January 2005

January 5, 1005

Terrible start of the new year.  I am beginning to understand Mandelbrot much better - the market's moves are often dramatic and violent.  Certainly that has been the case these last two days.  I am out, with significant losses, of the ProFunds.  I currently still have some stocks, but I will dump them today unless there is a decent bounce.  I am considering shorting, but that appears to be too risky at this time.

Out entirely now.  I have never, except in March of 2000, seen such a collapse.  The movement in the indices does not tell the whole story - many individual stocks, formerly good movers, have simply collapsed.  In addition, ETFs, even the index funds, have moved down more than their indices.  A good reason, perhaps, to avoid such things.

All of the major indices have broken their trend lines, to put it mildly.

Time to do some re-evaluation of the way I have been trading.  Here is an interesting fact:  there are random effects considering when you start up the system.  Well, I have always known that, but I had never thought that they would be so dramatic.  In general, they have not.  But anything can happen with stocks.  If I start up the system at the last buy of any signal I can find, I get decent results, with small declines over the last several days.  But if I start it when I did, the results are terrible.

So what to do about this?  Diversify the systems across start times?  That is certainly one good idea.  That means trading more, and also figuring out what to do with the money waiting for a new system to start.  Index funds while waiting instead of cash?  Sounds like a good idea.

January 21, 2005

Based on certain technical considerations, I went into the market with about half the account on the 18th.  This may have been a mistake, since all but one of the major signals are on a sell.  We will see if the market is bottoming or not.  Personally, I think everybody is nervous about the coming election in Iraq.  If that turns out well, the market may move up.  Otherwise, things could get nasty.  If that happens, I may hedge with some of the leveraged ProFunds.

Meanwhile, on a more cheerful note, a mastiff has given birth to 24 puppies.  Unfortunately, only 20 have survived.  Can you imagine living with 21 dogs, even for a while?  Dogs that will shortly weigh 180 pounds each?

See the Story

 January 31, 2005

Elections in Iraq seem to have been successful.  Of course, Kerry minimizes the result.  I really do not think that he and much of the Democratic leadership want us to succeed in Iraq.  If we fail, they can say "We told you so".

Line to Vote in Iraq

IraqUnity

Things are looking up today, but it has been a bad month.  I have not recorded all my closed positions.  I have not had the time this month.  But next month I should be able to resume doing that.

I went into the market today, but still have some cash.  This month, when I have entered a system, I have essentially done 2 systems:  one with the current highest rank, and one with the things that would be held if you had been trading the system for some time.  That minimizes the risk of getting a bunch of bad calls, which happened earlier.