There are some pretty interesting anomalies occurring in the financial markets these days. It seems like each week a new and unexpected theme emerges that traders should be aware of. In this week’s Top Trading Links, we’ll take a closer look at some trading studies while highlighting ways to avoid market underperformance as an investor. Let’s get to it!
Market Insights
- We’re in rarified air as the S&P 500 yields more than the 10 Year Treasury. @MktAnthropology offers up a thoughtful look at what this means for the markets moving forward. The one year returns for stocks when this occurs have been incredible, averaging 30 percent gains.
- @AlmanacTrader points out that negative Januaries have a slight negative effect on February. It’s pretty interesting that a negative January in the NASDAQ Composite has only led to a positive year to date return at the end of February in 2000 and 2014.
- @JLyonsFundMgmt looks at Wednesday’s unique 90% downside day. Oddly, there were more NYSE new highs than lows.
- @Likefolio nailed this call on Deckers Outdoor (DECK) earlier this week. They don’t make a lot of calls, but lately they’ve nailed the calls they do make. The Likefolio team parses through social data for clues on consumer behavior. Andy Swan and company seem have a solid grasp on it.
Investing Insights
- @fabiancapital reminds us not to confuse our time horizons with our risk tolerance. Every day somebody opens a brokerage account with intentions of investing, only to find themselves trading constantly. That’s okay, but not if you’re actually trying to retire on said funds.
- @Behaviorgap breaks down exposure and risk. He makes a great point in that we can clearly measure our exposure and that’s where our focus should lie. Potential risks are everywhere, but extrapolating them often just adds friction (and cost) to your portfolio.
- @Reformedbroker breaks down the traits of the worst type of investors. Like Josh points out, we’ve all exhibited a few of these traits before. There’s a necessary maturity that is critical in success in most everything, specifically trading and investing.
- @Ritholtz comments on an awesome chart from Valuewalk. This chart really touches on the #1 thing any new do-it-yourself investor needs to understand. The average investor tends to hurt themselves more than they help themselves. It’s an unsettling fact, but owning that knowledge is a solid first step to reducing the learning curve of some common errors.
Other Considerations
- ExploringMarkets.com shared this video featuring world banking leaders including Bank of England Chairman Mark Carney. “Reckless risk taking is built on false assumptions”. It’s a long, but awesome listen for those interested in economics.
- @AdamHGrimes wrote an excellent piece on using spread charts and discusses many important considerations.
Thanks for reading and trade safe.
Follow Aaron on Twitter: @ATMcharts
No positions in any mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
