That Was The Week Ending 11May

Another Big Up

Well despite my musings, the weak pound and Brent crude price(76.99)  have favoured FTSE. We are a little underwater with contrarian trading,and will explain in Trade79. We often talk of the folly of predicting, but we do need to have a view. Perhaps when volatility is low we should just get long. This seems to have been the pattern since February.

Politics and The Market- Getting Political too!

Political moves have made the oil price jump and further served to destabilise an international peace accord. Perhaps there is a rationale behind this but the EU and USA now have a deep division. Iran can choose its trading partners as long as the world needs oil. I suspect they have invested in infrastructure too and are not heavily reliant on the West. How does this help us in our trading? Uncertainty usually produces volatility, but there are other factors. We live in the age of credit. As long as the UK banks* still have 1/3 of a trillion of other people’s money, there is no panic. As long as interest rates remain effectively negative, things are peachy. We just enjoy the ever  increasing lump of easy credit.

Those Unseen Market Movers

Anyone remember property booms AND busts? Not since the early 90s has property taken a sizeable fall, in the UK. The US was a different kettle of fish after 2008,and many bogus mortgagors were found out. A friend reminded me of the film’ The Big Short‘ well worth a viewing. Property underpins so much of the economy, but the concern is the burgeoning army of Millennials who cannot get on the property ladder. I learned this week, that many middle aged folk are renters in the private sector. Tenants in the private rented sector are insecure in their homes, and nobody has the political will to address this. Tenants and landlords have a two way contract with rights and obligations on both sides, but it’s an uneasy situation. Thus the rental property market may be due for political intervention which might have a domino effect. And not in a good way.

Transparent Factors

Property remains the biggie for us, while the central banks can change their view in a heartbeat. Conflicts, commodity shortages, agricultural and ecological disasters. We can quantify these and take them on board, but it’s always the left field that surprises and clobbers the market. The unknown unknowns.Trading is about dealing with these when they happen, not trying to second guess as we sometimes like to do.

*https://www.ftadviser.com/investments/2018/03/06/bank-admits-qe-policy-has-harmed-uk-productivity/

Filed Under: Strategies

About the Author: First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

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