever profession. With the 3 hours – I will be able to impart a structured learning approach, critical ideas on investment psychology, how to create business rules plus I’m giving a sample which you can customise for yourself and assess the business environment (market) for low-risk high-reward investing. This will form the foundation from which you can invest profitably and keep improving yourself to achieve consistency.

Many people are preoccupied with entry techniques which includes how to understand charts, see patterns etc. Dr. Tharp calls this a “bias” and his most important lesson is that you may think you are “right” when you make an entry into the market — however, the market will do whatever it wants to do when you have entered it. According to his research, entry is only 10% of the success factor in investing. What matters most – the 90% of your investing success – are your low-risk ideas your system, position-sizing which I will discuss in the 3 hours of our workshop. Another major component – your investment psychology will be discussed as an overview although the in-depth discussion is in my bootcamp (which I hold once a year) and of course, the esteemed courses of Dr. Van Tharp (his work is tremendous, what I discuss is from my experiences which I process through his teachings).

And finally, I say to people who use all the charts and indicators — it’s fine, if you enjoy it and it works for you, that’s a good thing.

To end, I would like to say, “when you teach you learn twice”. I look forward to progressing my learning with my fellow committed investors tomorrow.

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Better Options

December 2, 2015

It’s Christmas and the traffic in the city is just scary, especially after lunch. I’m starting to suggest to friends to instead have breakfast parties rather than dinner parties to celebrate. It’s always nice to have options doesn’t it?! Or Skype parties… since the whole point of getting together is the conversation 🙂
How to stay relaxed this holiday season… it’s always nice to have options.

In the same vein, I am so delighted that there are Options for our financial investments. Options are basically contracts that you can use with your investments. Quickly, there are 2 types, Calls and Puts. Call options are used for making sure you have the right “to buy”, while Put Options give you the right “to sell”. Here are the benefits:

Earn income
You can earn income over and above dividends by writing call options against shares you own.
This is a very popular strategy with investors who expect the price of their shares to remain flat or fall slightly. Writing call options can generate extra income during such periods.
For example, assume you own 100 shares in Intel (INTC), which in early December are trading at $35. You believe that over the next couple of months, the share price is likely to stay around current levels.
You write a January expiry 35 Call option for a premium of $.80
Writing the January 35 Call means that you accept the obligation to sell your Intel shares for $35, if the option is exercised. For this you receive the premium of 80 cents per share ($80 for the contract).
If at expiry, the share price is below $35, the option should expire worthless. Your INTC shares may have fallen in value, but you have earned $80 in extra income for selling the call. Because of the extra income, in this example the share price can fall to $34.20 before you make a loss on the strategy overall.
If, however, the share price is above $35, the option will be exercised and you will have to sell your shares. Effectively you have sold your shares for $35.80 (the exercise price of $35 plus the option premium of $.80).
Brokerage and transaction fees will also apply when trading and exercising option contracts.

Protect the value of your shares
Put options allow you to protect your shares against a fall in value. Buying a put option locks in the sale price of your shares for the life of the option, no matter how low the share price may go.
Without using put options, in a market downturn you can only watch your shares fall in value, or sell them.
For example, if in early December you believe the share price of Visa is going to fall from current levels of $80, you could buy a V Dec 80 Put option, say for $1.80. This option gives you the right to sell your V shares at the exercise price of approximately $80 any time up until the option’s expiry.
A great advantage of this strategy is that if the share price should rise, you are not obligated to sell your shares. Your shares will benefit from the price rise, and all you have lost is the put option premium.

Speculate
You can use options to profit from a movement in the underlying shares without having to trade the shares themselves.

Options give you exposure to movements in the share price for a fraction of the cost of purchasing the shares themselves. Because of the small initial outlay, you can gain leveraged exposure to share price moves. For example, Warren Buffett’s company Berkshire Hathaway whose “A” shares are worth 204,945 would perform the same as “B” shares worth 136.43 which has a $137 call option costing only 50c.
With an increase in the price of the underlying shares, the percentage return on the purchase of a call option may be greater than on the purchase of the underlying stock. Similarly, if the price of the underlying shares fall, percentage return on the purchase of a put option may be greater than the percentage change in value of the shares.
However, just as leverage provides the potential to make high percentage returns, it also involves the risk of making large percentage losses. AS A BEGINNER, you will only be allowed the strategy with the limited risk, typically, you will only lose the premium you paid.

