Market
Review
Friday's market was impressive,
to say the least.
EWZ (ISHARE MSCI
BRAZIL F (AMEX:EWZ)) made new
highs: an emerging market bubble, or simply the precursor to the
secular bull market driven by global growth & trade that we have been
talking about for 15 months?
A brave man enters this stock
right here, but the power of the move and the funds driving it are a sight
to behold!
One of our core names,
QUALCOMM, had a stellar day Friday. Wireless suppliers
across the board are in a strong bull trend, partly reflecting all these
dynamic changes underway across the new mega economies of
India, China & Brazil. QCOM has started to outperform the indices
hugely in the last six months after a stumble in early
2005.
One caveat to this latest surge can be seen in the
chart below on MDY, the ETF tracker for mid cap US stocks which has been
on a tear in 2005. Ideally you would like to see stand out volume as the
indices break out. So far we have not seen that at all. So this week
is a big week: the start of Q4 earnings news AND a test of whether
the market can hold these rarefied levels.
Mind, Money &
Markets
A common mistake beginners
make is that they feel that they want to (or need to) trade every day and
thus if they don't feel wholly confident in placing a trade, rather than
not trade (which is what they really should do) they place a trade with a
smaller amount when they are feeling confident, they go over board and put
far too much money up front.. Learning to sit on your hands could be the
most profitable thing you ever do. A futures trader I know taught me this
lesson. He is a highly successful trader who developed his own system from
scratch then secured investment funding from high net worth individuals to
trade the system with big money. He had tested the system with paper
money, but never experienced the emotions of trading with real money.
Within three months he had
lost £75,000. This wasn't his money, but this to him made it even more
stressful. So he stopped, it was making him ill. He re-examined everything
he was doing and double checked the system. Six months later he had
doubled his investor's initial investment. He didn't make a single change
to his trading system. He did however change his trading mindset.
He realised he was over
trading and with that came inconsistency. He was jumping on every
opportunity that came along, not sticking to a staking plan and crucifying
himself for taking a loss or missed chances. In effect he was gambling. He
had no control over his emotions, wasn't recording his trades, wasn't
sticking to a plan and therefore wasn't being consistent. He once
explained to me that consistency was one of the keys to trading success.
If you are trading erratically but winning, you'll learn nothing and
eventually lose your money because you'll never know why you are winning.
If you are losing, but being consistent, you stand a better chance at
profits in the long run because you can track why you are
losing.
If you are inconsistent you
will place a trade, which might lose, then fear will get hold of you
stopping you trading that method again. Next time you miss out on a super
profitable trade because you lost the last time, got fearful and didn't
place it. This "miss" might be even more frustrating – leading to self
criticism and even more stress. The futures trader didn't improve his
system to increase profits, he got consistent. As he said once:
"The
biggest lesson I've learnt is to sit on my hands and not over trade. If
you can take a loss without criticising yourself because you stuck to the
rules or sit on your hands all week and miss out on a "profit" without
flinching because you were being consistent, THEN you are a
trader"
For
individual coaching to help with your trading mindset click here: http://www.truenorthinvesting.com/m3.htm
Active Global Investor
Our Active
Global Investor service has just released its portfolio for 2006. Here is
a preview of one of the portfolio's stocks which maintains its buy
rating.
Korea
Electric Power (KEP)– Purchased
in November for $16. Oil and gas are expensive and will probably remain
so. Alternative energy sources are as yet not up to the job, so that
leaves Nuclear Power. Nuclear power is relatively cheap.
Japan
and China
know it. For example China
plans to build two large plants a year for the next 20 years. Other Asian
countries are turning Nuclear too at a rapid pace too.
India
has said that it hopes to become energy independence by 2030. So whilst we
assume BHP Billiton will provide the Uranium
Korea Electric Power will be building the Power Stations. Its not just new
power stations either. Several Power stations is perfectly positioned to
benefit form China's
commitment to Nuclear Power.
China
cannot rely and will not rely in oil reserves to sustain its growth and
has therefore planned to build on average 2 Nuclear power stations per
year for the next 15 years.
China has no problem outsourcing the power stations to a
company in another country as they've a history of doing it already. This
company is not debt heavy (unlike many big utilities as their business is
capital intensive) and unless there are any nasty surprises the share
price should climb once the mainstream join in.
Active
Global Investor service
Using diligent
asset and stock allocation, the aim is to invest in outperforming growth
& income stocks and let profits run until such point in time when a
companies stock appears extremely overbought, or sentiment for one reason
or another has changed.
The portfolio,
which consists of stocks, investment
trusts, exchange-traded funds, and power shares, can easily be
reproduced by the private investor with a medium sized portfolio.
The portfolio
management team focus on high quality
companies with excellent earnings visibility around the
globe.
For more on
this service, visit out website: http://www.truenorthinvesting.com/global.htm
...& now for a commercial
break...
ETF Trader Service
We are very pleased to
announce the launch of a new service for active, chart-orientated
traders of US & non-US exchange traded funds (ETFs).
Using a blend of
discretionary
and rules based trading alongside candlestick pattern
recognition, True North ETF Trader is
geared to swing &
position traders who focus on charts
as their primary tool.
"ETFs are like a
designated
driver -- you don't have to worry about them," Tom Taggart -- Managing director of Barclays
Global Investors, a prime sponsor of exchange-traded
funds.
ETFs give you almost
unlimited
flexibility. If you think
Europe is a better play than the
U.S., ETFs give you a way to act on that
hunch. If you'd rather fine-tune your strategy to
individual countries -- say you think that Spain is the place to be -- you
can do that too....Since most ETFs require
no minimum
investment, there's no reason individual investors can't
use them to time the
market, or particular areas of the market,
just like hedge
funds. Harry Domash -- San Fransisco
Chronicle
Two week free trial
here: http://www.truenorthinvesting.com/etf.htm
Good luck out there & have an excellent week!
Dane Halling
Dave Evans
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