The Van Tharp Institute |
March 21, 2007 � Issue #313 | |
Home | Workshops | Products | Contact Us |
||
Do Not 'Reply.' Click Here To Email info@iitm.com. Tharp's Thoughts Weekly Newsletter |
Thank you for subscribing to "Tharp's Thoughts" |
Workshops Back-to-Back Core Training Coming in April
Feature Article Market Efficiency Portfolio Update, By Van Tharp
Trading Tip The Volatility Cometh, By D.R. Barton, Jr.
Recommendation Tax Time for Traders, Here's a Resource You Can Use
Melita's Corner Which Face do You Put On?, by Melita Hunt
Oops we missed an issue! We apologize that you didn't get an issue of Tharp's Thoughts last week. Our production manager was out sick the whole week. It's one of the few issues we've ever missed in more than 5 years of publication. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Workshops
Coming in April Back-to-Back Core Workshops One trip to Cary, NC for six extraordinary days of training. The combo discount saves you the most!
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Feature
Tharp�s Thoughts Market Efficiency Portfolio Updated March 12, 2007 By In preparation to leave for a trip, I prepared this report a week early. I was curious to see what last week�s China sell-off did to the overall market efficiency. The bottom line was that we didn�t get stopped out of anything, and the market decreased in efficiency, but not that much. Overall, the market dropped from over 70% positive efficiency to 65.3% positive efficiency. And the number of stocks ranked over ten decreased from over 200 to146. Nevertheless, the market is still very positive as shown by the chart below. It�s still difficult to find a good short candidate with only 24 stocks below minus 10 in efficiency. Fortunately, we were not stopped out of any stocks, so I don�t have to make any changes to the portfolio this month.
ALB has split two for one. Rather than confuse people I have kept the unadjusted price in the table. Last month, I mentioned that it was �probably a dangerous time for our portfolio because if the market suddenly reverses, we could end up giving back much of our open profit.� And on Tuesday, February 27th we had a shock to the portfolio. Amazingly, we were only hurt significantly in our two Asia based stocks, SGF, our new addition last month and CHL, our China stock. However, neither of them were stopped out. As a result, our portfolio remains intact and I do not plan any changes for this month. We�ll let the Asian stocks play themselves out for another month. One of our stocks, MWP has now reached a 3R profit, which is the way the portfolio is supposed to work. All of the closed out positions to date are listed in Table 2.
Overall Commentary: Although I didn�t look at the portfolio after February 27th, I had assumed that we were stopped out of a number of our stocks. Had that been the case, I would have closed the portfolio down to start determining what was wrong and how it could be improved. However, we were not stopped out of anything, and I have decided to keep the portfolio running through June. That will give us one year�s worth of data on the portfolio. I am somewhat disappointed in the portfolio at this point because we should be hugely profitable. We�ve been through a mini-bull market that had seven up months with no significant corrections and even what happened in February doesn�t really count as a correction because the total down movement was less than 10%. As a result, we should be up significantly. Instead, our portfolio is down $1298.99 on March 12th or about 6.5%. At least one person has said that following the portfolio was a total waste of his time, but what he didn�t realize is how much you can learn from what doesn�t work. And at this point, I�m pretty sure that just a few changes to how the efficiency portfolio is done could make an immense difference. The efficiency method has already proven itself. Even in 2001, in a huge bear market, the efficiency portfolio was making money being long only. But I made some changes to the way we did this portfolio that I thought would improve things. Those few changes might have made a huge difference in the effectiveness of the portfolio, so we�ll be looking at that this summer. Until next month�s portfolio review, this is Van Tharp.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Volatility Cometh By D.R. Barton, Jr. Right up until the end of February everything was just hunky-dory for the bullish investing world:
