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Blog del 28 agosto

How to Trade the Hurricane Harvey

How to Trade the Hurricane Harvey – Introduction

Hurricane Harvey has been called the worst disasters in the United States since 2004. The Federal Emergency Management Agency (FEMA) has said that the recovery from the hurricane will take years. And it is easy to see why. Roads have been submerged. Airports have been shut. Products in retailers have been destroyed. Utilities like internet and water services companies have been destroyed. Companies have been closed as workers remain in the recue facilities. As a trader, how do you trade in such a crisis?

A good starting point is to look at history and how the markets reacted. After Hurricane Katrina, the stock market remained resilient with the S&P rising by about 3%. The NASDAQ and the Dow Jones Industrial Average also went up by a slight margin. The market did not fall as many had expected. However, the market’s reaction after the 2001 terror attack was immediate. The markets fell as investors feared more attacks. There was also fear that the President of the United States would be a target during the crisis.

The two scenarios were different. In the case of Hurricane Katrina, the areas that were affected were in Louisiana, a relatively small area that accounts for minimum trade. On the other hand, the terror attack in New York and Washington was severe because of the size of the two cities. There was also fear of more terror activities. Another issue that is equally important is that there were forecasts of the hurricane. There was no forecast about the 911 terror attack.

To trade the Hurricane Harvey, first, you need to look at the so-called safe havens. One example of a safe haven is gold. When there are high risks, investors tend to move their money from risky assets like equities to bonds and gold which are usually safer. As seen below, while other asset classes fell, gold prices rose. The same is true when you look at other classes like bonds.

 

After looking at the safe havens, you need to look at companies that will be impacted. To do this, you need to look at the geographical location of Texas and the industries that maintain the state. As you will find out, Texas is one of the biggest oil and gas state in the country. It is home to many refineries and oil explorers. At this period, most of them have shut down operations. This will likely lead to lower revenues. Therefore, as a trader, it will be wise to short the refiners and oil and gas companies that are in the state. You can also buy similar companies that are not in the state as their competition will be reduced.

Another way of trading in the crisis is looking at infrastructure companies. A lot of destruction has happened in the state. Roads, water services, and houses have been damaged. After the floods are cleared and people’s lives come to normal, they will likely reconstruct their houses and buy new furnishings. Therefore, this creates opportunities for companies like Home Depot and infrastructure companies. It also creates a lot of opportunities for companies that sell home furnishings products.

With infrastructure damaged, it means that companies like Frontier Communications that provide internet fiber optic products will be affected. Their infrastructure products have been damaged which means they will be required to replace them. The same is true to companies that supply water and waste management services.

The biggest casualties of all this will be insurance companies like Geico, Chubb, and AllState. These companies will be required to pay people who have been affected by the disaster. Therefore, in the immediate effect, it will be wise to short the companies.

While the disaster is bad and fatal, it will create opportunities for companies. Companies that are likely to benefit from the disaster are technology companies like Google and Facebook, as well as cable companies like Fox and 20 Century Fox as more people use them to follow up on the disaster. Companies like those that deal with cement and lumber will also benefit.

How to Trade the Hurricane Harvey – Useful Tips:

  • To find out more, please visit CNBC;
  • Another interesting reading on Bloomberg;
  • Discover more information on the matter on Nasdaq.
Blog del 28 agosto

Hurricane Harvey and the Need to Stay Protected

Hurricane Harvey and the Need to Stay Protected – Introduction

The financial market is exciting. As I have mentioned before, no day is usually similar to another. The events of this weekend are wonderful illustrators of this. On Friday, the Hurricane Harvey started along the Texas coast. By the close of the market day, investors shrugged the fears about its impacts on the financial market. This is because investors are used to these events. The markets closed largely higher.

Then came the evening. The hurricane was so bad that it was later given a 4 classification. Then came the rains. As we saw on TV, the entire Texas area was flooded. It was so bad that most places were submerged.

As markets opened worldwide, it was clear that investors were wrong. The major indices were red as you can see below.

 

 

As you can see in the image above, the markets worldwide were in the red except the S&P 500 Vix index. A rise in this index is in fact a sign that the investors were pricing in more risks in the market. In other markets, the American WTI crude index fell as more refineries in the region were shut. This was coupled with the implication that there would be less demand for the commodity. Brent, which moves directly with WTI rose, an indication of the seriousness of the flood issue.