Time to decide
There may be times when you are unsure whether you want to go ahead with the purchase or sale of shares. Buying an option enables you to defer your decision until the option’s expiry.
When you buy a call option you lock in the purchase price for the shares. You then have until the expiry day to decide whether or not to exercise the option and buy the shares. Similarly, by taking a put option you lock in a selling price, and give yourself time to decide whether or not to proceed with the sale of the shares.
In both cases, the most you can lose is the premium you have paid for the option in the first place.

How Options are traded
Options are traded through stock brokerages ( which are then interconnected to the NYSE, NASDAQ
Opening and closing option positions are facilitated by the Market Makers operating in US options market. Market Makers play an important role in the options market, and are required under the Market Rules to provide quotes in certain option Series. Their obligations to provide quotes are not unqualified and your ability to trade out of a strategy may depend on if you are able to obtain a quote from a Market Maker.
This requirement is to promote liquidity in the market, so that you are more easily able to trade into and out of option positions.

In order to trade options, clients will have to open an options account with a broker, and sign a client agreement form and a risk disclosure statement.
A broker will provide you with these documents.

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I remember when I was new to investing in the stockmarket, I tried to learn the most I can about what to buy, what are the entry techniques, what do technical analysis mean, fundamental analysis. Dr. Tharp opened my eyes to this truth — “Being right has nothing to do with making money”. SHOCKING!!! I know… For example, a popular stock in the PSE like URC plunges by 4% today! When the PSE Index is up by 133 points or 1.9%. Or even fixtures in US shopping like Walmart (who does not go to Walmart!) in the US dives like last time it reported earnings.

So what does every investor need to do to make money? Number 1 is controlling risk. And there are 3 areas of risk that we should recognize and I will be discussing in depth in the Low-Risk High-Reward Investing Workshop. Save time, money and hair! Learn what it takes to make money in the stockmarket. Just in time for Christmas we are offering a special rate of only 1,500 pesos.

Here again is the link to learn more about our fantastic content

Current Workshops

Send me a message or email me at charmel@highheeledtraders.com for payment details. See you on Saturday!

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December to Remember

November 30, 2015

This is going to be a December to remember. Yes, this is it! Finally, just like “everyone” predicted, interest rates will rise in 2015. December 2015. Glad we are on track to meet the “duedate” – if only just. 🙂 Today’s business day will evolve around what happened last “Thanksgiving weekend” which, I heard was “in-line” with expectations, I was scouring for news and there isn’t much about it. I guess we haven’t got bad sales for it to be headline-worthy. So we’ve jumped past Thanksgiving and we’re faced with a heavy week of economic reporting events. Here are some of the major economic events:

Monday – International Monetary Fund will decide whether to grant China’s yuan status as a reserve currency. This is a BIG deal but somehow has quietly slipped past media. (You’d think it’s a done deal?)
Tuesday – ISM Manufacturing
Wednesday – US Fed Chair Janet Yellen starts her testimony in Congress (2 days) as well as Beige Book being released
Thursday – Jobless
Friday – Employment situation

Plus we have ECB’s monetary-policy decision on Thursday, widely anticipated as an event supportive to the European economy and by extension, to the stockmarket. US economy I think is perceived to be strong enough to withstand that first rate increase, and whatever turbulence from China or the bullish US dollar. Good news all-around. Naturally, I’m getting “high”.

http://www.reuters.com/article/2015/11/30/us-usa-holidayshopping-idUSKBN0TI0WB20151130

http://www.bloomberg.com/news/articles/2015-11-29/euro-holds-drop-as-ecb-week-begins-with-all-eyes-on-china-stocks

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Fragile China

November 27, 2015

I hope you all had a wonderful and warm Thanksgiving Day for those celebrating the occasion. It’s a half-working day too today, so it is likely that holiday-makers will stretch R&R up to the weekend, and just like Wednesday we would see light trading volumes, this day could also be very volatile owing to some contrasting market sentiment overseas — Europe confidence is high thanks to more stimulus promised (article here) but China is not reassuring at all with the latest economic report showing industrial profits have fallen yet again — 4.6% in October. (Article here) I mean, yes they keep promising stimulus, but the question is – do they work?! I’ve said it before — with Euro weakening, China has more competition from better quality, better value products that Euro-area factories are producing. Affordable Made in China or Affordable Made in Germany… you know what you’d buy…

So what’s with China, followers of my blog might remember that I’m very bearish and admittedly sceptical about the growth prospects. Last I wrote about it, the market sailed on however, but I watched it thinking it won’t last. It’s the valuation factor again, and we might dismiss those Price-Earnings Ratio (which is a handy indicator) as just a number but in real-world sense it means that people are paying a lot more for something than what they are worth. This situation is all to familiar, say you bought a shoe that looks really nice when you bought it, but after 2 times you’ve worn it, the edges immediately gape open, or basically starts to fall apart. It’s not a good feeling to have overpaid, ever!

