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Was Soros right to dump gold in the final quarter of 2016?

Was Soros right to dump gold in the final quarter of 2016?

Soros Fund Management LLC has effectively dumped gold with regulatory filings this week showing the company sold its last gold share between October and December 2016. While this coincided with the weakest quarterly performance for the gold price in three years, the precious metal did rally at the start of the year. However, since then it has fallen back amid confusion as to whether Donald Trump will do well as US president or will fall flat on his face.

Gradual reduction in gold exposure

During the second half of 2016 Soros Fund Management LLC began to reduce all exposure to gold. We seem to be at a bit of a crossroads with the gold price at the moment, currently $1229 an ounce, with some believing it offers good value in the light of recent difficulties for Donald Trump while others believe its safe haven status is limited at the moment. Continue reading “Was Soros right to dump gold in the final quarter of 2016?”

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Who will be first to pull the trigger on Trump stock market rally?

Are Apple and Tesla a match made in heaven?

While at this moment in time there appears to be no stopping the Trump led stock-market rally it is often interesting to look at the situation from a different angle. Stock markets cannot continue to go up in a straight line, as they have done of late, and we will ultimately see a period of consolidation. Even some of the most bearish analysts are now been forced to change their views and it will be interesting to see who is first to pull the trigger and call the top of the Trump stock market rally.

Sentiment is the key

At this moment in time investors seems to be ignoring some of Donald Trump’s “problems” and his apparent inability to communicate with his overseas allies. It is all good and well taking these issues for granted and effectively ignoring them but if he continues in the same manner this will increase the risk of worldwide conflict. It is way over the top to suggest we could be on the way to World War Three but it is not inconceivable that the US will see increased friction with the likes of Russia and China not to mention recent activities by the North Korean authorities. Continue reading “Who will be first to pull the trigger on Trump stock market rally?”

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Stop learning from stock markets and you are dead in the water

Are Apple and Tesla a match made in heaven?

We can all name a handful of investors who have made constant returns over the years which have made them extremely wealthy. These investors are often held in great esteem by private investors and many will follow their every word and their every stock purchase. To the untrained eye it can look as though these “experienced investors” have been there, done it and know everything about the stock market. However, time will show you that once you stop learning from stock markets you are literally dead in the water.

Reading the current environment

If we look at the last decade, since the US led mortgage crisis, we have experienced historically low interest rates around the world which have led to situations the likes of which have never been seen since the great depression. Experience will help to guide you in the longer term but ultimately nobody alive today has ever experienced anything quite like it. So, even those experienced investors who have been there, done it and bought the T-shirt, are still learning today. Continue reading “Stop learning from stock markets and you are dead in the water”

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Bears run for the hills in Trump led stock-market charge

Should ground-breaking pharmaceutical companies be listed?

While Donald Trump may be making news around the world the US stock market has certainly taken him to heart as markets push to record highs. At this moment in time there is no stopping the momentum behind stock markets and many bears are now running for the hills desperately trying to reduce their downside exposure. As the bears run for the hills this could give stock markets yet another boost!

Closing short positions

As US stock markets continued to push towards record highs many investors took a bearish position using a mixture of stocks and derivatives. They saw the Trump led rally as a short-term trend which would very quickly turn downwards as his presidency got off to a rocky start. At this moment in time there is no sign of investors selling down US stock markets instead they seem to be banking on economic growth in the short to medium term due to expected increased investment in infrastructure and public spending. Continue reading “Bears run for the hills in Trump led stock-market charge”

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Shorting stock is a valid investment strategy

Balancing the risk reward ratio

When the subject of shorting stock is mentioned it can often be mistaken for some kind of underhand attempt to make a fast buck. We often hear criticism of those shorting particular stocks amid suggestions they are “messing with prices” and creating artificial markets. However, shorting stocks is actually a very valid investment strategy and a vital element of the stock market.

