Dunning-Kruger Effect

I came across a technical blog yesterday that talked about Dunning-Kruger Effect.

Simply stated, "People with less competence will rate their ability more highly than people with relatively more competence."

source: http://en.wikipedia.org/wiki/Dunning-Kruger_effect

You can read more about it here.

I reason I bring up the topic is because I have seen many people bash Warren Buffett; however, none of those people can demonstrate a better performance.

Debunked

Following my post on Blind Sighted and One Sided, I was jumping for joy to see a blogger debunked A Bad Argument Of Why Buy-And-Hold Is Bad Advice.

I was ecstatic that one blogger would stepped on another's blogger's toe, because it's the truth I seek and the good with the bad.

Learned something new today and will be the next topic for tomorrow.

I cannot wait, but hope you can.

Blind Sighted and One Sided

I watched Transformer2: Revenge of the Fallen and in my opinion, it was an awesome movie.

I read another article about leverage ETF today and have to think people are really blind sighted or one sided. People who write these articles don't paint the entire picture.

Before I go further, I am not suggesting or recommending leverage ETF. The decision is ultimately yours to make. I have blogged about Beware of Leverage ETF and Break Even Point before. Look for it on the blog if you have not read it.

SPY trades at 91.84. If you want to short 200 shares, it will cost you 18,368. Buying SDS, 2x leverage cost you 5,560. Numbers are based on 06/26/2009 closing price. The difference between money invested is 12,808. So? What you are missing is opportunity cost. The opportunity that 12,808 could make you money in another stock.

Another thing that I keep hearing about leverage ETF is time decay. However, no one can can show any data on this supposedly time decay.

Let's say you have 100k invested in SPY. One month it goes down 10% and the next month it goes up 10%. Are you are break even. NO! It must be time decay. NO! It's just math.

Next, you cannot short in IRA. Here is a hypothetical 100k portfolio.

60k invested, 30k cash, 10k (discretionary 3x leverage).

Run those numbers taken into consideration 10% rise and fall in the market with and without 10k invested in 3x leverage ETF.

Honestly, I sure would have love to have the ability to invest in leverage ETF for my wife's 401k plan. It sure beats having to buy and sell. Money market provides negative return. An 85/15 or 90/10 split would be ideal. Let's say I do 85/15 and SPY goes to 3000. The most I would lose is 15%. 15% cost to protect the portfolio is cheap considering that most have lost 50%.

You pay that much if not more in taxes.

Updated:

In my example, I was using shares for comparison, which is flawed. I should be using dollar invested.

For example, you and I have 5k to invest. You invest 5k in SPY. SPY was up 10% end of day. Your account is now at 5.5k = 10% return. I on the other hand invest 2.5k in SSO. My account is now at 5.5k = 10% return, but with 1/2 the capital.

The danger with leverage ETF is oscillation of price. But if there is a trend, then the benefit is definitely there.

Profit Risk

When do you take profit or do you just take profit because there is one?

My action is dependent upon how much risk is at stake.

True story.

Many years ago, I used to play at the $1/$2 blackjack table. One time I remember having KK on a $2 wager. Of course, I split the K and got 2 more face cards. Well, the person sitting after me was not too happy because he had 11, double down, and did not get a face card. Not much at risk for a $2 wager.

My strategy was to double the bet every time I lost a hand. It was pretty successful until I go on a bad streak.

Another time, I was betting $100 on the hand. Dealer shows face card and my total was 16. By the book, I was suppose to hit. However, I outsmarted myself by thinking dealer might not have 20 (always assume the bottom card is 10). If I take a hit and bust, the I lose first. Hell no! I am not going to hit. Too much money at stake here and hate to lose before seeing the dealer's hand. The person after me took a hit and it was a 5 and dealer did have 20.

APPL chart and the story will soon unfold.
What would you do if you were holding puts?

Focus

See how RIMM ran into resistance at the 50ema?


That should have been the time to purchase puts.
Instead, I was not focused and did not get the best price.


To be a traders takes efforts.
You need to know where all the moving averages are at.
And if you use fib, you need to know that too.

Silent Movers

These are what I call silent movers because they move up quietly while no ones pay attention. Disclosure: I tweeted and bought EEV this morning. I made no trade in SRS since I am already shorting the underlying.

