e-Traders Club

22 October 2008

Our outlook earlier this year  has been right on the money.   Our traders who used our market outlook as guidelines were now banking their profits.   However,  the oil has reversed strongly in recent weeks  due to weaker demand and looming recession.   We experienced severe crashes with the Dow Jones plunging 800 points in just one day and it shed more than 3,000 points in a few months!

Despite the congress bail out of $ 700 Billion, and the world's concerted effort to save the whole financial system,  investors are still hesitant to come back and invest.  There's so much bears around.   Until the housing prices stop plunging,  the problem will not disappear.  We agree with George Soros view that we should let the failing companies fail and start fresh.   There will be severe destruction of wealth but that is the only way to go in order to have a clean slate.

We expect the turbulence to last for 2 more years, the bottom may not be in the corner yet but with the government's continuous involvement, we just hope this nightmare will be over soon for most investors.

Our non-directional trading strategy is immune to these gyrations of the market.  We bet on all possible directions of the stock.  This means wherever it goes,  up, down or sideways,  we continue to make money.

We prefer to trade stress-free these days and leave the prediction to fortune tellers.   

14 March 2007

Our stategy for the year is to short US and European stocks while we go long on oil.   Oil prices has doubled since last year and there is no sign of  reversal for the short term.

Daily oil demand is 87 million barrels and supply is only 85 million.   It's no surprise then that oil price will keep on increasing till the end of this year.  Supply is very tight and with the hurricane season just lurking on the sides,  the trend for oil is bullish

It's a no brainer then that we have been holding long positions on selected oil companies and  substantial profits have been made.   However be careful when entering  long positions on oil.  You might buy on a price that is about to fall and you will lose money instead of making profits.

We are shorting some airline stocks and we also made a killing here.   With oil at prohibitive prices,  operations costs will spiral, inflation will go up and less people will travel for holidays this summer.  Several airline companies have already lost an average of 70% of their value since last year.  This is not about to reverse in the near future.

Credit crunch in the US is not yet over, house prices will continue to fall in the next 2 years.  Financial institutions will continue to put up with foreclosures and negative mortgages.  Severe distraction of wealth will occur before the US economy starts to move again.

We are seeing a  global decline in US dominance, investors are fleeing the US dollars.    As US economy falters , China and India will rise.  The world no longer catches cold as US sneezes.   A new world order will arise amid these developments.  And how this will unfold remains to be seen depending on the policies of the new US administration on November. 

For now, it's gloomy for US and European stocks. Gloomy for those who only know how to buy and hold.   But very profitable for the traders who know how to buy and short!