ROBINHOOD Tracking : This is the end

This is the end, beautiful friend

This is the end, my only friend

The end of our elaborate plans

The end of ev'rything that stands

The end

No safety or surprise

The end

I'll never look into your eyes again

It seems Robinhood decided to restrict (read "sell for money instead of providing for free") access to its public API based upon with sites like Robintrack  worked. Certainly it would be another potential source of income to Robinhood, but it means that my experiment has to finish. In any case the performance was disappointing so I am not shedding any tears.

 

3 months ago, for a fun social experiment, I created two indices to track Robinhood Traders performance. Going forward I am not going to rebalance the indices. I am leaving the tracking on with the last set of stocks which you can track below anytime. 

ROBINHOOD Tracking : July rebalance results

2 months ago, for a fun social experiment, I created two indices to track Robinhood Traders performance. So far the performance of Robinhood has been disappointing. Let us see how the month of July has been.

ROBINHOOD Tracking : June Rebalance Results

In June 2020, for a fun social experiment, I created two indices to track Robinhood Traders performance. This is time for first rebalance and report card. Let us see how they performed compared to broader market.

..... drumrollll .....

ROBINHOOD Tracking

A lot has been said about Robinhood traders on social media and in trading & investing circles. Some call them bag holders while others call them dumb money. They have been blamed for large inflows into ETFs like USO or JETS when the seemingly "smart money" was heading for the exit but if you look back many of these "popular" stocks have done well. So the question is "are the Robinhooders, as they are called, really dumb money or is this just a cases of wall street smarty pants being a little jealous of common man making some dough?" 

Let's find out !!

I'm back!

It seems I have got some time on my hand and also the markets are becoming interesting so I decided to dust off this old blogger account. Looking forward to sharing my thoughts and comments on the markets and looking forward to interacting with you again!

Watch this space!

$AAPL : What are you doing with your $AAPL holding

With the stock down 35% from top what are "real people" doing?

Buy, Hold, Sell, Short?

It is no secret yesterday's price down in AAPL was dramatic. Very high volume traded and the stock dropped nearly $63, largest absolute drop (in % terms there have been bigger drops in past) in a single day. Market cap equivalent to many NFLX, RIMM, even some countries GDP was wiped out.

But so far, it seems the pain is felt by over leveraged, momentum chasers, hedge funds type OR computers churning stock from one register to another. I am interested in knowing what are real people doing? People like you and me. 

I am sure you would have stories to say. When you bought AAPL? What was the lowest price you paid? Are you still holding that?

On Lighter Note $LOL

When there is not much to do

We can at least laugh.

How do you know market is trading against you?

Place a limit order. If its filled you are on wrong side. (lol)

Keep reading the comments and feel free to add. Lets bring a smile on our faces.
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Blog Redesign

New look blog!

Result of accident !

I had to make changes to my blog template. I was playing around with some set-up on a lazy Sunday and inadvertently managed to make some changes which made the existing blog out of shape. I tried to restore back up templates, tried to edit the HTML/XML templates and many other technological tricks but to no avail. In the end I decided to slap a brand new template "Dynamic Views" and re-done some of my customisation.

However I am sure, I will discover some missing links/features as days progress. If you were a reader of the blog, please have a look and comment if any of the features you used earlier are not working and I will do my best to restore them, if I can.

Also while you are at it, please comment on the new look if it is any better. I am assuming the new template is better suited for mobile devices.

Many thanks for visiting.

VS

After the earthquake

After the nuclear plant explosions, as a sharp expected reaction, prices of Uranium have dropped drastically - looks like Uranium is becoming too hot to handle commodity. That can mean so many things - for many "politically correct" govts, it could mean putting new plant construction to back burner. Putting pressure on companies and supply chain of nuclear industry and possibly forcing some "on the fence" guys to break rank and deal with "rogue" govts like Iran who can get the fuel and technology on the cheap.
Meanwhile the energy needs dont seem to be going down anytime soon and thereby more "clean coal" and "gas" based power until the global warming/climate change issue heats up some other debate.
Stocks markets world over have gone into risk off mode and many expectation of interest rate rise in Europe and UK have been pushed back. Commodities have corrected sharply down.This could be the event which can induce the trend change.

2009 - A year in review

year of missing opportunities - Looking back on 2009 and lessons learned

Now that 2009 is coming to a close and holiday season is upon us, it is a good time to look back on year just gone by. Usually I run my year from April – March but I felt it would be a good idea to put up a page for year end review by me and other fellow traders.

