Patience

I sold all and put everything in cash, and took a two months break, and S&P500 was at 1517 on Sept.24th, now it's 1469. I didn't miss anything. Something to share for my future investment:

1. Focus on the main idea. All my thoughts the last 12 months are correct, but I mistakenly changed from investing in precious metals to short the market, which burned me. I don't have patience to wait and want to make money quickly. Without patience, you can't be an investor or trader.
2. The inflation will become stronger in the years to come, so hard assets like gold, silver, corn,wheat and oil are good places to save your hard earned money.
3. Dollar will trade lower in years to come, to right the imbalance between US and the world, specially China.
4. Chinese market will crash, sooner than most people thought.
5. PM shares will be lower when market crashes, but perform relatively better than general market.
6. And don't be a trader to short the market, be an investor. If I am a full time trader, then I think I can do it. But I'm not, so be real.
7. Now, I'll wait some more. I don't think now is the time to invest, maybe a little PM shares, but other than that, wait for the market to correct some more before I jump in, this time, with long term investments.
8. I think playing poker is a better idea for me, it's all skill, gut and luck, there is no cheating and inside information as in the stock market, there is no manipulation and false information to fool public while the investment firms (like the way they sold subprime mortgage) illegally (or legally?) engage dirty activities to make money for themselves.
9. So if I want to gamble, I'll try poker. For my money, I'll do investment in the future.

For these who are still in the market and read this blog, best luck to you. I'll share my thought and idea may be once or twice a week, since now I changed to long term investment.

I am sorry I could not make it as a trader, I tried, if I could I would, but I can't!

Take a break

I won't trade for a while, maybe a month, maybe more. I'll take a break. Look to get back if the market indeed crashes in October. I lost huge amount of money and now I need to review my process, I hope to make a comeback, but with the way things went the last few months, I may not be able to come back. In that case, good luck to you all.

1. Money management is the most important thing in trading. I failed miserably in this.
2. Don't trade options unless you consistently time the market right in stock. I failed miserably in this.
3. I feel ashamed of myself, the way things went the last few months.
4. I feel more ashamed that I feel ashamed of myself.
5. Good luck to your all.

Defeat

I was defeated again by my reckless decisions of using options and holding these options against the tide. Now I need to go back to basics of trading, just use ETFs and stocks, and I won't run against the time.

1. Market was higher again today, I sold last index puts for huge loss again.
2. I think the market will likely pullback tomorrow or Friday. FXI is a great short target. Most home builders shot up higher 5% early today, to only lost more than 5%, HOV is an example. So the shot in the arm (rate cut) is over.
3. Tomorrow we'll have GS number, can get better look into the impact to investment banks. In the end, it's the earning that decides the market direction, not Fed rate cuts. And earning depends on economic cycles.
4. On the long side, I like GLD,SLV and GDX.
5. Oil is a wild card.
6. Since Fed will add liquidity to the market and encourage reckless traders, momentum plays like RIMM, AAPL and BIDU will have more upside to go, until they can't go up any more. Hard to predict a top.
7. So I'll wait on the long side if not feel comfortable to short. Nothing wrong with that.

A famous saying: in order to become the great, you have to be defeated, embarrassed by your mistakes; then you'll learn from it and become the great. Now, at least I have the first part in place. I just need to learn from it.

What a joke

1. WTF wrong with me?
2. Market rallied almost 3% today on Fed's 50 bps cut.
3. The Fed had said in its previous three statements that inflation was the main concerns. Now they started to unleash the gate of stagflation.
4. We should have a short term rally, very likely to all time high.
5. We will have a recession and inflation: inflation is already here, if you eat and drive; recession maybe here already, if you try to sell a house.
6. The Fed rescued risky investors today, nothing more and nothing less, with market only 4% from all time high before the announcement, after today, it's only 2% from all time high.
7. You never see a crisis this close to the top.
8. Gold and precious metals, commodities are places to be. The bubble goes on, maybe last into 2008. But after that, we'll have a long bear market.
9. Fed's decision is to make the bubble bigger.
10. If you're not taking the riskiest asset in the market, you're not trying.
11. I am so stupid to trust the Fed will honor the value of dollar, now I think dollar will be worthless in 10 years.
12. From now on, I will not play options, I will drastically reduce shorts.
13. I lost my right to play these risky positions.
14. I have to beg for forgiveness for my gambling spirit and the mistakes and pains I have caused.
15. If nothing else, I will be a better person in life, I will learn from these mistakes and walk away from gambling.

