Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Free-Floating Anxiety

By -

I am, by nature, a worrywart. Sometimes this is good, and sometimes it is bad. When I was father to very young children, my ability to walk into a room and instantly assess any potential dangers was very valuable. As a trader, though, my worrisome nature can sometimes be costly.

A good example over the past few months has been with miners (symbol GDX), which I have mentioned 0514-worried something like fifty-thousand times this year. I was very vocal about my bearishness on the miners last year. I got a lot of nasty emails about how loony I was to think such a think. Precious metals kooks can be a passionate bunch, and they were firmly convinced not only of gold's imminent lift to $5,000 per ounce but, naturally, the value of miners following right along.

Well, my bearishness on miners was bold, visionary……….and poorly executed. I have worried myself out of that position countless times. In retrospect, simply shorting the holy hell out of miners and then just updating stops from time to time woudl have been a very profitable approach. Instead, I've tried to capture nickels and dimes along the way, sometimes winning, sometimes losing, and – in the end – making dramatically less than I ever would have just staying put.

(more…)

My Lil’ Options Account

By -

I trade actively every market of the day of the year, and that trading is within the confines of a hedge fund I manage.

A month ago, however, I opened up a tiny ($10,000) options account for a personal trade here and there. I haven't traded options in a long, long time – – but, for whatever reason, I decided it was time to give it a shot, and I deliberately did so with an amount of money I didn't need to care about.

I'm glad I did, because I find myself in this situation:

+ I started off with a $10,000 account on April 11th;

+ I built it up to a 50% gain last week and, out of the blue, I decided to wire myself back those $10,000 in original funds.

+ Thus, I am left with "pure" profit in the account (which currently is just a shade under $7,000, meaning about a 70% gain in a month's time).

I've only placed a handful of trades in the account, and most of them have (obviously) worked out. I trade conservatively, purchasing deep in-the-money options that don't expire for a while. The irony here is that my "conservative" trading has yielded results like this. It's a nice feeling.

But the far better feeling is this: no one can hurt me in this account. Abby Joseph Cohen can't. Mark Zuckberberg can't. Lloyd Blankfein can't. And, most of that, that disgusting waste-of-life Benjamin Bernanke can't. Because I've got my principal back, you blood-sucking leeches.

I've never done this little "trick" with an account before, in which I extract the principal. And, yes, I realize it's probably a rookie mindset to think of this as "house money". But the cold fact of the matter is that my disposition toward this account is marvelously detached.

I shall keep you posted, from time to time, as to my continued progress on this little psychological experiment of mine.

0514-haters

Grate Expectations

By -

When I reflect back on the very best trading days of my life, they almost all have one thing in common: they started off as completely normal and, often, hum-drum.

In other words, it's not like the opening bell rang and it was obvious that the day was going to be a bonanza. It might start off with a small profit – or even a small loss – but, tick by tick, accrue into a terrifically profitable day.

On the other hand, when I think a fantastic day is forthcoming, it usually ends up lousy. I have a feeling today is just such a day.

Yesterday afternoon, I was having a terrific time at the San Francisco Zoo with my little girl. The most peculiar part of my visit was in the afternoon when I was, in the span of moments, watching the Euro plunge on my iPhone while observing a hitherto cute baby gorilla engage in the acts of (a) making a huge puddle of urine on the concrete; and then (b) slurping it up.

There's got to be a parable in there somewhere.

In any case, with the ES down 19 points, the Euro down about a full percentage point, and gold (my long) holding up decently, I had big dollar signs in my eyes as I went to bed last night.

Well, this morning I was in for a rude awakening:

(1) The Euro has recaptured almost all of its lost ground;

(2) The ES and NQ had dispatched with most of their losses (and, as I am typing this, the ES is well into the green);

(3) Precious metals and the miners were weak, and those constituted my long positions;

(4) One of my short positions, Vertex (VRTX) was up 60% pre-market, which I covered at a nasty loss. (I will note that my individual shorts usually count for less than 1% of my portfolio, so even train wrecks like this aren't that damaging – – but that doesn't take away from the suckitude). Just to add salt to the wound, the regular-hours trading was up "only" 40%, so I shot myself in the foot by trading before the open. Ugh!

I have beat a hasty retreat back to 50% committed (all in shorts; the rest in cash). I am, at the moment, down 0.6% on the day versus a flat market. A manageable loss, to be sure, but all the same – – I can pretty much assure myself that my dreams of a Monday bonanza have gone the way of the dodo.

Oh, to close on a somewhat positive note. As some of you recall, I re-opened my options trading account a few weeks ago, just for the hell of it. I am pleased to say I am up over 50% on that with what have been very straightforward trades. The latest was a block of FXE puts, which I sold this morning. Perhaps the tiny size of the account makes my disposition toward it more "pure" as a trader.

Occupy and The Bottom

By -

Remember the "Occupy" movement? Late last summer and early in the fall, all kinds of Occupy protests popped up all over the country. Goodness, it even came to my little town!

I think back on this, because I truly believe there is an inverse correlation between public rage and the financial markets. When things are soaring (like now), the sheeple are fine to let the ultra-rich run right over them. Or, at the very least, the hippies don't get the press converage that they would otherwise.

But when the seams are starting to tear, then the public allows themselves to get pissed off at the powers that be.

(more…)