TRYING TO OUTGUESS THE MARKET MOVES

This is a part of human nature to find answers for uncertain things. We always love to create ideologies why the market needs to go down or why it needs to go up. We don’t like the uncertainties in our life, so we hate this in trading too. I have predicted many times in my first period of trading career. But I don’t do that anymore. Why? Because it is not possible to predict the future, we are only guessing. As John Bogle’s old runner colleague said „NOBODY KNOWS NOTHING”.

Most of traders are looking for gurus who always tell the truth. They can’t accept the fact Mr. Market more complex than could be ever forecasted. Beacuse it is dynamic random system always with at least two scenarios.

We use different forecasting systems. Fundamental analysis or technical analysis with hundreds of indicators. But I have never met a person who had 100% hit rate. Nobody knows what holds the future. All type of analysis only tell us what happened in the past or what happens now. But any of them not able to show the future. As George Soros once said ”It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." That is the point. I never care about I am right or wrong. What I only care about is the size of the profit or the loss.

To place a good investing decision we have to accept the uncertainty of markets. If we are honest about it we won’t fight with the market anymore. I found a great statistics that there are no gurus. Mark Hulbert of the Hulbert Financial Digest analysed the top-performing newsletters from 1986 to 2010. They found that they underperformed the SP500 by 2.6%. But still today many investors use them and convinced they have found the way to reduce the uncertainty of Mr. Market. They create a fake sense of certainty.

There is another problem with the gurus, signals and recommendations. You are able to avoid the responsibility for your decisions. You are pushing away that. If you make money you say ok that is great I knew that. But if you lose you will say the bastard guru is made a bad job. So it is not your mistake but the guru, signal or newsletter’s mistake. This is typical approach by human investors.

Accept the fact that Mr. Market is more complex than anybody can predict and realize that no one knows exactly what market will do. As Warren Buffet said “I don’t know what the market does next week or next month or next year. What I only know what will do in 20 or 30 years.”

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

FIRST BITCOIN ATM MADE 100K CAD TRANSACTION IN 8 DAYS OF OPERATION

That Bitcoin ATM in Vancouver in the first 8 days of operation conducting $100,000 (CAD) worth of transactions. This number issued by Robocoin, that firm is the producer of that machines. Robocoin goal is to make Bitcoin accessible for everybody around the world. They just sold five machines for $20k each. The plan is to settle new ATMs in Toronto, Montreal, London and Berlin.

The very first of Bitcoin ATM was launched in a Vancouver caffe last week. The only requirement that you use biometrics in order to access the machine, a palm scanner. But there is another company Lamassu which also building Bitcoin ATMs, the difference is no require biometrics. I do believe these Bitcoin ATMs are break down the obstacles being more popular as an alternative currency. Recently the users mostly use for buying in 80% and just 20% wanted use for selling their Bitcoins. The transaction fee is quite high 3-5%.

Currently the Bitcoin price is at 330$. It looks a bubble but everybody said the same at 100 and 200 so we never know what is the highest price.

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

NO RISK, NO RETURN

In other words risk less means return less. Many of investors, traders are scared to pull the trigger. They scared to enter into the market, because they lost at least once before in his trading career. Most of the traders are remembering well for 2007/2008 Credit Crunch’s massive losses. So most of us still fear to buy stocks. This kind of investors missed out the last five years opportunities and the rally.

Blackrock released a survey which shows clearly most of investors are afraid, remembering well the 2007 crisis. This survey says 48% of assets still held in cash, 18% in stocks and 7% in bonds.

The typical investor recently is ultra conservative, still not buying stocks. “The dramatic stock market decline from October 2007 to March 2009 appears to still linger in investors’ minds,” says Sarah Holden. The SP500 since January gained around 24% which is brutal, but in longer term in a decade the SP500 only did 5% per year. Which is ironically not enough for a normal investor. That is funny. They want to make more than 10% per year.

What I recommend to investors now. Pull the trigger because the bull market started 4 years ago, that is true. But if the bulls are really strong they can exist much further than 4 years. After the post war period they gained for more than 20 years.

Now we are at Schiller PE ratio 24,4. At the Internet Bubble 1999 this ratio was over 40. We are still far from the bubble sentiment. The median is around 16, and we are above that level but not extremely.

