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Archive for May 28th, 2008

I read a lot of economic blogs, mainly because I find the subject interesting.  But I ignore them in terms of my trading/investing.  Why?  Because most of the time, sadly, their reporting is not actionable.  It can range from interesting information to paranoia – particularly on certain websites such as Bill Cara’s website.  Now I know some people, perhaps Bill himself, will find his way to my website and say “hey, I’m not paranoid, this is really going on!!!”  And that may or may not be true.  Plunge Protection Teams, interest rate cabals, the US causing 9/11 and AIDs – it all might be true, but it doesn’t help me on a daily basis.

Mish’s Global Economic Trend Analysis has a lot of interesting posts – like this one.

Here’s a great quote from the article:

“What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors. Specifically, these are Corporate and Government Pension Funds, Sovereign Wealth Funds, University Endowments and other Institutional Investors. Collectively, these investors now account on average for a larger share of outstanding commodities futures contracts than any other market participant.”

Now, this may be what is really causing the rise in commodities.  Seems to make sense to me.  But the question is how do I profit from this information?  Does that mean this trend is on-going?  Or is it about to come to an end?

In contrast with this, my MOMO1 system has been long OIL since 4/2/08.  The system has picked up on this momentum.  Now, like most momentum systems – momentum giveth and it taketh away.  So I fully expect OIL to give up some gains at some point.  The position is up about 24% after being up as much as 29%.

So what am I concentrating my time on?  Figuring out how to make my MOMO1 system unload holdings at the top – now that’s something to spend time on.

In short – stop worrying about what you cannot control – focus on what you can control.

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MR1 cashed out of IBB this morning and took a position with XLB which was bought at the open.  IBB gained 1.08% on the position (including commission) – so not great, not bad.  XLF continues to be held as well, with the position continuing to be in the red.

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