The US might shrug it off though, since they have experienced healthy (and steadily improving) job market through all the overseas drama…. so, keep calm and give Thanks….


http://www.bloomberg.com/news/articles/2015-11-27/china-stock-bulls-hit-breaking-point-as-state-dials-back-support

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Short and Sweet

November 24, 2015

This week it’s going to be a holiday-shortened week in the US, so it’s a clue. People are going to take profits off the table, and that’s what I’ve been waiting for. The market finally took a step back. A decline for a few days for sure, a buying opportunity, but beware, it’s not going to be for every and all stock out there. Take for example, oil and gold that has just been on a slow-grind. You’d think they are low already, but they’ve just continued to slip.

Anyway, I did say I was waiting for this, just last night AAPL, lost more than 1% and it would go down some more. If you were keen on options, you could have outlayed a small amount like .20c on the 116 Put option and go to bed then waking up to .39c value on the 116 Put, making 95% on your trade. FB also went down, and so one with some “hot stocks” that are going to look like good picks this week.

People are going to be focused on Thanksgiving Day in the US, and a lot of people are going to be trooping to their favourite stores to get themselves whatever they like ,,, hopefully on bargain price. So there’s the sweet opportunity in the RETAIL sector, (WMT, NKE, TGT, BBY) even technology stocks are in to the party – Amazon, Ebay, Apple.

But wait! The GDP number is coming out Tuesday so there’s going to be a volatile run again. Bad news is good news and good news, may well be,,, good news,,, or not! But you know what, this is the beauty with Options — it can let you construct a strategy to profit whichever way the market with a “straddle”. That’s why I am so excited for my workshops coming on December 5 and upcoming webinar series after. Get the details here and let me know early because we got some pre-workshop materials to send out to help you prepare. Email me at
charmel@highheeledtraders.com

Here’s an insightful video on the Retail sector from Bloomberg.

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Current Workshops

November 20, 2015

NEXT schedule: March 4, 2017
(sorry, change due to booking mix-up)

Invest Right Discovery Workshop
830am-12noon
Ortigas area (exact venue to be sent in registration email)
Early Bird Rate : 2000 pesos (Regular Rate 3000 pesos)
BONUS : FREE 365page full eBook of High Heeled Traders (800pesos value), Investing Plan (No need to start from scratch! Priceless!)

US Investing and Income Investing Workshop
1-530pm
Ortigas area  (exact venue to be sent in registration email)
Early Bird Rate : 5000 pesos (Regular Rate 8000 pesos)
BONUS : Attendance to morning session Invest Right Foundation Workshop and all its freebies – the full eBook of High Heeled Traders and Investing Plan

Email : charmel@highheeledtraders.com to register!

Invest Right Discovery Workshop

This is our foundation workshop that discusses how to make money from actively investing your money in the stockmarket, and how to assess the business environment (what the market is doing), avoiding the loss trap and the right investing mindset.

What You Will Learn
• The investing mindset you need to be successful
• Why investing / trading is a business
• How to avoid the loss trap
• How your personality impacts your investing
• Using a structured investing approach
• Developing your system or investing/trading rules
• Understanding the big picture and how to fit your strategy
• Market Movers : companies, governments, big money
• Prediction
• Effective entry techniques
• Profit-taking exits
• Controlling risk and achieve your goals with Position Sizing

US INVESTING WORKSHOP

What You Will Learn
Some of our Cutting Edge Content

•The U.S. Financial Universe
•How Big Money Plays the Game
•How to Find Your Edge
•The Best Stocks to Invest On and/ Or Trade
•Effective Long (Bullish) and Short (Bearish) Strategies
•Generating a Monthly Income Using Stocks You Already Own (Thru Options Contracts)
•Trading Examples
•Opening a U.S. Brokerage Account
•Tools and Resources for Investors

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Rate Rise Happy

November 19, 2015

Just want to highlight the US market movements of recent days. Paris got attacked, and while the Asian markets fell early, there was recovery throughout the day, and by the time the US market came around, the panic has dissipated which looks like the day is just starting off like any ordinary day. You have to take note of this behavioural pattern, there is fear of the unknown at the start, and as the day progresses, it becomes clear where the negative effects are — and the negative effects are limited, at the end of the day only travel and airline stocks declined. With the airline stocks, this may qualify as a buying opportunity for the medium-term given how oil prices remain slack, and the potential for another terrorist attack is lowered by the increased security and intelligence gathering. However, just so you know, ISIS themselves are saying there will be more attacks to come.

