Well that was quite a start to the New Year wasn’t it? I’ll blog about that separately. I said I would go through some of my thoughts on last year and plans for this year.
Part 2 Method:
2015 Learning points:
FX: STAM worked well:
Kept me long dollar all year
Kept me short the ComDolls (CAD, AUD,NZD)
Kept me clear of any CHF damage
Kept me out of most of EUR Chop
GBP was an interesting year – its was strong against everything but the dollar
In the past I just focused on the 28 currencies of the majors.
What was new to me was back in 2014 I started to look at USDRUB in Q2 of 2014 (based on the geo-political, fundamental, technical and sentiment of the time). This led me to investigating the other available BRICS and EM currencies with some serious intent. 2015 was my first year of adding them to my trading watchlist. In particular what I added was:
USDCNY (I only watched this – I did not trade it – because I still don’t ‘get’ it, but I recognise its important to he overall market.)
I was very lucky that last year was a fantastic year for being a USD bull (see comments in my first ‘Reason to be cheerful’ piece.) I blogged and presented about those Brics / EM currencies throughout the year. Trading them went well…..but I traded them at miniscule size, and I suspect that, with ever-glorious hindsight, that 2015 was probably their best trading year for the next ten years! It was pretty much one-way traffic.
So what did I learn that I can use for 2016?
Well I think I should start to investigate the Skandi’s (NOK, SEK and DKK) and see if they’re worth adding to my watch-list. When I first started using the strategy of STAM 6-7 years ago the skandis were a pretty thinly traded bunch. That has changed and now its possible to look at them in terms of STAM.
Furthermore I realised that I had misse dout on chances to really milk some of the DOminant trends within the markets. I have for a good few years now built synthetic positions. What I realised was that when a huge dominant trend was in full flow due to a structural change that not only would t impact the FX, Indices and Commodities markets but also the sector and specific equities.
If you look a the major trends of Dollar Bullishness, commodity weakness and EM bloodbath there have been opportunities to really drive home the trade.
Take a look at Glencore over the last 12-18 months- its been slaughtered by the market as the commodities boom imploded. Its dropped from 520 down to 73p – there was a lot of gravy to be had for a bear like myself!
Or take a look at BHP Billiton’s Share price over the last few years. In particular its fallen off a cliff from 2000 – down to 635 as part of this commodity down turn.
So going forward I’ll be focussed on
28 Major FX pairs
Major Indices & Commodities
BRICS & EM
All the while adding some investigating into:
A special situation fund (investigating the ways to truly play a major Dominant Trend).
So plenty for me to be doing then!!
In my last piece I talked about how we had reasons to be cheerful. Well to continue this theme of music from my youth, and in a nod to yesterdays passing of the legend that is David Bowie I can say that this will be a year of Ch-Ch-Changes
Any thoughts or experiences of ‘special situations’ trades/funds would be appreciated.