Clearly, the biggest losers in this flood will be the insurance companies which will be required to pay the policy holders huge sums of money. There will be losses among the retailers who will be closed for business. Other industries likely to be affected are utilities like water, and roads. Other industries are consumer goods companies and transport-related industries. However, there are industries that will benefit. For example, infrastructure companies that will be tasked with building the destroyed homes and roads will benefit. Social media companies like Facebook and Twitter are also likely to benefit as more people check on them to find information.

As I have mentioned before, this is what makes the financial markets business interesting. No days are usually the same. This calls for putting in measures to always stay protected no matter what happens. In the past, I have talked about the need for having a stop loss for all trades. I have also written about the need to have small trades open all the time. Opening high-risk trades at such times can be disastrous for all traders.

However, such times also create huge opportunities for traders, especially those who are not in the market. As you already know, the financial market has surged after the election of president Trump. This has made it very expensive to own different assets. Therefore, a correction like this helps investors and traders find cheaper items to buy. Being protected is the most important thing that any trader can do. It allows them to maximize their returns while reducing their exposure to huge risks.

Remember, there are other risks that can lead market lower. For example, a major news from a big company can have a major impact on the price of stocks. A good example happened last week when the largest advertising company, WPP, reduced its guidance. WPP is interconnected with other industries. For example, its biggest advertisers are the fast moving consumer goods like Unilever and P&G. Therefore, if the FCMGs are not doing well, the risks are also transferred to the retailers which market the goods. When the retailers are not doing well, – which leads to store closures – the risk is transferred to the real estate companies that house them.

Therefore, as a trader, you should look at these events carefully and always ensure that your trades are protected.

Hurricane Harvey and the Need to Stay Protected – Useful Tips:

Blog del 21 agosto

Important Suggestions for Navigating the Current Financial Environment

Important Suggestions for Navigating the Current Financial Environment – Introduction:

Globally, the financial markets look great. In the United States, the major averages are near an all-time high. The same is the case in Europe and in the emerging markets. With the markets at these highs, investors don’t know what to do. Do they close their trades and initiate new positions? Do they add more to their positions? Do they place short positions in anticipation of a correction? These questions are genuine and investors and traders should always ask them. In this article, I will explain several suggestions of what you need to do.

  • Avoid envy

Envy is very common in the world of investments. If you have seen your friends make money on cryptocurrency, you might be tempted to buy them too. For example, the recently launched bitcoin cash has soared more than 100% in the past week. Bitcoin has doubled this year. The same is true with Ethereum. The three currencies now represent a market worth more than $100 billion. It is okay to be envious of your friends who have already made money in these currencies. However, you should avoid it and stick to your investment expertise. Remember, what happened yesterday might not repeat itself in the near future.

  • Don’t lower your standards

Another suggestion is that you should not lower your standards just because the markets seems to be going up. Remember, in the Dow’s journey to 22,000, we have seen several near ‘corrections’ where the Dow has had several double-digit losses only for it to recover within a few days. Traders have therefore been using a strategy to buy the dips. As a trader, you should not lower your standards to this. You should avoid a situation where you use a strategy just because it worked recently.

  • The news of the day

One of the things I have constantly warned against is relying on analysts’ forecasts and predictions. Analysts in banks like Morgan Stanley and Goldman Sachs have a history of being wrong. In fact, before the financial crisis, these analysts were bullish on the market. In fact, a week before the collapse of Lehman Brothers, its analysts were busy recommending what to buy and what to avoid. As a trader, you will constantly watch financial news and follow the debate on Stocktwits. However, I recommend that you avoid being over-reliant on the news. Always make your decisions independently.

  • Take Profits

If you are investor long companies that have been excellent performers this year like NVIDIA, I recommend that you take profits. Several companies have had double digit gains this year. I believe that investors should take profits in such companies. Remember that too much of everything is poisonous. Even when you take profits now, you will have performed excellently this year. Therefore, take profits and search for companies that have not performed as well to invest in.

  • Expect the worst

A common problem with many investors today is that they have become complacent. They believe that Trump’s policies will fuel growth. However, they have ignored the notion that being complacent is actually risky. For example, they believe that tax reform will be good while ignoring the impacts of a border adjusted tax on business. They are also ignoring the fact that Trump has proven that he is not a very good negotiator. Therefore, it is very important for investors to hope for the best but anticipate the worst. Doing this will make you have a great time as an investor by putting in measures to protect their accounts in case of a downside.