Yes indeed, steadily rising markets with low volatility were making trend followers everywhere look like geniuses. CNBC trotted out guest after guest who proclaimed the wonders of it all; the roaring 2000s had finally come to roost. Then a funny thing happened on the way to the celebration. Markets got overextended. Investors got complacent. And the markets took a plunge. And after Tuesday, 3/13/2007, it looks like the plunging is not over. And equally important for many investors and traders, it looks like volatility has come back with a vengeance. In fact, daily volatility is at its highest since the fall of 2002! This brings both opportunity and challenges to traders. Day traders are LOVING this! Markets with this much daily range provide multiple profit opportunities every day. Enjoy it while it lasts! Swing traders and intermediate-term traders often have to suffer a bit as their systems adapt to wider swings in shorter time frames. A prudent course of action may be to shorten the look-back periods on your volatile indicator (instead of using the standard 14 periods for an AverageTrueRange calculation, use 7). This will allow the system to adapt more quickly. Long-term traders may find that they�re getting stopped out quickly on positions due to the quick and deep moves. This is a tenuous time for long-term traders because it�s tough to tell just yet if this is a trend change or just a fast pullback. In all time frames, if your systems don�t have parameters that adjust for volatility (for example if you use % stops or targets) then you must take extra care especially with volatility being 2.5 times what it was two short weeks ago! Great Trading! D.R.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
It is Tax Time Again... We often get emails and calls from our clients concerning their taxes. As all of you know, Van is not an accountant or tax guy and we can�t really answer all of your questions. The best advice that we can give you is to refer you to one company that has specifically been in the business of helping traders with their taxes for close to ten years - Traders Accounting. As an active trader, if you are having problems understanding what forms to use and how to file them and if you are interested in finding someone who will get your taxes done correctly and keep you out of trouble with the IRS, then please take the time to visit them and see what they have to offer. www.tradersaccounting.com/2006tax
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Which Face do You Put On? by Melita Hunt Van and I were just in Phoenix at the Investment University conference. I always enjoy these couple of days away because I get to see people that I haven�t seen for a year, and I get to meet a lot of new people. There are over 300 people attending and a plethora of speakers and companies selling their wares. I spent most of my time in the exhibit area, watching the faces of the people attending the conference and it always fascinates me to watch their responses and reactions to the subject of money and finances. Some people take the subject of money SO seriously. They actually walk around with a look of pain on their face. The expressions range from confusion and befuddlement to stress and desperation. There are frowns, wrinkled foreheads and pursed lips as people try to decide which sessions to attend, who to talk to, who to believe and what to invest in. On the flipside, there are the smilers. The group who just takes it all with a grain of salt. They wander in calm and relaxed, they come and chat to me about all sorts of subjects and enjoy their experience. There is no hurry, no stress; they are simply here to learn, gather information and decide what is useful. So what causes the difference? Is it a confidence about money or do they just not care as much? Whatever it is there is a distinct difference between the two groups. So which face would you put on? Does the subject of money cause you stress, concern and bewilderment? Are you searching for the Holy Grail or a miracle answer from someone to fix this area of your life and need to have that answer NOW? Or do you have an abundant mindset and confidence about your finances, knowing that money will always flow in and out? Knowing where you are �coming from� could make all the difference between a life of smiles or a life of frowns.
You can contact Melita at mel@iitm.com |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Do Not Reply to this email using the reply button as the email address is not monitored, your email will not be seen. Please click this link to contact us: suggestions@iitm.com The Van Tharp Institute does not support spamming in any way, shape or form. This is a subscription based newsletter. If you no longer wish to subscribe, Unsubscribe Here Or, paste this address in your browser: http://www.iitm.com/privacy_policy.htm
The Van Tharp Institute |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Back to top
Copyright 2006 the International Institute of Trading Mastery, Inc. |
.
.
.
.
.
.
Quote: "There's never enough time to do all the nothing you want." ~Bill Watterson, Calvin and Hobbes |
.
.
.
.
.
.
.
.
.
.
.
.
.
Free Trading Simulation Game A computerized version of Van's famous "marble game." It is designed to teach you the important principles of proper position sizing. Download the 1st three levels of the game for free. Register now. |
.
.
.
.
.
.
.
.
.
.
.
.
Tharp
Concepts
|
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Free Downloads. Handbook for Traders and Investors
|