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

JESSE LIVERMORE - LEONARDO OF TRADING

Maybe some of you are aware I am a great, great fanatic of Jesse Livermore. But I am only a small and fake epygon of him. But I learned most of my trading knowledge from him. And I extremely sure that most of the contemporary traders are effected by him. He is not ignorable at all. I don’t fully believe in Thomas Carlyle’s Great Man Theory, that the History is the result of actions of heroes and geniuses. But in history of trading I do believe great traders and investors like Livermore’s life and career give us guideline how to trade and they changed our market knowledge.

There is never enough story about him, so I recommend that article for today by Eddy Elfenbein.

www.crossingwallstreet.com/archives/2013/11/the-devil-in-jesse-livermore.html

and a video about his life:
http://www.youtube.com/watch?v=tz_Asqh8pbs

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

BE FEARFUL WHEN OTHERS ARE GREEDY, AND BE GREEDY WHEN OTHERS ARE FEARFUL!

In 2007/2008 I will never forget everybody was concerned and desperate, including me. That was a real scary period of investors. Seemed that here is the time the collapse of Capitalism. I know one guy who was contrarian and started to buy in the dips.

Yes, he is W. Buffet.

He bought stocks for his personal account. Many of us did not follow him. He said in 2008 “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful,” ... “And most certainly, fear is now widespread, gripping even seasoned investors.” And he was absolutely right about the fear. Most of us were fearful and paralyzed to buy anything.

Since that time the DJIA has gained with 88% and is on new historical high, the SP500 has doubled and it is on new records too. When Buffet recommended to everybody buying most of us left the market for many years and just now starting to get back. The typical average american investor keeps their 48% money still in cash and just 18% in stocks.

And what is the common sentiment now? There is a feeling of „We missed the rally” and recently and slowly the investors get back into the market. American investors so far this year have invested $106 billion into equity funds.

My lesson from that story is the following. Be contrarian. Buy when everybody sells and sell when everybody buys. That is the art of the investment.

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

IS THE 2013 BULL MARKET EXTREME IN HISTORICAL WAY OR NOT?

Most of the investors are concerned and sceptical about the future of this bull market. They think the market is generally overbought and shortly needs to come a huge correction. Below I want to prove that the markets are not in extreme zone. This year 24% SP500 gain is absolutely not unique.

If you look at that chart right below you can find the 24% is not special at all. In many many years were more than 24% gain. I know it happened only twice since 2000, in 2003 and 2009. But it might be a good signal. If something not happen so often it means the possibility is higher to occur again. The highest gain was between 40-45%. It is not possible to hit that percentage within 2 months remained but might be over 30% easily. One of my rule says if some trend get started we never know where and when ends. Remember that.

All in all 2013 is a very typical year for the stock markets. The 20-25% return is second most common data since 1927. Most of the traders are looking forward after this kind of year will be followed by falling movements. The fact is the opposite. Historically seen that after 20-25% return, the market keep continues the gaining in the couple of following years.

If we look at the chart of five years annualized return. The 2013 performance proves the same. From the end of 2008 until now, the return falls back into a common, 15–20% range. Which is a business as usual. So don’t belive that mantra the prices are in extreme levels, it is historically and statistically not proven and not true.

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

Summary of 2013

The bulls are strong so far and having a great run. Remeber we had Fiscal Cliff in December/ January and  in October Debt Ceiling anxiety. In April Cyprus Bail Out. But the market ignored all the bad news so far. Beside the quiet summer months in each month we saw new historical highs almost in all markets. This week there were new records again.
DJIA up 19%
SP500 up 24%
Nasdaq 30%
Nikkei 50%
Just look at the chart it tells everything (by CNN)

Do we have any warning signal?
Yes, we always have. That is the part of the trading. If everybody would ecstatic it could mean the end of the bull market. Now many analyst and market actors are crying about the bearish scenario. Forget that guys. You know how many times I have heard this same argument in the last 2-3 years and just look at the chart. They were wrong.
They are complained about the PE ratio, abut the bad earning numbers ... etc. They are scared when occurs any correction. But this is the behavior of Mr. Market. Markets are pulled-back and paused always. This is a forever rules of markets. From technical point the market just made a breakout after 13 years of consolidation. So, I do believe this is not the end of rally.
So again and again, the indexes and stocks are traded near record highs.