Haven't read the article yet, but it seems to me that funding liquidity is different from market liquidity. Liquidityblog.blogspot.com is a great resource to learn more about this. Funding liqudity is likely to continue in the longer term because it takes a long time to change the behavior of investors such as the baby-boomer population. Clearly, the trend is to provision for the future by investing heavily. Market liquidity can dry up, however, causing a sharp stock market correction. This can be sudden but it is unlikely to have a material effect on the habits of private investors (private equity) and their hunger for yield.In the longer term, the private equity boom is much more likely to form a gradual top over time, and less likely to peak and fall as the magazine picture shows.
Hi Pradeep,The 'Economist cover indicator' didn't work for calling a top on AAPL. Or do you think it might take a while longer?AJ
I hate to admit this, but everyone was so sure that Apple was topping that I took it as a counter indicator and bought last week. Maybe we need a technical analysis of this.
There are no certain things with any indicator. When Apple did not rally in to launch and did not break down, I also bought it. AAPL was also EP candidate this week.
Fyou are right. In fact the article says exactly similar things. That blog is interesting.
What is your typical $ size for trades? You mention you bot AAPL, on EP event. At these high prices, how much $ would you invest in it? Also, what would your exit point be? Will it be based on a target % move up, or a spefic price target or would you ride it with stops?
$ size for trades is function of risk on a position. I risk typically 1% on a position. To illustrate this Starting equity = 700000Risk = 1% = 7000Stock entry price= 20Stop= 19Amount invested= 20*7000/(20-19)= 140000So dollar value depends on total equity at that time plus stop. I have the in house programmer built a tiny application to calculate this dynamically and earlier used to take exact say 1117 shares kind of positions but nowadays I just round them up approximately.Sometime account will not have that much cash, so I buy up to the extent of cash available. In case of AAPL, I am riding it with a stop.
anyone buy TCN today?i did but i have to admit that i dont even know why it was up so much yesterday.
Thks for illustrating the method. But the stop is so tight, there is hardly any breathing room, so how do u make sure you dont lose 7k (as in this example) each time u use this? In other words, one must be quite sure the stop will not get hit b4 it goes up. How do u manage this?
That was just illustration. My stops is at 3 day low before entry day. If you select stock likely to go up a lot, they seldom have pullback after 4% breakout or EP.Stocks in IBD 200 list and Double Trouble universe generally fall n to that category.
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