Archive for April, 2009
Now Really. What Started the Recession ??
By Marek W. Stupka | April 24, 2009
With many investors finally being “sick and tired of being sick and tired”, and with some macros evidently showing signs of bottoming, winds of hope are being blown into the sails of the capital markets. Looking retrospectively at the mess behind us, people ask: What has really caused this?? What’s started the recession, in the first place?
There are, of course, many theories trying to answer this question. In any case, I don’t believe the recession trigger was a highly-complicated matter that only a limited number of carefully selected economists has the right to understand.
I believe everybody should know what the recession trigger was to really understand the current status-quo and the possibilities for the future. I also believe we should all do our part so that similar things won’t happen in our future world.
First of all, the 2008-09 recession had been caused by greed. By limitless, uncensored greed of the top managers and owners of the biggest financial institutions, mostly in the USA but also in other countries of our Western world. To be specific, let’s just mention one genuine example of a financial giant that has: A. Played its part in triggering the recession, B. Had to face the music and pay the price when the crisis hit.
A perfect example is the former biggest insurer in the United States - American Insurance Group. When the storm came, AIG was two companies. One was a rock solid insurance company. It made money the old fashioned way. It had terrific management, and offered steady, quality insurance. Its tables were not fraudulent, it was insured by the states and heavily regulated. This forced AIG to be above board and had a regular earnings stream. It made money over centuries! Not a lot of companies can say that.
Now the top managers and owners of the AIG group took this triple-A-rated company and decided to throw a giant hedge fund under its umbrella. The whole motivation was pure, irresponsible, non-censored greed of the AIG big sharks. If it worked out, they’d all have made billions of dollars. Unfortunately, the risk was enormous - and it just didn’t. The people who set up this hedge fund literally rolled the dice on the whole company.
Now, let’s wind down the whole thing. This is the same frustration with Citigroup and Bank of America, the same story you hear from other banks, insurers, even non-financial institutions all over the globe, too. We all now pay the consequences for the fact that somewhere, sometime not long ago, some monkey boss decided to “roll the dice” and jeopardize an otherwise sound and healthy business by creating a hedge fund right next to it under the same hood - that sucked out all the money from the healthy operations once the recession storm finally hit both of them !!
The real problem, of course, was not the existence of the hedge funds themselves, but the extremely risky assets they unanimously began to invest in, since “everybody had been doing it at the time”. It was that being a “monkey boss” became a new fashion among the big sharks…
Another reason to the recession was the governmental tolerance of extensive indebtness, either institutional or individual, caused by the fact that what the former US Government really stood for was - when we peel down all the rubbish - the war itself. But I have already expressed my views on this issue several times, feel free to search the Archives to find more.
So you see, for the future, it is up to every one who is in the top management position to simply realize the consequences of accepting a risk level that is too high. And here as well as in trading, by the way, the same principle applies: IT PAYS TO STAY CONSERVATIVE. ESPECIALLY OVER THE LONG HAUL. IF YOU WANT TO AVOID YOUR PERSONAL RECESSION IN TRADING, YOU SHOULD KEEP THIS SIMPLE RULE !!
Topics: Miscellanous | 3 Comments »
As Forecasted, EUR Continues to Gain !!
By Marek W. Stupka | April 2, 2009
Those traders that have listened to my long-term forecasts predicting EURUSD to rise long before it did (old posts can be found in the Archives of this blog) are now several hundred pips richer. Let’s look at the charting...
The bullish convergence scenario in the 1W chart proved to work as smoothly as it was foretold. In the 1D chart above [ click on the picture to get a bigger chart ] we can see that my forecast came out at the very bottom of the long-term price action.
Note that there’s another bullish convergence, agreeing with the indicators, this time in the 1D chart above. This simple technical setup suggests a continuing movement to the north in the days or weeks to come. However, I’d be a little more careful this time - the referential currency pair nears its long-term Resistance found in the weekly chart (not charted in here)…
N.B. Those of you who do not understand what the crap we are talking about are welcome to apply to my 1-on-1 course where Convergence/Divergence Scenarios are explained in great detail.
And, as usual, be advised that what is being presented to you here is a very simplified technical analysis, and you are under no circumstances advised to understand it as a trade signal or recommendation. To actually deploy a trade, you should have it backed by a full-scope technical examination, that we at Gepard Investments, Inc. like to call the Trading System, following a clearly defined Trading Plan.
Now, in order to master and deploy a working, back-tested GEPARD trading system (either short-, or mid-, or long-term) you need the access codes to enter the community of GEPARD traders. Feel free to send me an email if you have any questions about joining our community and participating in the 1-on-1 Training.
Topics: FOREX Trading Analysis | No Comments »