I will play three patterns in the future:

1. Extremely oversold conditions and extremely overbought conditions.
2. New highs.
3. Long term fundamental plays.

Give up

I started to liquidate some of my put positions at great loss today. For the rest, will do 1/5 each next week. Bulls, you win, I give up.

Friday and next week

Today the market was strange, very strong out of the gate, but previous strong Nasdaq faded quickly, Dow was the strongest index, with GM and MCD did the most up lifting. Dow was up 1%. Another very painful day for bears.

1. IWM and MDY were weaker than QQQQ, which was weaker than SPY, which was weaker than DIA.
2. Today's wonderful news: CFC secured another 12B credit line, the news lifted the market spirit. Is this their last decisive move?
3. Sector rotation again today. The previous leader, like tech, was weak and previous laggards, like financials, were strong.
4. I checked retails (like BBY) and financials stocks, both sectors were down more than S&P500 in recent months. Looks like the smart money already know we're either heading to a recession or a meaningful economic slow down.
5. Unless we have other "wonderful" news tomorrow and next week, I expect a mini bounce at the best, and then we head lower to test 1430, maybe the August low.
6. With this market, with the Fed, I have to say I'm still clueless. Multiple indicators are pointing to a pullback as well, let's see if the market can fool us again.
7. GS, LEH, BSC and CFC all shot up a great percent today, very much a strong bounce on a down trend. All are good short candidates, but better wait after Fed and their earning releases.
8. You don't want to catch the top or bottom, but want to sacrifice some profit to be on the safe side, I was careless in this regard. By waiting, you can avoid lot of mistakes, like being totally wrong.
9. Why do I have to play options, there are two things against me: the stock's movement, and time. Time is running out quickly if you place the wrong bet in options.
10. Fed will cut 0.25%: it won't show too much weakness in the economy; and it won't put too much pressure on the dollar. The market will likely sell off. This is the most likely outcome.
11. Thanks Ryan and Curt for your comments and ideas.

The spirit is willing, the flesh is weak

I was very surprised the market held very strong today, on top of yesterday's strong showing. You thought a patriotic rally and no bad news yesterday therefore we rallied, today, here were the high line news, you thought the market would give up some gains, but it finished strong (flat) today:

1. U.S. dollar hit all time lows against Euro. So a Fed cut will put further pressure on the dollar, therefore not good for dollar based assets, including U.S. equity market and bonds. Falling dollar is one of the factors behind the 1987 Black Monday crash.
2. Oil hit all time high, over $80 for the first time. So that's inflationary, energy happens to be one of the non-essential items (another is food) Fed excludes from calculating core inflation. So we don't have issue there.
3. Signs of credit problems re-emerged as Barclay's (BCS) was reported to inject $1.5 bln into a third fund, Golden Key. Late in the day, however, Citigroup (C) attempted to calm investors’ concern by issuing a statement that their subprime losses were declining.
4. NY Post, Countrywide seeks more capital, taking decisive steps to ensure future "growth"(or survival). I thought they already took decisive steps a few weeks and days before: taking full 11.5B line of credit; 2B equity investment from Bank of America; cut 12,000 of employee(1/5 of total). And now this? Remember, it's price was at $16.6, below the $18 Bank of America paid for the 2B. And CFC only covers one of every five mortgages in US.

But I was dead wrong and bet against the tide:My recent actions in the market. I felt clueless about what's driving this strong U.S. market, only 5% off all time high in S&P500!?

1. Maybe the article about Patriots spying on Jets is right, the U.S. market is also filled with cheating activities, for these of us who are clueless, we'll finish last: If you're not cheating, you're not trying
2. Maybe Fed cured all the issue that can trigger another black Monday:Black Monday 1987
3. If the Fed cuts enough (50 basis points), good for equity market, what about dollar?
4. If Fed doesn't cut enough (25 basis points), what about the price already in the market?
5. Fed is cornered between a rock and a hard place.
6. Still I have no one to blame but myself, I thought I knew something about market, I learned the history and past patterns about the market.
7. But like Churchill once said, the only thing we learned from history is we don't learn from history.
8. I should know better.