This year (ending March 2010) would be special for me as I would complete 3 years of active trading without blowing out my accounts completely. They say that if you can survive for 3 years on your own, you can probably last as an independent trader. Also interesting to note is the equity curve, which after a tremendous jump in 2007-08 has remained practically slow sloping upwards. I thought about this point and I put it down to missing opportunities – the more I learned, more I was confused in various strategies and more I missed opportunities. When I knew little, I could trade with my method and not get confused by additional knowledge. Therefore since July 2009 I have started going back to my own trading style which I am comfortable with and stopped getting distracted by desire to try every thing under the sun. I believe trading is about mastering a few systems and methods instead of trying to fight in all arenas. My fellow trader AO has provided an interesting 38 point journey of a successful trader. It is worth looking at that every now and then to see where you really are. Also the journey does not end at point 38, instead one can easily lose discipline and fall back a few steps or even at the start of the queue.

Another important change I adopted during this year from Mid June 2009 was to start a disciplined daily Home Work process with track record. Some of us regular traders publish our daily analysis of the markets we trade. I run a special book for these trades and this book has been the most successful book since the day it was started with not a single losing month. So far I report the results on 1 lot basis. From next year, I will start reporting the results on two lot basis to better capture the real performance (one lot for first target and second for runner position). The disciplined home work process helps me tremendously not only in the short term/day trades but also to manage my longer term positions.

I have also learnt to my peril that my trading style does not suit scalping/fast moving intra day trading and therefore I have stopped looking at any strategies which require quick entry and exit of positions. I neither have that sort of attention span nor mental setup to execute such strategies. With that aspect in mind, I put a decent stop loss on each trade giving trade time to breathe. Larger stop loss does not mean excessive risk. It simply denotes smaller position size per trade as per money management rules (not more than 2% – 5% risk per single trade). In my longer term trades, I still prefer to trade breakouts and building positions as the trade moves in my direction.

In hindsight, I had some good calls in 2009 but due to “conflicting signals from multiple systems”, I ended up exiting earlier OR even missing my trade signal completely. I had good call In December 2008 on Silver outpacing Gold and later on in January 2009 about start of Gold bull move. But I did not capitalise on the full move in either of them ignoring my system. In early summer, I had good fortune to catch the bull move in British Pound which I rode a long way for good profit and bear move in USD which I exited bit early. I suffered from “conflicting signals” in summer 2009 and exited many of my established longer term positions early without realising the true potential. I attribute this failure to “too much learning”. Keep it simple still works and I am determined to use that in the coming years.

I also made the mistake of trading counter trend and trying to turn bearish too soon on the markets. I think it was a mistake to try to pick up tops and bottoms in a strongly trending markets. Instead it is worth to be patient and wait for the trend to signal change.

For the coming year my business plan remains similar to before. I will have 50%-50% capital allocation to Homework Trades, and Longer Term trades. Risk per single trade would be 1%-2%. My analysis would be predominantly based upon my own system which is a combination of technical analysis and Elliot wave theory. I will be avoiding scalping and scalping based systems. In addition, I will be trusting my instinct much more and avoid the temptations to close trades early. I believe exciting opportunities will materialise in 2010 and we will be ready to make use of them.

Happy Trading.

The BORING BANK

Can a public sector utility bank be a solution to the banking crisis

Most articles you read on current financial crisis today point the figure of blame squarely at bankers and their greed with low respect for risk. It may or may not be 100% accurate accusation but the root of this issue points to the uncomfortable marriage of public deposits and investment banking industry. We loath banks for their greed and bonuses and at the same time we cannot function without them. This create the vicious circle where banks end up becoming too big to fail, and end up taking tax payer bailouts. If the come out stronger after bailout – they receive the wrath of anti capitalists for making money on account of tax payers and if they end up failing further, more tax payer bailouts are required as they are “too big to fail”.

Many would point to separation of Investment bank/retail bank or more and stringent regulation etc but I feel that it could be a papering over the cracks. The fact is as that as long as deposits are guaranteed by the tax payers/governments it implicitly puts a floor under a bank failing and therefore it will inevitably promote excessive risk taking as the cycle progresses and we will remain in this cycle of boom and bust.

Can there be a simpler solution?

Just as protecting the country’s borders is public sector enterprise (army/navy/air force), protecting public is public sector enterprise (police and fire brigade and in most of Europe – health care). Why can't protecting the public’s savings be a public sector enterprise. I can think of the following outline of a bare minimum “BORING BANK”

• Ability to deposit money (branch, electronic)
• Ability to withdraw money (branch, ATM, debit card)
• Ability to make and receive payments (electronic, cheque, branch)
• Ability to receive monthly account statement (postal or electronic)
• Peace of mind on safety of money by an absolute government guarantee.

