Answer my first question, and let's see if it's worth your time.
Tuesday, July 8, 2014
Monday, July 7, 2014
In the meantime, the official unemployment rate in the United States has decreased to 6.1 percent, according to the BLS (Bureau of Labor Statistics). For the fifth consecutive month about 288,000 jobs were created, the best progression since 2000! However, there's still the issue of low wages. One of the reasons why the Dow closed above a historic 17,000 points is that companies are raking in profits due to fact that there are low wages, and they're collecting profits from (still growing) emerging markets. Of course they're also still taking advantage of next-to-zero interest rates.
Saturday, June 28, 2014
Monday, June 9, 2014
The volatility index (VIX), also known as the panic index, or fear gauge, is at its lowest level since a long time. At 10.73 to be precise, at this time of writing. Around January 2007 it was around these levels - more than 7 years ago! In fact, I don't remember it even dipping below 10. In any case it looks very interesting to me. This is mainly due to the fact that this level strikes me as insane. Civil war in Syria, unrest in the Middle East, Europe not being able to keep its currency under control and tensions in Asia, yet the volatility index is at it lowest level (ever?). I think any range in the 10 'zone' is a reason to look at this index and be optimistic.
How to play?
But how do we play this trade? I personally like the XIV (VelocityShares' Daily Inverse VIX Short-Term ETN), the VIX backwards (get it) index. This ETN trades like a stock, and goes up when the VIX goes down. The XIV is a short term exchange traded note, which means less risk than the VXX (mid term, not inverse so keep in mind that if the VIX goes up, the VXX goes up as well). The XIV doesn't have options, unlike the VXX that does allow you to trade options contracts.
Thursday, May 22, 2014
Basically figuring out which kind of trader you are determines which time frame you 'like' to trade. Do you think you can profit from quick drops or peaks in the market, you may fall under the category 'scalper'. A scalper applies the so called 'fade strategy' in trading. When there's a quick drop in the markets the scalper buys at the low and sells it quickly when the price of the security goes up just a bit, or the other way around, short selling when there's a spike in the security's price with the underlying thought that the security is too overbought, or previous traders who bought the stock are cashing in on profits. The scalper won't last very long though. It takes a tremendous amount of stress, and it's simply an exhausting technique.
Tuesday, May 20, 2014
The Blockbuster Effect
Think about this logically. Right before Blockbuster video went out of business it did everything it could to stay alive. Promotions, free rentals etc. Yet the competition didn't have expensive stores to maintain. Redbox and such was/is merely a kiosk, a soda-machine like kiosk that pops out DVD's and Blurays. Netflix (NFLX) offers streaming video, no need to physically go to a store and pick out something and then bring it back, many like Netflix followed - leaving Blockbuster in the dust. We all could see this Blockbuster scenario coming from afar. Many other companies had similar dilemma's. Unfortunately, one of my favorite stores, Borders Books coped with the same problem - online competition.
That was all in the past. But what can we learn from it? Well, look around you. We have to keep a close eye on companies that are susceptible to online competition. I think these companies are mainly in the retail sector. Take Staples ($SPLS) for instance. What I said about Blockbuster and Borders back in the day, I say about Staples today. How a company like Staples can survive is beyond me. By the way, that's exactly what they are doing, surviving - that's no way of doing business. Closing stores is usually a bad sign - not so much a cost cutting issue. But doesn't it make sense? Can't you buy the majority, if not all, office supplies - you guessed it - online? Therefore Staples has no future, a good stock to short? You bet! Same goes for RadioShack, which is even more susceptible to online competition, not to mention the competition from other major electronic retailers which offer the same - or better products - for cheaper. The same goes for Sears Holding (SHLD). When I started writing blog posts about Sears a few years ago, telling how this company is going nowhere, it was trading well over $80 a share.
So, most likely companies that mainly sell products that can also be bought online, will go under sooner or later. Another fine example is GameStop (GME) or BestBuy (BBY), all retail companies that will go extinct within the next 5 years, if not sooner. Because why would you buy a product from a specialty store if you can buy the same product for the same price, or even cheaper, from a store 'where you can buy something else too', like Walmart (WMT), Target (TGT) etc. In fact I want to say that Target offers promotions like if you buy electronic product X, you get a $20 or more gift card for free.
Retailers like Home Depot (HD) are less likely to suffer from online competition since their customers are less likely to buy lumber on the internet for example. So use common sense when you look in the retail sector to short stocks.
Whatever the case is, when it comes to shorting stocks, I'm not looking at any other industry but the retail industry. Just for the simple fact it's an industry that's rapidly changing and offers clear direction when it comes to shorting stocks. My shorts this week are Staples (SPLS) and JC Penney (JCP), as soon as the rally on Wallstreet is over, these are the first stocks that will be affected the most. What are some stocks on your short list, or companies that you think will go under in the near future?
By: +John van der Munnik
Friday, April 25, 2014
|Actual screen shot taken from my iPod|
Candy Crush Saga, Level: 1
All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.