More Natural Gas

I got up this morning and I said to myself, "I think that there might be something interesting to be found in comparing natural gas and equity index correlations over different time periods."

So I looked into it:



When I get some more time I want to check for other periods of over 6 months that have negative correlation. I think that is a nice buying signal right there. Time will tell.

Natural Gas

You tell me where it's going.

Of Interest

This will be the first post of a series of research posts. I've been thinking of trying out some strategies lately with fairly recent historical data. Simple stuff: buying shares and on-the-money puts and various doubling down strategies at different price levels. I think it would be interesting to see when these strategies would have been feasible to employ and in which equity sectors they would have done best.

I'll share the process and results as much as I can along the way. I'm going to try and be conservative by picking stocks or sectors that I was actually looking at last year.

More to come.

Hurricane

Hurricane say: Stay away from the windows

I'm buying natural gas on the way down because I'm insane.

In other news, if we are getting tornadoes in Ontario, Canada for the first time in like 50 years, whats the weather got to be where the get some Real winds.

Yarr, there she blows.

Today in the Markets

China loses 4% off one of its equity indices and we see the Americas shake the blues to rally mid-day. Regardless of whether we turn south from here this is a good sign that many think this is just a dip and we will soon be headed higher.

Status

I've come up with arbitrary net worth numbers to assign people to a social class:

< $50,000 - Riff Raff - You are poor as shit cause you spend too much. Much fun to be had here. There is beauty in the struggle that is the low class.

$50,000 - $500,000 - Middle Class - I hate the middle class. You are like limbo, waiting to die. However, you are necessary.

$500,000 - $10,000,000 - Rich - You or your descendents will probably make your way back to the middle class because in reality, you probably got here by chance.

$10,000,000 < - Wealthy - You control things silently. You understand how the world works. If you don't, you are only visiting this place.

Game time

What makes you able to buy a stock from someone and sell it back to someone else at a higher price? How is this even possible? What makes you different?

Questions I ask myself everyday.

Now that I've seen and held stocks that have swung -80% or -90% and recovered 200%-500% I have a wonderful view of the cyclical nature of stocks. I also see that the common investor's view of risk is wrong. The number you call the standard deviation of an investment is not the risk of that investment. It is the closest thing that they could wrap their head around.

Never buy at new lows. I want to widely promote this rule because it encourages even cheaper prices for me, the buyer. My aim is to throw the traditional rules out the window and create my own, slowly but surely. In fact, I'm not convinced I need rules to be a sucessful investor. At least not ones that can never be crossed.

Knock it off

Stop buying.

Everyone and their uncle can see a pullback coming. Heck even I'm selling some of my stocks. I happened to get lucky with oil driller TDG, they reported a loss when I was betting on a nice gain, and I still managed to get out in the green. I'll pick them back up at a later date. It's about time we had a leg down, I was starting to miss the days when I felt so poor I thought I didn't deserve food. I'm still staying over 50% long but not by much. I will be buying again when prices look attractive.

I know. Real rocket science eh. Shuddap.

Bad Move

My friend gave me a good piece of advice yesterday. I wish I had taken it.

Today I faced with two decisions. First, to lock in some gains via purchasing BAC puts and second to take profits on my natural gas position. I wanted to do both first thing in the morning. I decided not to because I was afraid and as a result I lost money instead of making it.

He who hesitates is lost.

Today in the Markets

BAC continuing a measured move higher? It was only a matter of time considering the levels of say WFC and MS.

Natural Gas continuing higher? Natural gas is a random walk most of the time. I'm half in GAS and half in HNU leaving me approximately 1.5x leveraged to weed out half of the mathematical theivery from 2x leverage. That being said I might play around moving between 1x and 2x because I'm bullish on nat gas until 2010 as it stands.

HBF and ATVI didn't get bought because I saw better upside potential elsewhere. More risk but you know what I say:

When you've been playing with fire and already been burned a couple things happen: (i) it doesn't hurt as much when it happens again and (ii) you know how to play with fire a little better.

Viva la revolution

Eat It

I don't trade for the trend
I trade Before the trend
I don't see the end
and I don't have to
cause I got flava like all dressed chips seasonen