51st Percentile

Who would have thought blackjack could be so educating. Over the last week I've been learning to play blackjack and some elementary card counting systems. Under normal circumstances you are no more than 50 basis points away from winning 50% of your hands playing standard casino blackjack. If you employ some kind of tracking you can usually get up 2-3% at least every 1 in 10 hands. I make minor errors so I conservatively put myself at an overall advantage of 51%.

What has amazed me in my short amount of play testing is how much of an advantage that is. Betting heavily when the odds are only slightly in your favour Actually can be a lucrative venture. I was always sceptical that to experience large gains one had to trade or bet on high probability events. That is not necessarily the case.

Skewness

My 100th post on this desolate wasteland of a blog.

The concept of skewness can be thrown in with the cliche bunch "easy to learn, hard to master". It is important because it is the pitfall of every losing investor. On the micro level, people aren't as stupid and everyone portrays. Random retail investors, such as myself, probably do a decent job of picking winners. The problem is when we come across a loser. Like our first love, we just can't come to terms with letting go. This creates negative skewness in our portfolio position returns. It is why successful investors and traders commonly preach to cut losses short, no more than 10% if possible, at all times. That way you defeat negative skewness.

I've been learning to count cards a bit so I can put up a fight at the blackjack tables, it's the same mindset walking into a casino and logging in to your brokerage account. Something to keep in mind.

Shadows

CJT.UN
TDG
BAC

I have roughly equal long positions in these 3 currently. They are all showing good resistance here. I am especially pleased with TDG given that oil is lower, it feels like buyers see this as an opprotunity. I am holding my positions despite the risk of a drop because it still feel like buyers lurk below. Unlike late 2008 - early 2009.

Psalms 23:4 Yea though I walk through the valley of the shadow of death I will fear no evil

Screens

With the hostile Potash bid this week and Jim Rogers constantly talking about commodities and holding 'real' assets I'm starting to think there is potential here.

Agriculture is looking more and more like it is (or even better, soon will be) a leading sector.

I'm looking at smaller caps like FOS that could blow up.. haven't found much.. yet.

Rating Agencies

It's nice to be small and not worry about the politics of posts.

After meeting several Moody's employees, reading about them, and most importantly playing with and understanding their models and rating methodologies I have formed a terrible opinion of rating agencies as a whole. If it could be helped I wouldn't trust them with a dime of my money.

The good news is that wise investors know this already.

Monday

I don't have the creativity for a catchy title at the moment. I only have a similar forecast to The Fly.

The equities market will rally into September and then start falling, possibly off a cliff. As long as this prophecy remains likely I am planning on being 50%+ cash by September 3rd.

Current position: 75% long (BAC, CJT.UN.TO, TDG.TO) , 25% cash

Money Managers

If I was managing a larger portfolio, say 10MM+, I think the investment decisions would be much easier.

I see two slam dunks right now: getting long FFH and short bonds via whatever method you choose. These plays have little room to go down in value and potential to produce 100% returns over 3 years.

However, just because the investment decisions are easy doesn't mean the job is.

Ship it

Buy something that's going up.

Sell it tomorrow when it's higher.

Until then

Metamorphisis

When you think about how to make money for long enough, you start thinking differently.

Your brain stops working to live and starts living to work. And you like it.

Read

I've been meaning to boost the amount of blogs and columnists I follow on these here internets, right now I'm only really following these two:

ibankcoin.com : the guy who runs this site is a highly intelligent nut-job and I find him to be a hilarious and great writer. I might one day hunt this man down to shake his hand and/or become an understudy.

gregspeicher.com : great value investor site. period.

I've been too busy reading books; just finished 'the big short' by michael lewis and am now reading his 'liar's poker'. Also read 'the quants' which I liked too. It's all just flavour.