Some interesting currency moves today

[JR8]

What's the point in watching the market chase its tail day to day? Some days it goes up, some days it goes down. On the whole, the market enriches with increased valuations over time.

For me it is (in part) that the markets crystallise all that is going on in the world, and expectations for the future. By following the markets I feel very much in touch with global events of all kinds. If I go on holiday and can't follow the markets at even a summary level, it's er... rather like other people who cannot go on holiday without their mobile and/or internet, and/or e-mail and Facebook. It goes further of course, my entire working life has centred around trading/investing, it's not an exaggeration to say I find it fascinating, occasionally beguiling, but highly stimulating.

I know people who have the opposite view, like my father who has absolutely zero interest. He asks me similar questions.... typical answer... 'It keeps me fully occupied and pays the mortgage'. I ask him why he plays golf, especially considering how much it costs, and I still don't get it at all

Sure, the market seriously loses value from time to time, mostly because of the gaddamn %^&*^%$* bankers and investment houses but it comes back. We are well beyond the huge decrease in 2008 in case you haven't noticed.

Here we go again Funny, I thought this week's woes in Europe were down to goddam ^&"&"E%"^% engineers at VW. One article I was reading this morning suggested this is a death-blow to 'Germany Inc'. I'm not persuaded of that, but it's certainly a very big deal. Another interesting article (today's Daily Telegraph) tied it into Corporate Social Responsibility (CSR)... how VW ranked near the top of all the league-tables for CSR and yet this happened. That ties back into Enterprise Risk Management. Is VWs emissions trick their version of the faulty O-ring that ended the space shuttle programme...

And the second thing, is far too many participants in the market behave irrationally. There are the day traders and options traders that think they've got a leg up. And there are those that react irrationally to price changes, selling when they should hold.

Traders trade, that's their job. A trader pays to hold a position in his portfolio, so it has to justify itself by performing. If he works in say a bank he pays for the internal funding on a daily basis. Quite similar... I pay margin on a daily basis. Even if I'm not margined I have opportunity cost.
I remember once seeing a trader getting a bollocking, roughly, 'You're a trader not a goddam investor, so get out there and TRADE!'

I agree though, trading can be a battle against human nature. Perhaps that's one of the things that make it challenging/engaging. If you witness say a stock halving in price, and it's screaming BUY! at you, it is still a very difficult thing to do IMHO. In such a situation I find the emotions and step-by-step thought process and rationalisation fascinating, even quite amusing in how predictable it is, a bit like holding up a mirror... and yep seeing the same old face again hehe...

[Wd40]

Well said JR8, that is exactly why I watch markets, I cant think of too many things that interests me as much as the the markets do

[JR8]

Hehehe... my father is getting on now, and as seems to come with age he doesn't waste too many words (barring his encylopaedic collection of photo-albums and war-stories all of which must be given a 100% focused and uninterrupted airing each time lol).

Guaranteed, every time we visit my parents, will be the question, in a pretty disparaging and disdainful way - 'So what is it you do all day? [pained look]'. My work isn't easy to pigeon-hole (well, for him) and 'boast' about to the neighbours, so all he sees is that I get to go to the pool each day during work-hours, presumably do nothing, and have achieved nothing with my life If he wants investment advice though, he's not shy to ask... lol.

[earthfriendly]

EF, you chose the wrong EM at the wrong time. India is the only EM that is going to benefit from the commodity crash.

Too late now, I bought it many years ago. At that time, I had some money and decided to go shopping for stocks. I don't even remember why I bought it. We live and learn. Emerging market is too risky for me since I prefer to "invest and forget". Take less risk and let it grow slowly.

[JR8]

Somewhere on this forum last week I was suggesting the big mining stocks were so beaten down they were offering juicy yields. A week later Glencore is up 42%, and to add to that this morning the chairman has bought another £100k worth in his own account...

'Woulda, coulda, shoulda'... but that's how it sometimes goes...

[Wd40]

Somewhere on this forum last week I was suggesting the big mining stocks were so beaten down they were offering juicy yields. A week later Glencore is up 42%, and to add to that this morning the chairman has bought another £100k worth in his own account...

'Woulda, coulda, shoulda'... but that's how it sometimes goes...

Well look at its one year chart:

http://www.bloomberg.com/quote/GLEN:LN

In 6 months it has fallen 60%. So people who bought it 6 months ago, this rise is a small blip. So I sometimes wonder when you talk about dividend yield, if your principle falls 60%, does the dividend yield of 4-5% still make sense?

[Wd40]

US markets down today. Doesn't look like this correction is over yet. It's starting to look like a bear market. The band aid of QE is looking like coming off and we may be staring at the same situation we were in 2008. I hope I am wrong.

[JR8]

Well look at its one year chart:
http://www.bloomberg.com/quote/GLEN:LN
In 6 months it has fallen 60%. So people who bought it 6 months ago, this rise is a small blip. So I sometimes wonder when you talk about dividend yield, if your principle falls 60%, does the dividend yield of 4-5% still make sense?