I propose that such BORING BANK can be placed in a public ownership. All the deposits to this bank would be backed by 100% guarantee of the government. A typical private sector bank uses the deposits to make further loans and that is how, using fractional reserves, they can leverage the depositors money and earn profits. And that is where the risk lies for a bank.

The BORING BANK would pay depositors interest at some discount to prevailing short term benchmark rates (which in today’s world would be close to zero if not zero).

The BORING BANK will not make any risky investments – not even overdraft facility on the deposit account, will not offer mortgages to public and will not do anything remotely similar to an investment bank. It will be a bare minimum, no frill deposit bank not even offering foreign currency transactions. The deposits will count towards borrowing by the Government.

Or in other words, deposit with BORING BANK is akin to buying a Government Bond, which anyone can do today, just that it will be much simpler with wider access and can be part of day to day life of people.

BUT, the key change after introduction of BORING BANK would be that there would not be any guarantee on deposits with private sector banks and no tax payer funded bailout. Also the regulation on the banks could become lighter and they would be allowed to take as much risk as their internal risk control (and depositors) allow.

Private Sector banks would still operate but without explicit government guarantee. They will still be able to take deposits from willing customer but in full knowledge that the deposit is not guaranteed by government. This would increase the deposit rates paid on such deposits with private sector banks. Customer would still rely on private sector for credit cards, mortgage, foreign currency transaction, insurance, investments and other risky transactions and any other borrowings the customer would need to go to such private sector banks.

I think such a move will ensure that the cost of capital for the private sector bank would move to a reasonable risk adjusted level and since private sector banks would be competing for capital, it will ensure that excessive risk taking would be curbed.

Government would be spared the huge cost and risk of providing the deposit guarantee and future bailouts. If a private sector bank fails it will be similar to any other private sector company failing.

so how much such BORING BANK will cost

I did a back of the envelope calculation

Adult population of UK who will be the likely account holder = 50,893,318

Assuming 1 employee per 1,000 account holder = 51,000 employees Appox.

Assuming average cost per employee = £100,000 per year (on generous estimate considering average household income is only £30,000)

Total Personnel Cost = £5.1 bln

Assuming all other costs = 2 * personnel cost gives TOTAL COST FOR BORING BANK = £15.3 bln per year.

I would say this is much better deal to tax payers compared to the £1.4 trln bailout money already on hook and will be money well spent. Considering that this BORING BANK is providing a bare minimum services, I am sure the cost can be much lower. Someone with experience of running a bank can comment on this aspect.

Conclusion

What I am talking is not unique. The process is already in place. If you want absolute security on your money, you have the option of buying government bonds from Debt Management Office (DMO). Just that the process is not easy for every one and cannot be used for day to day purposes. What I am proposing is a radical change to extend remit of DMO to convert into providing the services required by the BORING BANK and extend its reach to all population and at the same time remove the costly government guarantees on private sector bank.

Make no mistake, I am not calling the end of private sector banks or investment banks. I am merely asking them to operate on pure private sector basis – paying the true cost of capital for funds they play with. After that, if someone earns a bonus of £100 mln good luck to them! They deserve it.

Can this solution work? I think it can. It is not about removing competition but promoting competition. Just like we have National Health Service does not mean that private sector insurance/health care is dead in UK. And just because we have police does not mean some one with extra security requirements and money to pay for that cannot hire a private security company.

Same way with the BORING BANK, any one who needs better returns on their capital will turn towards the private sector banks with full knowledge that they are taking risk with their capital. Same way people invest in stock market or even start a business. Rest of us who just want to sleep well without worrying about their savings or unnecessary tax payer bailout wastage can leave the money in the BORING BANK.

I would like to know what you think on this and also why such an idea cannot fly?

REVIEWS

Books, Videos, Sites etc.

As requested by Dee here is a page where reviews and suggestions can be put for readers to review. So please keep this page as bookmark.

The format is same as home work page. Reader can put a suggested books/link as comment to this page. Now that we have DISQUS, the comments on a particular review item can be put in the form of threaded structure keeping all relevant comments under one thread. New thread can be opened by simply creating a new comment.

Happy trading!

DISQUS integration

Dear Friends,

I have heard and seen a lot about DISQUS as provider of comment aggregators and discussion manager and so I decided to integrate this blog with disqus.

For future posts you will have option to put your comment via the blog page or via the community page on http://vs-trader.disqus.com/ . We can have comments in thread forms as well as subcribe via email. Integration with facebook and twitter is also possible though I have not explored that aspect.

Please try out putting comments on this page and on the community page and note your expriences. This way we will be ready when the next home work page comes up in August 2009.

Happy Trading,

VS