by Gavin M.
I'm sure you've heard of all the promotions and ads out there touting trading as your gateway to riches and your way to leave your 9-5 job. It has always been hyped up that why would you bother working for a corporation when you can work for yourself. There are some parts of that statement that is true but majority of it is baseless.
Most of us traders were once employed. I was once an engineer, a trader at an investment bank and so on and so forth. The experiences I gained working for corporations helped form the foundations of what I am today. You cannot just simply go at this trading gig without getting some sort of experience.
More importantly, the statement above that said don't work for the MAN and be your own man is largely false. If you are a stock trader, what would you trade if such corporations did not exist? We all have our part to play in the greater scheme of things. Just as not everyone can be a doctor, not everyone can be a trader.
Reality is harsh but accept it. If everyone could be a trader, then why would they all bother promoting other degrees? It is for the same reason that only 1 in 10 people ever become a successful trader. It's a mix of everything you see. You have to have the right attitude. You got to have the motivation. Most of all, you have to have some money prepared for this business. In a world where everyone is encouraged to be whatever you want to be, most people will never want to come to terms with something that they fail to excel at.
The most difficult thing I have ever done in my life so far is to look a student in the eye a few years ago and tell that person that they are just not cut out to be a trader. Of course young people are full of bravado and their egos are easily bruised, they will relent and reject reality.
There will always be those out there who pretend to be a trader, who love the idea of being a trader and who actually live as a trader. Traders don't have a certain look or attitude. Traders are often private people who hide in the shadows of their own home offices and meticulously pore over their techniques day in and day out in the hopes of improving their net profits.
These young kids on Twitter acting so cocky and brave, well, only time will tell if their foolishness will truly yield results. I'm still alive and kicking. The people I knew 5 years ago on Twitter no longer are.
by Gavin M.
I'll try to be as objective as possible in this post. Everybody's favorite stock reports earnings tomorrow. Everyone including their grandparents are going to watch with great anticipation what Timmy Cookie will say to all the Apple drones and investors.
The AAPL chart is below. The highest price target for it currently is by FBR (please correct me if I'm wrong) at $187. Already the armchair, faux MBA twitter millionaire traders are already saying it is still way undervalued at $187. You know, because nothing says it's a damn bubble when a company that has really made NOTHING NEW is worth $187.
I don't mind if AAPL does go up to $200 heck, even to $700 by end of the year. I want to help the bulls realize that dream of having no more down days. With Janet Yellen and her super friends at the bid, why would anyone want to sell? Here's the main reason why I think AAPL, regardless of whatever happens, will always catch a bid: EGO. Everyone and I repeat, everyone on wall street is balls deep LONG Apple shares. They have their credentials, their expertise and their egos on the line. These folks have killer instincts and would never want to be proven wrong. They will average down Warren Buffet style if Apple does drop after the earnings report.
I told you, I am being objective here. The permabear in me would just say I hope AAPL stock dies tomorrow. But I am being practical. What is far worse than shorting a stock at highs? Shorting a stock loved by a vast majority of hedge funds with billions on the line.
If Apple (heaven forbid) pulls back significantly after earnings, watch as the morlocks buy it hand over fist. If it beats, watch as they take it higher a la Netflix. I do not think we have reached peak insanity yet in the tech 'bubble'. Imagine Apple stock as that really popular club in your city. It's way overcrowded, it's way over capacity yet the lineup is still a mile long. Nobody wants to get out, everyone wants to get in. They need a significant event to get people out of there. Usually there are three ways to get people out of a club: 1. A Fire 2. A Fight 3. Party's Over. Not any one of these exogenous shocks have happened yet for Apple and that therefore is the reason why I cannot foresee Apple crashing hard. When I say crashing hard, I mean we hit $90 hard.
Before you say, "Geeze, did Gavin just become a bull?" I will say with a roaring voice, HELL NO. I trade AAPL almost every week. I am not an investor. I am not buying to hold for a long time at pullbacks. Why would I bother worrying about what happens to my investment when I can eke out $1000-$4000 each time I trade AAPL? Take for example my trade on Friday, April 24th. AAPL crashed 50-70 cents at open, I was able to make about 35 cents a contract on my Puts which roughly translated to about $1,700 in profits in just 10 minutes of work.
The recommendation for AAPL is just to be ready. In a stock market where GOOGL and AMZN get rewarded for having horrible earnings, bad is good and good is good. The logical conclusion continues to be BUY BUY BUY. Somewhere, Jimmy Cramer is laughing....
Good luck to all of you on AAPL tomorrow. May the Force be with you.
by Gavin M.
It hasn't been an easy journey for me being a bear these last few years. My neighbor who owns properties here in Santa Barbara throws about $200,000 of his money each year into the stock market. His comments last week perfectly encapsulates the central bank economy: "Gav, I think you're wrong man. This market keeps going up and I keep making more money each time I buy stocks like Apple and Chipotle." When you put it that way, I would not disagree with you. If you have been constantly buying the market since 2010, you would be net positive on your investments. There is no arguing that. This is the result of these idiotic markets - the brazen confidence from investors that their positions will never go against them.
Perhaps selling should be outlawed. Perhaps everyone should just give up selling and just keep buying. There is one clear distinction between my neighbor and I: I am a trader. He is an investor and what he has is the gift of time. Investors are enjoying this market as they continue to buy. As a trader, I cannot hold my position ad infinitum. I am happy for those who chose to be optimistic in this market and continue to buy amid all the bearish noise.
However, here is the one big differentiating trait between my neighbor and I: he has no plans to cash out his profits. This is the type of 'Buy and Hold' mentality majority of investors right now are employing. While it's true majority of retail investors have given up on the stock market, the ones that are still in have no plans of taking profits. My neighbor bought Apple since it was $400 before stock split. He continues to buy each year.
I do not know if there will be a crash soon or in 2020 or in 2050 or maybe never. I consume all market info and make my decisions after the fact. Though I am always a bear, I do not always short each time a stock or the S&P 500 breaks out. But my point here is that majority of investors are always in a profitable state until a bust happens. Take 2007, majority of my co-workers were in profits with their RIM, Apple, Exxon and etc., positions and then it went bust in 2008 before they even took their profits.
Being paper rich does not equal to being really rich. When you are up 50%, 100% and etc on your investments, it may make you feel like you're Warren Buffet but if you do not take your profits and wait for the next opportunity to buy in, then you are just as bad as the guy who leases a Porsche and tells everyone you bought it in cash.
The markets do not pay you until you hit that Sell button. If we do not learn from the mistakes of the past, then we are doomed to repeat them in the future.
Traders from Equity Sense will be writing on this blog on positions and other market-related things.