If you select an appropriate timeframe you could probably use it as back-up for any position you wish to argue.
Glencore is an interesting one as the mining sector stocks are pricing in that Chinese economy is more or less permanently finished; which quite obviously is not the case. 'Currently troubled', yes, but far from dead.

Glencore is also curious in that analysts at Investec, a supposedly reputable operation, quite inexplicably suggested in a research note that Glencore stock was effectively heading fast to zero value. That took the whole Mining sector down. The Glencore board released a statement saying that that opinion was.... er, '*complete and utter bollocks*', and the sector is more or less recovered. I'm left wondering WTH Investec were thinking.

The markets are in a heck of a nervous state these days (re: US, CN etc).... one can only hope it's followed by a relief rally when when the US do fiiinally raise rates. Given today's surprise notably weak US Labour market figures, it is just one yet further reason why I do not see US rates rising any time yet.

re: your point. You can control at what yield you purchase a stock but little else after that time. But few people would complain if their dividends halved if at the same time the stock price doubled. Anyway, it's all a part of using stock-picking metrics to try and select good long-term reliable stocks. Reputable companies tend to go to a huge amount of trouble to grow or at the least maintain their dividend payments (year-on-year). If they reduce them, become 'a cutter', it's usually a sign of potentially further very bad news to come. That's why at the first whiff of a stock cutting it's div, the stock usually gets sold through the floor. That's pretty much what Investec suggested of the mining sector last week, but, they kind of iced their opinion and put cherries on top too! I wonder if and when Investec have ever managed to bring that amount of reputational damage upon themselves before... amazing really.

It's all rather chicken and egg:
Stock A @ 100, yield 5%
@50, yield now 10% -> BUT the market reckons the co is pretty doomed, and that the dividend will be next to drop.
@ 200, yield now 2.5%. The market likes what it's seeing and sees it as a good prospect. The company will endeavour to keep raising it's y-o-y dividend.

Actually come to think of it, how do you look at it?
If I buy A @ 100 on 5%, then to me that purchase will always pay 5% or more, unless they cut. If say 3 years later they're paying a 50% higher div, then my yield on purchase price is 7.5%.
But if I were to return to the market and buy an additional chunk of that stock, then I'd look at the 'Current Yield [CY]', what they've paid out in the past year/current share price.

In that way if I've accrued some cash that I want to use to purchase stocks with, say topping up an existing holding, the CY is always a key consideration as in my mind that's what I'm locking in for the duration of holding that additional incremental position.

These are febrile times. I don't recall the markets before ever being this nervy and directionless for such a long period of time.

[JR8]

US markets down today. Doesn't look like this correction is over yet. It's starting to look like a bear market. The band aid of QE is looking like coming off and we may be staring at the same situation we were in 2008. I hope I am wrong.

Yeah, me too
No, it's not over yet. It's normal for the big traders to go risk-off to some extent for the weekend, esp. if they're profit-taking.
But these days it feels like things are so uncertain that just about every Friday sees a sell-off. Given the uncertainty/gravity of the news that could come out over any w/e right now it's not too surprising.
And again I am forced to go back to an earlier observation I made, quite why the Fed made SO much noise about the likelihood of rates rising, when as each week passes, the chances of such seem to recede months further away. The Fed's caution seems to be doing a precision-guided job of torpedoing the market right now [/ironic].

[JR8]

I think the linked article summarises most of the key themes/tips re: investing your own money for a future pension.
- 'Time in the market, not timing the market'
- Pound/$-Cost Averaging
- Reinvestment of dividends
- Where possible self-investing rather than using fund managers
and so on, etc...

http://www.dailymail.co.uk/money/invest ... rocky.html
'Will you really make money if you invest for the long-term - and do investors have to commit to five, ten or twenty years?'

[Brah]

Thanks for this and the link, will read it offline.

Question that may have come up before, any opinion on The Motley Fool? Been getting their emails for years but never subscribed.

I think the linked article summarises most of the key themes/tips re: investing your own money for a future pension.
- 'Time in the market, not timing the market'
- Pound/$-Cost Averaging
- Reinvestment of dividends
- Where possible self-investing rather than using fund managers
and so on, etc...

http://www.dailymail.co.uk/money/invest ... rocky.html
'Will you really make money if you invest for the long-term - and do investors have to commit to five, ten or twenty years?'

[JR8]

Thanks for this and the link, will read it offline.
Question that may have come up before, any opinion on The Motley Fool? Been getting their emails for years but never subscribed.