Yes, Yes, I know. You all probably read how bad leverage ETF are. They are bad if you are betting against the trend. But notice that the trend is in your favor now. I have done enough research to know better now. Do not hold them if they turn against you.

SRS

EEV


Not find much I like because of the huge down move, so there might be a bounce and everyone is expecting a bounce as well.

NTAP make a good short.

Happy Father's Day

For Dad to Enjoy - The-200-Sexiest-Female-Athletes-Of-All-Time here

Two versions of RIMM chart telling the same story?
Chart1
myChart

Disclosure: I have some puts in RIMM and here is one gone bad.
Looks like I overpaid.


Lots of tweets about ETFC and here is one opinion.

Lots of tweets about APWR and there is one response from stevenplace: Terrible chart, earnings weakness on increased volume; looks good for shorting on pullbacks to upside.

Stay tuned because I will add more as I see them.

Updated:

Good artist copies, great artis steal.

More charts than you want to see.

KOL

Look at the humps for possible support.


Notice how both have same price objective.

Too

Too late to short?
Too late to buy?
Too lost to know?
Too beautiful?


Too conflicted charts.

POT


EBS


AEM


FSLR


AAPL


V

TTM Squeeze Indicator

For those who don't follow me on twitter, I would like to share with you the Squeeze indicator. Try it out, you might like it.

In all seriousness, you can watch the video here

BMRN

Gift to My Children

Some high lights from Jim Roger's Book.

Rely on your own intelligence.
People laughing at your ideas? Take heart!
Be who you are. Be original! Be bold!
Above all, be ethical.
Save

Read more here

When I was younger, I wore clothing with I.O.U brand.

Innovative, Outrageous, Unique a total meaning from I.O.U.S.A.: The Movie.

Discipline

According to the free dictionary, a few definitions are:

To train by instruction and practice, especially to teach self-control.
To teach to obey rules or accept authority.

It is no wonder that I can be undisciplined at time because I quite often questioned authority.

I short when I am not supposed to, anticipating the next move.

I know, I know, too may cliche out there saying trade what you see and not what you anticipate. That is not how I work because I am forward thinking. Look at the charts and tell me if you would be short or long here. Or are you afraid to touch it?

Here is a review of my holdings

SHORT (all happens to be CRE)

SPG

PSA

JLL


LONG

EXC

ED


And the one that got away.

ALXN

1 to Watch

Actually 2, but only 1 is a short.

KATE


JLL

Is Isn't

She isn't Asian. She is beautiful


A watch list isn't a purchase.
A buy list isn't a purchase.
A purchase is a purchase.

How is ED doing? Still in BUY mode.


Watch list for Thursday.

EXC


STR


ATHR


Had questions on whether I like STP or LDK.

I was lucky to have bought back LDK and absolutely missed STP.

Did not think it would run up after the secondary offering.

That's what I get for thinking.

LDK


STP


See the potential resistance coming up?

It is resistance only if it does not break above.

Hold'em

LDK daily


LDK weekly
Looking at the weekly chart is why I decided to buy back LDK.
Hope that was not a mistake.


SQNM
Not sure how you would have caught this unless you had some alerting.
Green all the way and look at those up arrows.


Hopefully, the lottery pays off for me.

Solars

Better off being short than long today from the yesterday screens.

VRSN took a dump today. Oh well.

There were some chatters on solars today.

See the yellow trend line?

It was automatically drawn by QT.

Not always perfect, but pretty cool.

LDK


SPWRA

Best Of Both

I have finally leveraged (a bad word) Strategy Desk and Quote Tracker Paint Bar.

I will start trading a few stocks Monday using small amount of money.

Here is what Strategy Desk came up for a screen.


Each block represents a BAR for the duration.

Pay attention to the [5m]4-8-21 and [15m]4-8-21 columns and colors.

The CYAN BLOCK = CYAN ARROW.

ED 5m chart


ED 15m chart


ED 1d chart


SHORT SIDE

ZMH 5m


ZMH 15m


ZMH 1d


They say a picture is worth a thousand words.

In my case, I hope it's worth a thousand dollar.