Don’t let your heart rule your head when investing

Should ground-breaking pharmaceutical companies be listed?

While many people speculate what makes a good investor the fact is that we are all very different, we have strengths and weaknesses, and we need to appreciate this. You should never invest in markets in which you have limited knowledge or limited interest because it will be almost impossible for you to read the market correctly. However, there is a much simpler way to maximise your investment returns which is quite simply, do not let your heart rule your head when investing

We all have our favourite stocks

Whether we admit it or not we all have our favourite stocks, favourite sectors and companies we like to trade. Many investors will focus on a limited number of volatile companies, get to know them very well and be able to read share price movements to their benefit. However, sometimes it is possible to get too close to a company and become detached from the cold hard decisions you need to make. Continue reading “Don’t let your heart rule your head when investing”

Hedge funds speculate on oil price recovery

Oil price

After a disastrous couple of years which saw the oil price fall below $35 a barrel we have seen a partial recovery to the current level of $55 amid speculation that hedge funds are banking on a significant recovery. Regulatory data seems to indicate that the net long position on oil is at its highest since 2014 suggesting hedge fund managers believe the recent announcements by OPEC will result in a reduction in the current glut of oil.

Net positive position

Official exchange data has confirmed an ever-growing bullish outlook for the oil price with the equivalent of a net 820 million barrels now “in the hands of speculators”. To put this in layman’s terms, 820 million barrels equates to 9 days global consumption of the black gold. This latest positive move will go down well with the UK authorities where the net tax take from oil fields in the North Sea has fallen to zero. Indeed, if you count the various tax incentives and decommissioning assistance the net income from the North Sea is now negative. Continue reading “Hedge funds speculate on oil price recovery”

Donald Trump pulls out of Trans Pacific Partnership trade deal (TPP)

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Donald Trump has formally withdrawn the US from Barack Obama’s Trans Pacific Partnership (TPP) prompting concern amongst investors. While Trump had previously flagged his intention to withdraw from the TPP, like many of his campaign promises there were hopes that he would dilute this threat or change his mind. However, the official withdrawal from the TPP has left something of a power vacuum in Asia.

TPP never approved by Congress

Despite talk of the TPP being a vital element of the US economic revival the partnership was never formally approved by Congress. As a consequence Donald Trump was able to withdraw from the partnership scheme with relative ease with a formal executive order signed today in the Oval Office. The arrangement involved the likes of Australia, New Zealand and a whole host of countries in the Asia region. Initially it was hoped the partnership will allow the US to control trading arrangements across Asia beating China to the punch. Continue reading “Donald Trump pulls out of Trans Pacific Partnership trade deal (TPP)”

Why is it better to travel than arrive?

Better to travel than arrive?

Those who trade stocks on a regular basis will likely have come across the term “it is better to travel than arrive”. On the surface it seems a little bizarre, suggesting that investors are better off jumping ship before an expected announcement which could impact a company share price. However, there is a sensible angle to this quote which will perfectly illustrate why it is better to travel than arrive.

Rumours, counter rumours and more rumours

As we have mentioned on numerous occasions, if you view stock markets as information exchanges then they will take into account public information and “inside information”. Whether we like it or not, inside information does find its way into the stock market and can impact the price of company shares on a regular basis. The regulators will suggest this is wrong, the politicians will suggest this does not happen but just take a look at the performance of share prices just prior to potentially game changing announcements. Continue reading “Why is it better to travel than arrive?”

Apple looking to take over Hollywood

US markets back to December 2017 levels

History shows us that when Apple decides to invest heavily in a new business venture it will aim for the top. This is a company with cash balances of $230 billion and a business which continues to generate cash. At some point the phenomenon which is the iPhone and iPads will fade away and it looks as though Apple is already looking to counteract slowing sales. So, what can we expect from a move into Hollywood?

Original TV content

The likes of Amazon and Netflix have made headlines over the last few years investing hundreds of millions of dollars into their own production companies. Amazon recently took on the Top Gear team on multi-million pound contracts and a production budget which dwarfed that of the BBC. Netflix is already renowned for its own movies and this is a company going from strength to strength and one which Apple will likely be targeting. So, how will Apple enter the television shows and movies market? Continue reading “Apple looking to take over Hollywood”

Will Elon Musk benefit from his presidential connections?

