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Chris Ridder
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MSc Inventment Managment 2005 Cass Business School City University of London I started trading when I was 20 years old by shorting orange juice futures! And yes the results were not pretty.... Here is my public performance at Marketocracy which the long fund started November of 2000:... More
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  • Financial Regulators Discover the Obvious
    “The financial crisis has curbed confidence in the financial markets..." is the new discovery made by the German Finance Ministry with the result being "...proposed legislation extending a partial ban on naked short selling adopted last week to all German stocks and certain euro-currency derivatives." as reported by Bloomberg.

    www.bloomberg.com/apps/news?pid=20601087...

    Now it seems to be obvious, even painfully so, that whenever there is a "crisis" there  follows a downturn in "confidence". Hence, financial crisis should result in lower confidence in financial markets.

    If the price of something drops to a valuable level then buyers should be grateful and step in; even if the price is "low", compared to fundamentals, it means all the better bargain for the buyer, and bigger loss to the short seller. Now I started trading in the US futures markets and for every long there is a short by definition and all speculators are "naked".

    Why is there such a fear of "naked" shorts if the fundamentals are sound? And that is the point really. If the fundamentals are not sound then no banning of "naked" shorts will stop prices from falling. This "short ban" is just another Red Herring (en.wikipedia.org/wiki/Red_herring_%28idiom%29), and I am looking to try and find ways to short bureaucrats.


    Disclosure: Trying to find ways to short bureaucrats
    May 25 12:13 PM | Link | Comment!
  • The main stream media's reporting of economic numbers
    Today I found a perfect example of how astute investors have to continue to dig through economic reports instead of just scanning a headline or part of a news article.

    "New claims for unemployment insurance inch down" is the  headline from the associated press, with the opening sentence reading, "New claims for unemployment benefits dipped for the fourth straight week, a sign the job market is improving at a slow but steady pace." 1 On the face of it this would seem as good news, that is until we check the data on briefing.com 2

    Date ET Release For Actual Briefing.com Consensus Prior Revised From
    May 13 08:30 Continuing Claims 05/01  4627K   4600K 4570K 4615K   4594K
    May 13 08:30 Initial Claims 05/08  444K    440K 440K 448K   444K


    Here we can see that the original initial claims was 444K and this week's release was also 444K, therefore there has been no inching down of the data or dropping of unemployment benefits for four straight weeks as originally reported. The article also does not mention the rising continuing claims numbers.

    This is but a brief example of how traders and investors need to dig deeper than a quick scan of a headline. Just off the top of my head, other reports that I have noticed revisions being important are Non Farm Payrolls and housing data. It is tempting in our hurried culture to "consume" data and call it "knowledge", instead of developing thoughtful thinking, but the fruit of successful investing will go to the latter over time. If your colleague tells you unemployment claims are improving over this last month you can ask them to think about it again!



    1. http://news.yahoo.com/s/ap/20100513/ap_on_bi_go_ec_fi/us_economy

    2. www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm



    Disclosure: No Positions
    May 13 11:46 AM | Link | Comment!
  • SPY and XOM updates
    SPY is below the 118.25 neckline of the 60 min Head and shoulders chart.
    Emini SP futures are below the 1177.25 neckline. See previous entry for charts.

    XOM dropped with the market and the call ratio backspread position was closed
    at a spread price of -.61 . The entry price of this spread was -.97 .  The price target of 76.50 after earnings were released was not reached; but the great thing  about call ratio backspreads is that they can still make $ if the market drops or implied volatility rises.

    I'll reexamine another entry into XOM after next earnings release.



    Disclosure: XOM position, Index options
    May 04 10:58 AM | Link | Comment!
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