Category: General

How to Protect Your Portfolio From the Sequester

Posted on by admin

The "fiscal cliff" deadline came and went without even a bearish whimper from the stock market. Now, the so-called "budget sequester" -- a set of laws that limit federal spending -- was put into effect on March 1. Absolutely nothing negative has happened to the economy -- so far.

The bullish reactions to these events, which may result in long-term, negative overhang on the thriving stock market, have lulled many investors into a false sense of security. These satisfied investors point to the stock market roaring higher, steadily improving economic numbers and to bad news being dismissed as irrelevant as sure signs that the market's surge won't end any time soon.

But investors should be concerned... Continue reading "How to Protect Your Portfolio From the Sequester" →

It's more important to the market than the Fiscal Cliff, the sequester and all the debts of Italy, Greece, Portugal and Spain combined

Posted on by The INO.com Team

The drama of the Fiscal Cliff and the recent sequestration circus, plus the trials and tribulations of these four countries (which have run up huge deficits) have been well documented and known for quite some time. What is more important, in my opinion, is not the size of the debt which is staggering, but rather what is happening in the market and the market's perception of current events.

Market perception trumps everything else out there. Market perception trumps market fundamentals every time. Market perception is the one card that the government cannot control. It is the card that can potentially give the individual trader an edge.

So what is market perception? Well, have you ever noticed that when some big world event happens, or a new "hot" IPO hits the markets (remember FaceBook, Zynga and Groupon?), traders expect that market to go in the talked about direction and typically it does. What doesn't get talked about is how the market then corrects itself and the technicals really come into play.
Continue reading "It's more important to the market than the Fiscal Cliff, the sequester and all the debts of Italy, Greece, Portugal and Spain combined" →

The Most Important Trading Metric: Compliance

Posted on by The INO.com Team

For the risk-based trader, compliance — not profits and losses — is the most important metric to track. Compliance simply asks the question, “Have I followed my rules on this trade?” For example, measuring trade-execution compliance will identify the gap between planned trade execution and actual trade execution. In other words, answer the question of whether the trade should have been executed in the first place, and if so, whether you did it correctly.”

Measuring compliance doesn’t have to be a complicated process. Displaying a dashboard-like visual on your workstation is simple way to keep track of the important trade metrics you need to assess. The example in the chart below shows a standard “compliance dashboard.” Notice how the tool displays only key compliance metrics — setup compliance, entry precision, filter/conditional rules, daily loss-limit compliance, and journal review compliance. Such key performance indicators (KPIs) should be measured against benchmarks that reflect a standard of excellence or a personal trading goal.  Aggressive traders can raise the expectation bar by setting benchmarks that exceed compliance. Continue reading "The Most Important Trading Metric: Compliance" →

Are You Prepared For a Market Drop?

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The stock market has experienced the perfect storm of bullishness in 2013.

The Dow Jones Industrial Average is making new all-time highs, surging more than 9% within the first three months of the year. Meanwhile, the broad market barometer known as the SP 500 has pushed within 20 points of the all-time high of 1,565 reached back on Oct. 9, 2007.

The market rally is being fueled by an ideal combination of the Federal Reserve's quantitative easing measures mixed with improved housing numbers and employment data. Continue reading "Are You Prepared For a Market Drop?" →

Malcolm Shaw Likes Under-Covered, Unloved Energy Stocks

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The Energy Report: As a retired sell-side analyst and hedge fund VP, what do you look for in selecting and analyzing investment situations?

Malcolm Shaw: My background is actually geology, but over time I got pulled into finance. There was an advantage to having geological or technical knowledge, particularly in evaluating small- and mid-cap companies. Technical knowledge aside, the key for me is good management, and I've met hundreds of management teams over the years. Good management with sector expertise is always my first screening tool. After that I like companies that are under covered or generally unloved by the street because they tend to be where the market is less efficient. I'm not really going to add any value talking about names like Exxon Mobil Corp. (XOM:NYSE) or Encana Corp. (ECA:TSX; ECA:NYSE) simply because the information is so well distributed and the market is more efficient in larger caps, but not in smaller caps. Continue reading "Malcolm Shaw Likes Under-Covered, Unloved Energy Stocks" →