Why removing Elon Musk may actually help Tesla Motors

Elon Musk is the man who built PayPal, sold it on, and then moved on to an array of new groundbreaking technologies. Currently his attention is taken by Tesla the luxury electric car manufacturer which has taken the US market by storm. When we say “luxury electric car manufacturer” the company is actually looking to attack the mass market with the forthcoming delivery of its much heralded Tesla Model 3. So, will Elon Musk benefit from his presidential connections?

Big egos, different opinions

Many saw the proposal for Donald Trump and Elon Musk to work together as the incoming president’s first compromise. Pres Trump is not a believer in global warming which you might assume would impact the introduction of electric vehicles. However, it does seem as though Donald Trump has recognised the entrepreneurial skills and ability to “think outside the box” of the Tesla CEO? Continue reading “Will Elon Musk benefit from his presidential connections?”

Gold price impacted by Trump affect

Gold price impacted by Trump affect

Since the presidential election in November there have been some fairly volatile swings in the price of gold. After hitting a high of $1300 an ounce prior to the presidential election the price fell to around $1100. There were strong expectations that the new incoming Trump government would significantly increase infrastructure spending which would prompt growth in the economy and inflation. At some point US interest rates would also follow suit to counteract inflation thereby reducing the attractions of gold. So, how has the price of gold been impacted by the Trump affect?

Is Donald Trump a loose cannon?

Donald Trump is literally hours into his new presidency and already he seems to be at loggerheads with the Federal Reserve. He suggested, from a business point of view, that the dollar was too high on the exchanges and impacting the competitiveness of US companies. Yet only days later Treasury Secretary Steven Mnuchin reiterated that the Federal Reserve was committed to a “strong currency”. So, already we have the makings of a difference of opinion between these two extremely influential and powerful parties. Continue reading “Gold price impacted by Trump affect”

Was Gordon Gekko based on a real Wall Street character?

Banking restrictions

If there is one movie which epitomises the 1980s and the booming stock markets it is the first instalment of “Wall Street”. The main character, who perfectly reflected the “greed is good” mantra at the time, was played by Michael Douglas who had the starring role of Gordon Gekko. Critics suggest that the movie glamorised the villains and the crooks of the time but in reality it was a perfect reflection of what was going on.

Traders and investors were living life to the full, pushing the boundaries and many of them were making significant amounts of money. One question which is often asked, was Gordon Gekko based on a real character on Wall Street? Continue reading “Was Gordon Gekko based on a real Wall Street character?”

What does it take to be a day trader?

Be wary of companies buying back their own stock

Since the 2008 US mortgage crisis, which resulted in a worldwide recession, markets have been extremely volatile and day traders have been making hay while the sun shines. We hear more and more about day traders and very often they are cast in very detrimental terms. Many people see them as opportunist, speculators and a pest for traditional long-term investors but they are a vital element of the market. Whether “traditional” investors like it or not it is very often the short term day traders who inject liquidity into the marketplace allowing others to trade more freely. So, what does it take to be a day trader?

Confidence in your decisions

If you ever come across a day trader they will seem very confident in their own decisions and often dismissive of other views. This is a vital component of the personality of the day trader, the ability to make snap decisions using limited information and have the nerve to act on them. Day trading by its very definition is often extremely quick with investors dealing on very small margins but regular traits. Continue reading “What does it take to be a day trader?”

Why buying stocks on momentum makes perfect sense

Momentum trading

Day traders and short-term investors do not get the best press despite the fact that they have a significant impact on market liquidity. Often accused of dealing on inside information or with preferential knowledge they attract unwanted attention. However, many short-term investors simply buy stocks on momentum and more often than not they will see a return. So, why does buying stocks on momentum make perfect sense?

See the stock market as an information exchange

If you take a step back and look at worldwide stock markets as “information exchanges” you may be able to appreciate why momentum buying is often successful. The price of any asset, whether a share, bond or precious metal is dictated by information which is in the public domain and also information which is shielded from the general public – i.e. inside information. Whether the regulators like it or not, the price of a share is dictated by an array of information some of which is legal and some of which is not. Continue reading “Why buying stocks on momentum makes perfect sense”