Sunday, February 22, 2009

Random Thoughts and Observations for a Sunday Morning

* Not So Preferred - I talked with a Dow Jones Newswire reporter on Friday about investor fears regarding bank nationalization. One psychological indicator of those fears is PGF, the ETF specific to preferred shares of financial institutions. As we can see from the chart above, PGF has been cut in half since the start of the year, as fears mount that preferred shareholders may recover little in any government assumption of equity.

* StockTwits - I recently began participating in the StockTwits site, which features conversations among traders who communicate via Twitter. One feature I like is the ability to filter "tweets" by stock symbol, so see what the chatter is regarding specific names.

* Trade Signals - I continue to follow Henry Carstens' mechanical trading signals via Twitter; it's interesting to see which signals do and don't fit with my own market judgments. One more piece of data for discretionary traders to integrate into their market views.

* Frugality - I found the N.Y. Times article on consumer retrenchment in Japan to be quite interesting; Iceland is seeing similar frugality, and the relative outperformance of WMT and MCD suggest that the meme has taken hold in the U.S. as well. Given that this represents a sea change in sentiment and behavior, not a fad, a number of pairs trades might follow from the theme: long the company that offers perceived value, short the company that offers perceived cachet.

* Ideal Coaching Service for Traders - The last few days I've been pondering the question of what an ideal coaching service for individual, developing traders might look like and how that might be delivered in a highly affordable way. I'll be posting ideas on the blog this coming week.

* Where Value Might Be Found - I recently posted a review of Janet Tavakoli's book that dealt with Warren Buffett's value investing. Here's a post that reviews Buffett's positions: where he is finding value in the current market.


CharlesTrader said...

Friday's close of BRK.A is 50.8% of its high in the fourth quarter of 2007, while the S&P 500 Index is 48.8% of its high in the fourth quarter of 2007.

Mr. Buffett can make the claim that he has performed better than the S&P500 Index since the fourth quarter of 2007, but not by a whole lot.


Eli Rosenberg said...

Dr. Brett,

I am really excited about your thought of an affordable trading coach program. I'll be checking back often because I am extremely interested in working with you.

Brett Steenbarger, Ph.D. said...

Hi Charles,

Good point, and perhaps it's a reason he has been more active lately in fixed income investments w/ firms needing capital--


GS751 said...

CharlesTrader, Buffett does not control Berkshires Stock Price...

Brett Steenbarger, Ph.D. said...

Thanks for the interest, Eli. Creating something that is effective and affordable is not easy, but strikes me as a worthy challenge. Some time during the year, b'Ezrat HaShem, perhaps we can give it a go.


madvac said...

Dr. Steenbarger. I have been reading your incredibly valuable and prolific posts for at least half a year and wanted to thank you for the fantastic wealth of information and insights and lessons offered.
I have thought what luxury it must be for the elite traders to have you looking over their shoulders and helpting them impove their skills. This brings me to the "Ideal coaching service for traders" point. One highly affordable method accessable to many at the same time that I would love to see is video podcasts where you live coach traders with general trading problems like "performance anxiety etc..". This could take many formats, for example like a video of university lecture or conversations with the traders or your comments to traders while live trades going on, live excercises to address trader problems etc...
I am convinced there would be a great interest in this. Anyway, one can always dream right?

Thank you again for your knowledge.

nsl said...

To continue on the theme of video podcasts, one useful product is Jing. It allows you to create and share videos (max 5 mins) completely free. You could flip madvac's idea round and have traders send in short videos discussing their issues/thoughts, 5 mins would be more than enough and forces the trader to be concise. Letting my imagination run away with me you could even go as far as to create a website/community for traders to share these videos and even allow others to comment. Traders helping traders, if I may steal the phrase.

As a developing trader myself, I'd be happy to help in any way I can.

John Forman said...

The "affordable coaching" subject is a tricky one. If you go with 1-on-1 coaching you limit yourself to a relatively small number of coachees. On the flip side, if you do some form of group coaching folks don't get the same level of personal attention.

I've done both myself and while I do enjoy working with individuals where you can see how the person progresses, I prefer the group approach more because it allows me to help a much larger number of people. The challenge I've had with groups, though, is that participants often just sit there like lecture students. Getting interaction can sometimes be a real challenge.

John Forman
Author - The Essentials of Trading