Here's the complete record of how my trend-following system has handled GoPro since it IPO'd back in the summer of 2014. Some losses, a gain, but most important: disaster avoided. Again, any institution that has a frayed-shirtcuff chartist on the payroll has to be glad.
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Again, applying my trend-following system to a single stock, this time Valeant Pharmaceuticals. Mr. Ackman clearly doesn't have a frayed-shirtcuff chartist on his staff who can identify trend reversals. For what it's worth, the system got long VRX again in early December; probably will wipe out the gain from earlier, but only time will tell.
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No good live versions so I'm forced to link to this:
More or less finished with the 2014 movies, so I've started on 2015.
Sicario ... didn't like this one. It's a variation on War Porn. Instead of battling A-rabs, the enemy is a Mexican drug lord. The movie is two hours long (meaning at least 20 to 30 minutes too long), and for the first hour you have no idea what's going on. The lead actress, a fashion model who has somehow become an FBI agent, also has no idea what's going on so you're as frustrated as she is.
There's a ridiculous and unnecessary road trip into Mexico to bring back "Guillermo," a brother? of the head honcho. Why not fly him over the border? The only purpose it serves is to stage this gun battle in stop-and-go traffic where a bunch of heavily tattoo'd Mexicans are blown away by Delta Force, or some Special Ops unit (just back from Afghanistan, of course ... I told you it was War Porn). Cut that whole section out and the movie would be shorter and no worse than it already is.
Anyway, the awful thing about this movie (like all War Porn) is that it doesn't just condone extra-legal means to an end, it glorifies them ... invasion, kidnapping, torture, assassination. It's morally reprehensible and rubs your face in it.
(A few logical quibbles for those who have seen it (spoilers): How does Benicio know which tunnel to go up? How does he know the corrupt cop will be delivering a load then? How does he know the little jefe will be traveling on a road near the tunnel at exactly the time he commandeers the cop car? Why does he kill a minor character like the crooked cop? Why does the big jefe only have five bodyguards around the house? And no dogs? How is Benicio able to shoot that accurately that consistently? Why are all CIA agents in the movies flip-flop wearing smartasses? And what's with the final scene? The violence continues, nothing has changed ... is that the point?)
Another viewer agrees ... "I left the film sickened and scrambled..." A.O. Scott also not thrilled: "... less an exploration than an exploitation of the moral ambiguities of the drug war."
Here's my trend-following system applied to Twitter in 2015 ... fairly disastrous, but if it's one of 100 positions, then it doesn't matter. Two bad whipsaws in September and October, but at least out in mid-November and no damage since.
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I don't usually apply my trend-following system to individual stocks since they're so volatile, but I was curious to see where the exit would have been in SunEdison (SUNE). The answer is July 27, 2015 at $25.61. The downtrend that started then has yet to reverse.
I guess the big shareholders of SUNE don't put any stock (ha!) in trend-following systems, but they would have avoided a lot of pain if they did.
(I plan to look at Chipotle, Twitter, and Valeant next, so look out for those posts.)
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One change this week as QID reverses. Please read this post to understand the new portfolio.
Been meaning to do this for awhile, but the New Year a good time to make a clean break. You can see from the correlation matrix below that there was a lot of overlap among the ETFs I followed, and many of them are now so illiquid that they are untrade-able, even on a weekly basis!
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DUG and SCO are highly correlated with the more liquid ERY, so they both get the boot.
DXD and FAZ are highly correlated with the more liquid SDS, so those two get the boot.
MZZ is completely illiquid and highly correlated with TZA, so it gets the boot.
EPV, FXP, SMN, SRS, TYP, YCS, and ZSL are all illiquid -- all get the boot.
Even though QID is highly correlated with SDS, I'll keep it for now.
VXX is very liquid but I prefer to keep the inverse XIV instead.
So that leaves us with: DZZ (gold), EDZ (emerging markets), ERY (energy), EUO (Euro), QID (Nasdaq 100), SDS (large caps), TBT (long treasury bond), TZA (small caps), and XIV (inverse VIX).
This is how the post will look from now on:
I'm going to try to read a book a week in 2016, ok, round it down to 50 books. Emil and the Detectives was actually an Xmas gift to my ten-year-old son, but I read it first. It was charming. Did have some disturbing pre-visions of Nazi youth (book written in 1929 ... four short years to 1933). Favorite line: "Four million people lived in Berlin, and not one of them was interested in Emil Tischbein."
From today's USA Today, a variation on the classic Tumblr: THE BROKERS WITH HANDS ON THEIR FACES
Photograph: Richard Drew, AP