Entries Tagged 'blogging' ↓

Made three trades this week:

NDAQ

Closed out my $NDAQ short. Lindzon said it would be a teenager and it was. Covered at $19 on cost basis of $23.50. If you recall, this was my “bad” trade (from a technical perspective) that turned out to be solid based on the fundamental premise. Uncertainty about possible taxes on the exchanges, and an overall down market, drove this into the $18s, but tripped my limit at $19. Overall, the NDAQ short and the puts I bought (when the stock was around the $25 mark) have netted me the largest combined gain this year.

Props to @alphatrends for highlighting this trade; even though it was a very profitable botch on my part, the simple fact that the social filter pointed me in the direction of a good story and good trading stock was worth it.

The lesson learned here is that if there’s a good story behind the stock, for my style, the entry point may turn out to be more of an optimization than an absolute rule. I entered (with the initial short) at the right time for a short term trade, but had to sit through quite a downturn when the market rallied. Since I had some confidence in the story, and a reasonably-sized position, I could weather it.

I’m not sure what “real” traders do. I’m trying to stick to a little discipline here around maintaining position sizes that are roughly 2% of my overall portfolio (yet about 8-10%, and sometimes as much as 25%, of what I consider the trading portion of my portfolio.) To the extent that other traders make bigger bets, there perhaps is much more importance to setting close stops in these trades, and being satisfied with smaller percentage gains (but higher dollar gains) based on the taking larger positions.

One thing I’m not learning from StockTwits is how others do bankroll management. I’ve read Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street and have internalized a lot of what it discusses, and follow that to a certain extent, but that’s all theoretical. I’d like to hear some real-life war stories and see people start tweeting their position sizes relative to their bankrolls.

Got off some SRS premium

Tuesday, near the open, I sold premium again on half my $SRS (ProShares UltraShort Real Estate) for what here at the end of the week turns out to be a 8.5% return over the next 28 days (Feb 86 calls). Had I waited until later in the day, that might have been as much as a 15% premium. SRS spent some time in the $70s, and since it is the bulk of my short position now, so I didn’t sell covered calls on the other half; I have a GTC sell in at an obscene amount in case it pleads temporary insanity. If my short position grows elsewhere, or if I turn even more negative, I may sell calls on the rest as we get closer to expiration.

Sold my gold: closed out DGP

My cost basis on this was $14.50, and it limited out Friday at 19.10. @sorenmacbeth called a turning tide in gold earlier in the morning (which turned out, at least for Friday, to be a bad call. Although he absolutely nailed a gold short call the week before. And adjusted his thinking later in the day. So no fair to pick on him…just that I recalled reading that and was surprised when I found myself closing out the position later in the day. Developing…)

I’d been in DGP since December 1, but a 31.7% gain over 53 days wasn’t that bad, and I can’t really count this one as part of the experiment (even though I got into it based on a StockTwits recommendation I’ve long since forgotten.) I’m not sure I can go short on any double ETF, but if it dips into the $15 range again, depending on the conditions, I’ll be interested. @mandelbrot seems to tune into metals analysis; I may need to check him out for potential entry points, as he seems to be hitting his stride over on Twitter Reality.

Entered an INTC April 15 Call Position

This one is risky. Last week I had flipped these calls for a .15/contract gain; I watched carefully this week and entered the position again in two trades for a cost basis of .55. The first trade was pre-earnings (and pre-layoff announcements.) The second was when the layoffs and results were announced, averaging down. I could have closed it out today for around a 22% gain, but decided that based on my overall positioning, I wanted to retain some kind of long position. April is a little too close for comfort for my style of option trading. I’ll probably put this one on a short leash next week.

I’m long INTC in my hold account and sell current-month 16 call premium when it is worthwhile. I don’t see much wrong with INTC; they aren’t as exciting as AAPL, they’re almost like a basic material at this point, with tech vig. An INTC below 12 for any period of time would shock me.

Trades I Didn’t Make

The AAPL-PALM swap I talked about a couple of weeks back didn’t pan out. But I was prepared. I had put buys in all week trying to snag some summer 5 puts, but the stock fell just enough to keep the bid from being hit. Late in the week, the rallies just weren’t strong enough to get a comfortable entry point.

I was in a great position to trade this one though. The day of AAPL’s earnings call, I knew I should have gotten on the short side of PALM for the reason that a bad AAPL number would drag all tech stocks down (including ones that imitate the leader poorly) and a good AAPL number would hurt PALM because it would likely further distance AAPL as the front-runner. The downside of not being able to trade during the day is that you’re not nimble enough to enter the position at a price you want and quickly enough after the insight.

