Reading to the Right Side of Charts

Recent events sparked the desire to write this topic captured only in trading books.

Long story short, the required mindset to fully capitalise maximum profit from recent events starting late April 2019 till today, requires quite an outlandish mindset. Being a passive investor would have had to tolerate the volatility for not much profit. Being active investing/trading beats passive during such a period. Therefore, different pockets of time favour different approaches to the market. Check out the curious case of Wheelock to understand more about this statement. Alternatively, you can check out Adaptive Market Hypothesis, an approach I personally subscribe to.

Giving things proper attribution is important to me. Being brutally honest about the facts and recording all the thinking processes as the events unfold are meaningless unless a person investigates in retrospect to critique as well as evaluate the narratives that generated the outcomes of the present.

20190712_1
2019-04-11 STI daily chart (POEMSview) pin candlestick on wedge resistance zone.
20190712_2
2019-04-11 Whatsapp Broadcast that day. Proposed planting shorts using DLC on top of exiting long positions. Acceptance obtained.

Those of my clients who accepted the proposal to plant shorts were experiencing loss when the market grind up.

20190712_3
To be honest, that spike did make me question my view.

At that stage, a tactical cash horde was built and it can be argued that I am missing out on opportunities as well as the upside having exited risky longs plus planting shorts. But hey, I am not perfect, and I believe in the wisdom of leaving some on the table to be able to exit.

20190712_4
“The market can stay irrational longer than you can stay solvent.” is one of my pet phrases.

I have said that future probabilities are not static, and this is testament to my consistent narrative that wealth management will forever be a craft.

20190712_5
No financial model can forecast Trump’s twitter account happenings.
20190712_6
Did I forecast accurately this would happen? Was I lucky to have called for planting those shorts and cash horde? How can this be attributed?

I must admit the imperfections of my judgement calls as well. I did not unwind the short positions at the perfect low just as I did not plant the shorts perfectly at the high. Eventually the shorts were unwound in 2 trenches at first foreseeable support zone.

20190712_7
Exited shorts around 3250 levels.
20190712_8
Whipsaw rebound expected but execution timing is key.
20190712_9
Truth be told, the DLC short went above $1.30+ so what is $1.15? Then again who knows.

Broadcast communication is on a daily basis to report developments as well as my own personal view and interpretation on the available public information. For a given set of facts, be open minded that different people may form different opinions of which some may not be mainstream.

20190712_10
Markets can move 3 ways. Up/Down/Sideways and views get altered by new information. Hence the need to be sensitive to changes in probability.

I like it that current CIO Phillip Securities Peggy, plays texas hold’em on mobile for fun. Those who play the game understand a nut hand at the turn might not be the nut hand at the river. New information from the last community card changes things. You need to run away from adviser reps with assumptive attitudes towards future projections. Man can plan, only God can deliver.

20190712_12

By this stage some longs have been planted, not perfect timing of course.

20190712_16
Am proud of this call though, on hindsight, well entered, near bottom.
20190712_13
Next question of course is rebound to what level and what happens after?
20190712_15
By this time, clients’ DLC longs exited already. It would have been irresponsible to carry them while I am on holiday. DLCs have higher volatility and not available for all to engage it.
20190712_14
That is the thing about markets, it can reward you for reckless risk taking. On hindsight, should hang on to DLC longs right? But who knows.

Having presented the sequence of events and thinking processes, what conclusions can be drawn?

  1. How many people can properly attribute the difference between luck and skill?
  2. Views are not static, neither are price paths which alter with new information.
  3. Forward probabilities are not static.
  4. Everyone sees the same chart but can have differing views.
  5. Ideation is one thing, execution is another.
  6. Hindsight is so much clearer than being in the hot seat making judgement calls at the right side of the unwritten chart.

Dear Clients of Mine, if you happen to read this. Thank you for your trust in my services. I still humbly acknowledge that it is not what is delivered before than drives today’s value. It is what gets delivered today, and the future, that drives value. With that, know that I will not be assumptive about the future and respect the markets.

It is 2019-07-12 Friday today, what is your play moving forward? Need my assistance, do not hesitate to arrange for an appointment.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.