Pleasure.
My 2c...
- Used to be a ground-breaking company and pioneer of the ethos of DIY investing, vs the then prevailing habit of paying 'professionals'. They were very good at that. That was c20-15 years ago.
- The world has evolved, and now preaching the DIY approach is far more common. So TMF are now just one of many.
- At some point and extent they have 'sold out' to big-business. I don't remember in what way now. They have way more advertising (incl from those that they use to directly advocate against). They also take linked introductory fees/commns from similar. In a way they've sold out.
- The forums which used to be DIYers discussing the TMF methods and similar constructive independent thought used to be civil, constructive, self-regulating, and a major source of parallel wisdom (in a 'lots of people in the same boat as me/mutual-help' way). These days if you criticise *anything* TMF do you will get banned. [I haven't been, but I know several who have. Ironic since the whole 'Fool' line is not referring to a *fool*, no no, but a court-jester, a court-fool, anti-establishment, the only man in the land at liberty to speak-out with the whole truth and not get executed by the king for it].
- They were in former years really taken seriously in the industry as an important bell-weather of 'the little guys thinking'. Each morning at work we'd get Xerox's of that days major news articles from around the world re: private client investing.... seems amazing now but that included articles from TMF... and that in a Wall Street bank lol!
- So in some ways these days TMF still purports to be a DIY/hokey little self-help community, but it's not, it's big-business. And in parallel, it's had to neuter itself and a lot of the highest value contributors have simply left. ... Some people vote with their feet and wallets and move on from faux 'hokey' mega-businesses like Jack Daniels and Ben + Jerry's too...
- Their editorial line isn't professional, as in paid for from appropriately qualified people. It's now often from a handful of 'rent a freelance writer to write what editorial we want', or an advertiser if funding it, the same as advertorials... worthless. Much of it is complete bilge.

There is still some value there is you can sift it. There's a huge range of fora from investing, of 1001 flavours, to more RnR stuff. Just make sure you never cross any Mods radar.

My own investing style and methods derive directly from the fool.co.uk a) 'Property Investing - Practical' board, and for stocks from the b) 'High Yield - HYP Practical' board.... there is still utility and use there if you have time to go and sift for it.


p.s. Are they touting subscriptions again lol? They're an American company with US [93-94?], then later UK [94-95?] then later other domains.

I joined the UK one initially, since their news clippings at work (as above) really sparked my interest. I mean... they had to be worth listening to if we, 'WE', were following them at work right? A few years on I moved to the States and then followed the Fool.com site. A lot in common, but discussion more locally relevant (even arrranging sub-forum meeting beers/food meet-ups in downtown Manhattan... what a genuine hoot!). Then, oh I don't remember now c2000-2 they tried to make it subscription only. And guess what, people were like WTH, it's us the users providing the real value content here and now you're seeking to charge us!? Hardly anyone paid, posting dropped off, the readership snow-balled down as a result, etc etc. in a cycle. At some point a year or two later they reversed on charging, and or introduced some dinky clever intro/promo offers not accepting the damage already done [absent readers don't take up ANY offer, however 'special']. Some point maybe mid 00's they gave up on trying to charge at all, and went so far as to refund fees to those still with active subscriptions.... So it would be interesting/ironic to me if they're (Fool.com) attempting to go down this route again, as I probably still visit (Fool.co.uk) once a fortnight to see if anything of note is up (it's invariably not), and the idea of paying for it in this day and age with all the other options is frankly ridiculous, more-so than when they last tried and failed at that was.

But as suggested, there is still good stuff there is you have the time to find it. Here is the FAQ on my then and still now stock investment approach of which they were one of the pioneering advocates. The strategy hasn't changed a jot and you might say I'm something of a disciple of it http://boards.fool.co.uk/faq-the-purpos ... 48855.aspx - shame the same can't still be said about the rest of their site.

[Wd40]

Nice article about early retirement:

http://www.marketwatch.com/story/how-to ... 2014-01-17

[JR8]

The EU is schizophrenic. Remember what Germany did to Greece just a few months ago after they suggested they were considering exiting the euro? The full force of the EU machinery came down on them, and they were effectively told 'you're staying in, or, lets be absolutely clear about this, we'll ensure that you are destroyed'.

Today the President of France has come out with this blatant lie...
-----
François Hollande on the EU referendum:
“The only possible way for those who’re not convinced about Europe is to leave Europe. There’s no other way.”
-----

The reasoning here appears clear. The UK government are currently trying to renegotiate some minor concessions out of the EU; they've been forced to (against their will) due to the UKs public hostility to the EU. So I expect Hollande's quote = 2-fingers to any concessions, and an alternative [quitting the EU] something that the UK PM Cameron is personally completely against.

[tags: No need to ask why so many Brits hate the EU].

[Background:
The UK are holding a referendum on EU membership in the near future (date TBC - the UK PM won't schedule it, if at all, until he's sure he can win a 'stay in Europe' result).
Opinion polls show the majority intend to vote to leave.
The UK, as a proportion of national GDP, is right at the top, if not the top contributor to the EUs budget]

[Strong Eagle]

An interesting take from The Guardian... http://www.theguardian.com/commentisfre ... -recession