PALM is in a horrible position here; there’s some interest, but when you really drill down, their value is only in making sure Apple keeps honest around innovation. Someone on StockTwits pointed out today that they can’t out-Apple Apple or out-open Google’s Android, and that leaves them no clear identity. No identity, no platform, no developers, no market.

My lesson: look for this in other situations where the 800-lb gorilla (e.g., AAPL or AMZN) is announcing and has a direct but chimpanzee-like imitator (e.g., PALM or PCLN) riding unexpectedly high. I’m not sure there’s a screen for that. But it’s a theory that could work.

I also tried to take upsidetrader’s advice and go short GS and MA earlier in the week (by buying puts). But they too fell out of the range I was willing to pay, so no position there. Once again, I failed to cash in on the meltdown in the financials.

Current Positions

I’m still short BBY, but not in the money on that one. I have the April 15 calls working on INTC (in the black). Still have the X puts (at just under cost). Next week I’ll keep watching BuyOnTheDip’s analysis around the financials; I just flat out missed that this week. My track record trading the financials is poor. Anytime the house can come in and change the rules of the game, I get screwed.

I’ve got nothing for next week; I’ll have to see what the rest of the weekend brings. I’m sitting on a pile of cash once again. I’m roughly 30% short, 10% long and 60% cash.

On the rare occasion I do anything that generates traffic above the background noise of crawlers and spammers (which means, twice a year), I feel the urge to go all meta and point it out.

This retweet of last night’s post was worth a few page views today:

All the traffic isn’t in, and it isn’t on the order of the Indirect Slashdot Effect, but I was fairly surprised at how much cred a StockTwits retweet carries.

And one point of clarification. In that post, my characterization of Brian (@alphatrends) as “chastising” my lack of paying attention was not accurate…I over-dramatized it. He was just expressing angst at someone having gone underwater based on misplaying his analysis (in my case, through lack of attention). Since then, I’ve started watching his market trend videos last week and have learned quite a bit just from watching one, and it’s a great resource for learning. Mea culpa. I typically don’t edit posts for anything other than typos, but I felt it necessary to correct that post.

The Vision

It’s the time of year for reflection and resolutions. After putting about a month of thought into the exercise, I’ve landed on a few themes revolving around preparedness, agility and serendipity.

Here’s my 2009 game plan.

Invest in Skills

In early 2006, Mark Cuban gave his investment advice for the upcoming year. The moneyshot:

Invest in yourself. Do the things that can get you closer to your goals and dreams. It wont come from a brokerage commercial. It will come from preparing yourself , working hard and standing apart from your competition. You Inc is the best stock you can ever buy…if you are willing to do the work. —Mark Cuban

Lazerow hits the same theme again at 2008 year’s end:

So the question you need to ask is simple: is your annual take home pay, after taxes, really enough for you to justify the status, albeit it potentially fleeting, quo? I’d argue for many of you that the answer is NO by a long shot. And you taking your paycheck and deluding yourself to think that this too will pass is dangerous and short-sighted.

In 2008, I split my investment between infrastructure, upgrading some equipment and skills (learning a little about the markets.) In 2009, the investments move more towards the skill side of things, as the scarcity of time and attention, and the value that can be created through focus and deliberate practice (pdf) point towards a greater ROI for your attention than for your capital, especially as we look to enter a long economic recovery.

Along these lines, my 2009 skill investments are:

• Learn Objective-C and Cocoa development for the iPhone.
• Create one screencast per quarter.

The learning has already started, thanks to the great Stanford Cocoa Programming course targeting iPhone development. I’ve tried in the past to get started with Objective-C and didn’t have much luck finding an easy path through the weeds; so far, this class looks to be a great guided tour balancing instruction with personal achievement. And it found me through Twitter.

As for screencasts, I learned in 2008 the power of a multimedia presentation style from Giles Bowkett. You may not like Ruby or programming, but his presentation at a Ruby conference is worth watching simply to understand how to win a crowd at the rate of around a slide every six seconds. Short screencasts, backed by transcripts and supporting materials, are to long term social influence for change as Twitter messages are to ephemeral, in-the-moment connection.

Building a decent screencast involves developing at least three new skills I don’t have. But thanks to the Creative Commons, it’s possible to start this learning from a much better vantage point than ever before.

Invest in Social Capital

Gary Vaynerchuk struck a chord with me with the insight that “social equity trumps private equity”. “I’d rather have a million friends than $10 million in capital,” @garyvee says. Seeing this with Twitter-era eyes, I don’t necessarily need them to be friends as much as I need them feeding the intake valves of my social filters so that the great ideas find me. Go long serendipity.