Overvalued companies

When shorting any stock you are effectively suggesting the current valuation of a company is more than its actual worth. This may be a short-term situation, it could be a long-term problem but if a company is overvalued then the only way to bring the valuation back “in-line” is to sell the stock. The traditional method is to sell stock which you own but there is also the opportunity to sell stock you do not yet own and look to buy that stock back lower down, thereby crystallising a profit. So, why does this type of investment strategy receive so much negative publicity? Continue reading “Shorting stock is a valid investment strategy”

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Timing is the key to any investment

Be wary of companies buying back their own stock

You may have spotted the best company in the world with the best products but if your timing is wrong this can severely limit your potential returns. It may sound obvious to suggest that timing is of the essence but there are a number of reasons why you need to consider the wider picture. This will enable you to give yourself the best opportunity of maximising your potential gain and protecting your capital going forward.

Market valuation

We have all seen those companies in the past which have made very bullish statements and investors have climbed aboard hoping to bank significant returns in the longer term. It is human nature to push prices too far on the upside and push them too far on the downside – it is called fear and greed. So, if you think you have spotted a company which has significant potential going forward if possible it is worth holding off until some of the “over exuberance” has worn off the share price. Continue reading “Timing is the key to any investment”

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JP Morgan forecasts buoyant US IPO market

Momentum trading

Activity in the US IPO market has increased over the last few weeks with a number of high profile deals in the pipeline. JP Morgan’s head of global equity capital markets, Liz Myers, has been talking about her hopes for the IPO market in 2017. It seems as though there are many reasons to be cheerful but why is JP Morgan forecasting a buoyant US IPO market?

Change in sentiment

While it is still relatively early days in 2017, initial figures suggest this is the best start to a year for the IPO market since 2014. At this moment in time there are 12 IPOs in the pipeline which compares to less than 100 throughout the whole of 2016. The average figure is around 200 IPOs per annum and there are high hopes we will return to somewhere near that figure over the next 12 months. Continue reading “JP Morgan forecasts buoyant US IPO market”

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Do markets trust the Fed to deliver on interest rate policy?

Do tax havens impact stock markets?

Only a few weeks ago the Federal Reserve forecast that US base rates would rise three times within the next 12 months. While many investors seem to take these forecasts with a pinch of salt, a number of high-profile bankers seem to be backing this move by the Fed. So, do markets trust the Fed to deliver on its interest rate policy?

Track record

If we look back over recent times, the Federal Reserve suggested that US base rates would rise twice during 2015 when in fact there was only one rate rise towards the end of the year. The situation was even worse in 2016 with expectations of four interest rate hikes culminating in one rise in December. At this moment in time markets are predicting a one in three chance that the current policy will be fulfilled but not everybody is convinced. Continue reading “Do markets trust the Fed to deliver on interest rate policy?”

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Day traders aren’t necessarily gamblers

Why markets need traders

Those who invest in worldwide stock markets will have come across day traders on a regular basis whether directly or indirectly. The general consensus amongst some people seems to be that day traders are gamblers who take undue risks for relatively short-term profits. It is easy to see why some people may assume this but day traders are not necessarily gamblers and often use a very structured approach to their investment strategies.

Research, research, research

Some day traders will research a small number of stocks in great detail, monitor their share price movements and attempt to trade before and after important announcements. We often see situations where shares are oversold on disappointing news or overbought on positive news. These two situations, which are dictated by volatility, are the perfect breeding ground for day trader investments which bank on the market returning to normal after abnormal swings. Continue reading “Day traders aren’t necessarily gamblers”

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Do stop loss limits work?

Stock markets

There are many different strategies to use to protect your capital but stop loss limits seem to be one of the most popular. In effect this takes away any decision once a stock hits a particular level and, if the strategy is followed, you simply hit the button and sell. So, do stop loss limits work?

Market volatility

Whether you hold a stock which has the best potential in the world, if markets are volatile and outside influences come into play, then all stock prices will be affected. If we look at the mortgage crisis in 2008, which led to a worldwide depression, this impacted all stock prices no matter their potential for the future. There is one danger of using stop loss limits, the chance that maybe market volatility is short-term and you could sell before the bounce. Continue reading “Do stop loss limits work?”