Politics and slowly emerging from the dead

I took a brief break from trading after my call on the beginning of the double dip proved to be wrong. That is not to say that I do not believe that the double dip will happen - I am still convinced that this will happen, especially in the UK. I refer readers to read my article in GX Magazine for more details.

I closed my short ESM0 positions at a decent profit of £570, but if I had closed at the bottom I could have realised £870. Luckily I employed a trailing stop. The reason I held the trade for so long following the bounce was that I had intended to keep the position open for the long run if the ‘W’ shape were to be fulfilled. This was not the case, and even though I could have made more money by closing the position when it was in profit, I stuck to my initial conviction. Put it this way, if I had closed near to the bottom, but the market fell even further confirming my initial view, I would be kicking myself even harder than I am now! But that’s the name of the game; you have to take risks to make the big bucks!

I have been watching news of the election in the UK unfold and the sentiment seems to be that we may be heading for a hung parliament (where no one party has an overall majority). This would be terrible news for the pound. I have taken a couple of short sterling trades based on technicals. I will post the graphs another time.

I am in favour of a change in government and that means that I am supporting the Tories, but that is mainly because they are the best of a bad bunch! The fact that they plan to tackle the UK's deficit as soon as possible is a positive step and I think that a continuation of the Labour government would be bad news for the British economy and our credit rating.

I have also taken a couple of short term short positions on the S&P (ESMO - June contract) and the FTSE (Z HO) again based of the technicals - you can see the graphs below.

The portfolio is perfoming steadily with a 20.8% return over the initial investment.

What a week to start a blog!

This is the first of what I hope to be many entries on my weekly blog...and what a week to start!

It all starts with the US Presidential elections which kick off tomorrow. It goes without saying that I am backing Obama to be first past the post...although I am weary of the deep seated discrimination of many of the US electorate. I doubt, despite the indications of all the polls, that the election has already been won. The problem with McCain is that he is too old (just think that if he were elected the US could be one heart attack away from Sarah Palin as president!) and his economic policies are no different to that of Bush's. The US economy needs new ideas and the country itself needs a new front which will accepted into the international political sphere. Obama is that front.

The BoE and ECB are expected to cut interest rates (again) on Thursday following dire economic news in recent data releases. The FTSE100 already seems to be buoyed by the expected cut...which many analysts are expecting to be 50bps.
As the FT have put it, "British and EU monetary policymakers are facing mounting pressure to slash interest rates to historic lows...amid a clamour for rate cuts unprecedented in their brief histories."

Of course the actions of the BoE, ECB, FED and other central banks around the world are a reaction to the Global Credit Crisis. I have had first hand experience of working in the industry during this difficult period which has moulded my opinions which I will document when writing my blog. In short, I believe the government actions so far have generally been poor or without foresight (for example, the US bailout plan - why try to push it through so quickly when the consequences for it failing to go through congress would be, and were, dire?! Add to that the ban on short selling, the nationalisation of Northern Rock, the "rent now, buy later" first time buyers plan aimed at reviving the housing market, the following of a Keynesian Economics policy- sure we can spend our way out of a recession...and the list goes on!), and that things are going to get worse before they get better!

Just a word on Lewis Hamilton - he's the man of the moment! 23 years old and on top of the world!! A legend in the making!

I will be posting my first full entry on Friday and every Friday from then onwards.