The US Fed came out with the minutes of their last meeting also last night, where it is no surprise (and they have been saying for months now) that the rate hike is coming, is needed, investors took note in the Minutes that they are proceeding with a gradual pace, so that the economy will remain buoyant. Frankly, I was expecting more volatility in the market last night, but you have to put away preconceived notions and just go with the market. And the market cheered the policy with a rally the whole day. My position in GILD was hedged (with a Covered Call) after a good run of the last 3 days, so my gameplan is to “roll up” my option so that I can still enjoy the rise in price — given that there is this megadeal in the biotech space with Pfizer buying Allergan.

Also just want to highlight the US market movements of recent days, and the phenomenal profitable plays
AAPL – Apple up 3.5% the last 3 days, even up by $3.5 just yesterday!
WMT – Walmart up 7% the last 3 days
GILD – Gilead a biotech company up 5.8% the last 3 days
(I posted about buying this in this post)

These gains are just on the stock ownership, what more with Options strategies that could readily give you – with this kind of price action – a return of 400% in just 1 day! Say spend 20c for a 117 AAPL Call Option expiring this week, and the next day the 117 Call Option is worth 1.08 or 440%. (See the images in this post). This kind of trading opportunities exists …. not yet in the Philippine Market unfortunately, but in the US market.

So don’t waste any more time. Register for the full US Investing workshop! You can still avail of the Early Bird Rate of 5,000 pesos and I will let you attend the the Low-Risk High-Reward Investing Workshop (where we teach creating a profitable system and assessing the market / business environment) for just another 1000 pesos (normally 3,000). This is because I really want you to be prepared for the opportunities and the business of trading in the biggest market in the world.

So again here are the details,

Dec 5, 2015
830am – 12nn Low Risk High-Reward Investing Workshop
1pm – 5pm US Investing Workshop
2/F Ortigas Library Conference Rm, Ortigas Bldg, Ortigas Ave. Pasig City.

WHAT YOU WILL LEARN
Just some of the fantastic content in our workshop
 The U.S. Financial Universe
 How Big Money Plays the Game
 How to Find Your Edge
 The Best Stocks to Invest On and Trade
 Effective Long and Short Strategies
 Generating a Monthly Income Using Stocks You Already Own (Thru Options Contracts)
 Trading Examples
 Opening a U.S. Brokerage Account
 Tools and Resources for Investors

Email me at charmel@highheeledtraders.com to register and for the instructions to make payment and other pre-workshop resources.

http://www.bloomberg.com/news/articles/2015-11-18/pfizer-said-to-near-acquisition-of-allergan-in-biggest-drug-deal

CLICK ON THE IMAGES FOR AN ENLARGED VIEW

http://www.bloomberg.com/news/articles/2015-11-18/would-you-pass-the-global-financial-literacy-test-

http://www.bloomberg.com/news/articles/2015-11-19/as-biggest-hedge-funds-stumble-one-currency-manager-gains-21-

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Stirred But Not Shaken

November 17, 2015

Paris terrorist attack last Friday was admittedly very disturbing. It was a multiple and coordinated attack after all. From previous experience, I decided it would be better for my trading that I distract myself. You see, a negative or fearful emotion can easily cloud decision-making. I offered prayers but unlike before, I did not read a lot of what happened. Since it was a weekend, I made a conscious effort to refresh and enjoy myself, as come Monday, I have to be focused to deal with it.

I am currently holding GILD, which is a biotech stock. I decided based on it’s PE which is below 10, that it was ripe for bargain-buying, and though at the start it was up by 30c or so, by mid-morning when the market settled it had dipped to 80c, which was not a happy development but noting that “time of day” was around 10am, after the recovery from negative opening (while the stock was diverging – meaning it was positive), there there was a sense of peace for me to leave it alone, unhedged, thinking that the worst is over, and bargain buyers could step up to scoop up the stock with the very attractive PE and soon will be paying dividends. I slept and woke up to find it up by over $1.

Stocks that moved are Energy going up, and Airline / Travel stocks down.

The global markets also dipped at the open on the tragedy but as the day progressed it had found its bearing, we extend our sympathies to Paris, and closed the day strongly, investors might have been “stirred but not shaken”. (Inspired by that line, enjoy this James Bond movie clip)

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