The 2009 plan to start down this road is simply:

• Contribute one thoughtful comment per day.
• Construct one reasoned blog post per week.
• Make one insightful tweet per day.
• Write one review (book, movie, tech) per month.

Invest in “Too Small to Fail”

Howard Lindzon said it best: I am TOO small to FAIL!

Being too small to fail means staying lean, not overcommitting, focusing on skills, finding efficiency of purpose, and looking for the highest return with what you have on hand and can build with your own hands. And in 2009, it also means survival, developing options and thinking about alternate income streams.

This is an ongoing process, and to be agile will require adjusting what it means to be too small to fail throughout the year. But for starters:

• Get something in the iPhone App Store.
• Follow through on a couple of StockTwits oriented projects I have in mind.

In terms of writing an iPhone app, I have no idea yet how much of a commitment it will take to complete even a simple one. If it’s on the order of a few hundred hours of spare time, I could pull it off. More than that, then it shifts more towards personal needs.

The StockTwits idea is simple (if not dull): make one trade a week based on ideas gleaned from StockTwits, and transparently document and blog the results. StockTwits seems to be proving its value to daytraders and swingtraders; this project would seek to answer the question of whether it can be used for gain by someone who can’t sit in front of a trading app during market hours. I have a chunk of my too small to fail portfolio to use for this purpose—with the extreme volatility of the last three months, I’ve managed to increase this small amount significantly, with some small props to StockTwits for help and ideas.

At scale, prognostication is a con game, and while we kid ourselves that the social filter makes finding gurus easier, simple probability says that in a million-voice field of 50/50 pickers, there’ll be one voice that through nothing more than luck hits 20 in a row, and there’ll be thirty who are sitting on 15-trade winning streaks on luck alone. What does that leave us with? The lesson is not to look at trades, but to look for ideas, the serendipitous connection that pushes you closer to your goals, whatever they are.

So in 2009, I’m going long serendipity, building social capital, developing skills and staying too small to fail.

(photos used via CC:SA licensing from William Hook and Lisa Brewster)

Quick update to the site: I changed the comment system this afternoon to use Disqus, so you may see some changes. I noticed that a few of my favorite financial bloggers used the system, but I never figured out the secondary benefits of Disqus. Now I see the theme: collaborative social filtering, a metaweb that sits atop the web.

The walled gardens are dead.

The conversion process was straightforward. Fifteen minute, with all the old comments successfully ported. It remains to be seen if this will actually help me with the spam (or give me better tools to deal with it).

After a configuration screwup, the archives are back and functional.

Also thought I’d share a little more insight into the indirect Slashdot effect. The echo resulted in:

• Visits from 52 countries (with the U.S., U.K., Canada, Australia, India and the Netherlands leading the way)
• Visits from 36 states (with California, Texas, Washington, New York and Virginia leading the way)
• Visitors from Microsoft edges out visitors from Oracle, 6-5
• The most popular follow-on article for visitors: The Tuesday Night Football post
• The most popular subsequent search target: my Soul of a New Machine review
• 100-odd comments on the Slashdot story, 36 comments on Richardson’s site, and 2 comments on my own
• Referrals from Richardson’s site outpacing Slashdot referrers just under 4:1
• My first commenter (none other than Susan Lammers herself) posting about her new site which resurrects the original interviews from Programmers at Work.

One other interesting side-effect turned out to be that I hosed a few of my site’s rankings in Google by posting the story; Firebones was not a heavily-used term in the Google index, but because the word appeared in the Slashdot story, lots of scraping and syndication sites that copy slashdot stories have mirrored the story and the keyword all over the place. This resulted in a lot of my previously higher-placed links dropping down. (This was a fairly short-lived effect, and matters little–most people searching for Firebones are looking for something other than this site.)

I submitted a story to slashdot the other night linking to Leonard Richardson’s Programmers at Work post. The submission languished in the firehose queue for a day, got up-modded by the user community, and then this afternoon was posted to the front page of slashdot.

Tonight I spent a little time watching the progression of a story around the net.

The coolest thing about the story for me came from seeing how a small minority of the slashdot crowd initially mocked the simplicity of Richardson’s site, but then rallied to defend it based on his longevity as a blogger and economy of style.

Slashdot was my second choice: the mindless link propagation that is reddit apparently didn’t want the link, although it’s now made it to the 10th position after someone submitted it a couple of hours after the slashdot story appeared. Bad karma, I guess.