Important Suggestions for Navigating the Current Financial Environment – Useful Tips:

  • Another interesting reading on Zyen;
  • For another information please go to TheguardianUK;
  • Discover more on RBA.
Blog del 21 agosto

Simple Trading Strategies You Can Learn from Sports

Simple Trading Strategies You Can Learn from Sports – Introduction

Trading is a game and most games have similar characteristics. In a game, two sides compete and there can only be one winner. In every game, there are people or teams that have a history of excellence performance. For example, in athletics, Usain Bolt of Jamaica is a good example of an expert in the 100 meter race. The same is true in swimming where Michael Phelps has won several Olympics games. In soccer, a team like Manchester United has an excellent track record in winning.

However, in sports, performance is not always on a straight line. It fluctuates. For example, although Bolt is the fastest man on earth, he recently lost a match. The same is true with Manchester United which has not won its leagues in the recent past.

All this is true when it comes to investing and trading. This weekend, Wall Street Journal published an article on Jeffrey Gundlach, who is the current Bond King. He is a person who has a proven track record when it comes to investing in bonds. However, his performance is currently waning and some of his investors have started to redeem their funds. This is a story we hear so often. Bill Ackman, founder of hedge fund, Pershing Square Capital, grew his assets under management to about $20 billion. Today, his hedge fund has less than $10 billion in assets. This weekend, New Yorker wrote a scathing article on Carl Icahn, who is one of the richest hedge funds in the world. This year, he has lost money despite being a special advisor to the president.

All this does not make these investors weak. Like sport, they’ve had their best moments and now they are in another phase of their business. In a similar way, you will have highs and lows and by following sports principles, you can become a better trader.

  1. First, sport teams and athletes take their wins as a launchpad for future success. For example, when you are an athlete and you win a match, the easiest thing for you to do would be complacency. You can rest and believe that you are the best. This is wrong because as you rest, the people you defeated are adding more effort to beat you the next time you meet. Instead, you should add more effort. As a trader, whenever you have wins, it is perfectly okay to celebrate them. However, you should celebrate for a short period and then focus your energy on future wins.
  2. Second, sports team take losses as motivation for future success. Athletes make money when they win. Those who don’t win championships don’t make anything. Therefore, they understand that failing to win can have serious implications on their careers. Consequently, whenever they lose, they take it as an opportunity to further improve their skills. As a trader, you should always take your losses as a lesson. Instead of being discouraged, you should add more effort to win next time.
  3. Third, exercise is very important. In fact, no team in history has become a success story. Athletes like Michael Phelps and Usain Bolt spend tens of hours every day practicing. They spend hours watching videos of their competitors. They also spend countless amount of time with their coaches. This is a vital lesson for all traders. It is important for you to spend time researching and practicing on your trades. If you are a quant trader, you should equally spend a lot of time developing strategies and algorithms. Doing all this will make you a better trader.

If you run a trading floor, you can learn a thing or two about staffing from sports team. Sports team that do well have the best talent. They spend vast amount of money creating a team. Recently, Brazil’s Neyma was bought by PSG for quarter a billion dollars. In essence, they saw the talent of Neyma and placed a bid that they believe is worth his skills. A look at teams that win shows that they always do the best that they can to have the best talent. As a trading floor operator, you should always ensure that you have the best traders.

Simple Trading Strategies You Can Learn from Sports – Useful Tips:

Communication post 11 agosto

New on TIP: Daily OTC Markets Report on T + 1

Day Trade The World™ is pleased to announce that starting today, Wednesday, August 9, 2017, and going forward, OTC Markets Group will post a Top 30 Securities Daily report.

The Top 30 Securities Daily report lists the most active securities by dollar volume for the OTCQX, OTCQB, and PINK markets.

Also available to download in PDF and zipped HTML formats, the report reflects the previous day’s trading activity, and is posted daily on T + 1. Details include the below data points:

  • Company name
  • Symbol
  • Country
  • Closing price
  • Trade volume
  • Dollar volume

Tell your traders to read the Top 30 Securities Daily report, and trade with confidence.