The Ultimate Leverage Investment Thread

[CrushinFelt]

It may not be a bad idea to lump B & C together into some kind of broader index. If you don't see any good trades then there's really no reason to force yourself into two new positions. Maybe pick a sector or 2(pharm or tech or health care, whatever) and use that rather than individual stocks.

Also, with regard to your wheat bet, can I ask why May? It is the tail-end of a crop year so what exactly do you think will happen? Definitely don't take this as me saying not to go with May '08 wheat, I'm just wondering why you chose it.

The new crops are still very low priced (below $6.50 or 130.00 in your price terms I think). I doubt any farmer in all of Australia will be planting wheat next year because of how badly they all got clobbered (obv a little exaggeration). But then that might spur farmers everywhere else (Europe and USA) to plant a lot of wheat to take advantage of a shorter supply. That in turn may spark a shortage in soybeans or corn because not as many farmers will plant it next year compared to this year.

I think commodities are really interesting because it really is a game of supply/demand as well as the crazy variable of weather.

Perhaps Mr. Baseball can chime in here ;p

[john kane]

thanks a lot for the reply. yep thats a good idea combining B and C into and index or one or two sectors. i just find reading into commodities, indexes and forex so much more interesting than individual stocks. i feel it's a much broader spectrum your reading about which i find more interesting.
im going to buy a few commodity trading books and do some reading, it's very interesting. as ive mentioned before i have a good friend who is a commodity trader (i am stilll waiting for him to reply about his take on copper amongst other things) so he can help meet as well - hopefully ill be living with him from jan onwards.

as for why May, solely becuase only time offered on my spreadbetting account, i assume that once a longer contract becomes available i'd sell the May one and buy a summer contract or something like that.

ive got to go to bed now - boo - and 2+2 is banned at work, but ill be back on this time tomorrow so sorry that i cant post anything till then.

thanks again.

[kimchi]

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thanks for the replies. pretty painful day with gold's drop, but rather than selling i increased my position from $60 to $200 per $1 swing at 750p. my current stop loss in now 700p but is very flexible.


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What made you decide to incease your position in gold by over 300%? Was this trade already going in the right direction?

Also, bear in mind that a 'flexible' stop-loss isn't a stop-loss. If your stop is hit, take the loss. If the trade looks promising again the next day, look for another entry.

[haakee]

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$7k forex position B (yen/dollar)

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Rather than investing directly in a foreign currency I prefer to invest in a company in said country with the vast majority of revenues in said country's currency. IF I can find a company that appears to be reasonably valued. I like the Yen vs. the USD (or GBP) right now and I think NTT is a better play on than buying yen directly.

[The once and future king]

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rate cuts are very likely imo in the UK (where im from). poor people with mortgages need it, economy needs it, and inflation is bang on the target at the moment so seems likely next month or in 2 months time.

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The BoE has no responsibility for poor people with mortgages. It is only concern is with inflation. As all the inflationary pressures are on the up side dont count on a cut in the next two months, indeed a cut is not priced into swap markets.

The reason the pound is about to drop is that the whole UK miracle economy is a fraud. As soon as the imminent house price crash sets in due to the massively increased criteria banks are asking for for mortgages, this will be revealed.

To be clear the UK is not in a housing bubble, it is in a credit bubble (1.6£ trillion public debt) and has the highest level of indebtedness in the developed world. HPI has been a direct result of the record debt as there is more money chasing fewer houses. Now that the credit crunch has set in to the UK economy the conditions for HPI do not exist and a housing crash is imminent in the next 6-12 months.

Basically when examined there are no fundamentals to the British economy. Yes indexes are good, but that is all down to the credit bubble. Once that bubble pops bye bye sterling.

Good peice on British Economy.

[ahnuld]

Just bought (or put in the order to buy) some Jan 09 puts on crox. Its my first time trading options. Did I make a mistake by entering market order? I find etrade generally gets good market prices. Also what percent of your portfolio does it make sense to allocate per options position? Seems like 5% should be the max, right? Or does that decrease with longer dated options because your hypothesis is more likely to be correct and thus youll finish ITM more often (even if you dont get back your full contract buying price)

[DcifrThs]

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rate cuts are very likely imo in the UK (where im from). poor people with mortgages need it, economy needs it, and inflation is bang on the target at the moment so seems likely next month or in 2 months time.

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The BoE has no responsibility for poor people with mortgages. It is only concern is with inflation. As all the inflationary pressures are on the up side dont count on a cut in the next two months, indeed a cut is not priced into swap markets.

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that may be 2 months out but take a look at the UK yeild curve. it is absolutely inverted with a big quick drop to 4.75% in the next 1-1.5 yrs. it stays negatively sloped out for the next 25 yrs (as of oct 22).

i'm thinking of a good trade idea here since the real yield curve is steepening (negatively) to a price of .25bps in 25years. that means there is an absolutely insane demand for UK IL bonds.

check it out here:

BoE Yield Curve

so basically, while the swap market may not be pricing in a cut in the next 2 months, the yield curve is pricing in some insane easing with some interesting outcomes (and thus some good trade ideas for me [img]/images/graemlins/smile.gif[/img] )

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The reason the pound is about to drop is that the whole UK miracle economy is a fraud. As soon as the imminent house price crash sets in due to the massively increased criteria banks are asking for for mortgages, this will be revealed.

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that is definitely priced in...perhaps too much for too long (will the UK economy really be in such a state in 25 years that there will be 3.75% short rates with 3.5% inflation? that is what is priced in at this point.

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To be clear the UK is not in a housing bubble, it is in a credit bubble (1.6£ trillion public debt) and has the highest level of indebtedness in the developed world. HPI has been a direct result of the record debt as there is more money chasing fewer houses. Now that the credit crunch has set in to the UK economy the conditions for HPI do not exist and a housing crash is imminent in the next 6-12 months.

Basically when examined there are no fundamentals to the British economy. Yes indexes are good, but that is all down to the credit bubble. Once that bubble pops bye bye sterling.

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is there a place i can see the forward sterling curve (i.e. the futures currency price in 3/6/9/12/15 months?) i'll look for it but if you know of one let me know.

Good peice on British Economy.

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thanks for the link, this will provide some very good fodder for trade ideas.

Barron

[CrushinFelt]

[DcifrThs]

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OMG, wtf, are those serious...i have to go get an MRI for my foot but i'll back out the implied UK rates given US rates at certain levels for those prices but at first glance they look way off.

be back later.

Barron

EDIT: i just realized why the late maturity contracts are so high, b/c they are being pulled up by the short maturities via arbitrage. i'll dig more into this later but thanks a ton crushin for the post (is this available online instead of just through your image shack?)

[CrushinFelt]

Ya, www.cme.com

and go to delayed quotes