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Showing posts from March, 2016

Abnormal Returns "Blogger Wisdom" Series: Investing Roundtable

Tadas Viskanta at Abnormal Returns is running his annual "Blogger Wisdom" post series, and a select group of finance bloggers have come to the table to discuss the hot topics and trends in finance and investing. 

I'm pleased to say that Finance Trends is included in AR's investing roundtable, so this week you'll find me addressing a variety of themes that are a bit out of my comfort zone. Check out this recent finance blogger wisdom post on the rise of index investing or today's update on (the lack of) women in finance and trading for some prime examples. 

Update: Highlighting some under the radar trading websites and books in the final part of AR's "Blogger Wisdom" series.

Special thanks to Tadas and Abnormal Returns for their long-standing support of Finance Trends and the wider financial blogosphere over the past 11 years. Check out the latest Blogger Wisdom series and bookmark AR, if you haven't done so already.

Your Job As a Trader: Manage Your Equity Curve

You can't bet if you lose all your chips, as the saying goes. 

Since our goal as traders and investors is to grow our capital over time (more chips in the pile), I'd like to share a great quote with you that really captures the essence of trading. 

As star hedge fund manager, Steve Clark said in Hedge Fund Market Wizards:

"Your job as a trader is to make the line of your equity curve go from bottom left to top right. That's it. Don't get hung up on other supposed "mandates". Protect your capital and the direction of that equity line."
Market Wizards author, Jack Schwager wrote that he highlighted Steve Clark for his "remarkable performance consistency". Reading those lines again today, I've come to a deeper understanding of how Clark achieved that level of consistency. He was focused on his one true mandate: protecting his capital so that he could continue growing it over time.


If you allow losses to grow, if you suffer huge drawdowns i…

Valeant (VRX) Update: Stunning Losses for Stubborn Investors

Valeant Pharmaceuticals (VRX) is now big headline news, as the stock's downward slide continues to punish investors, big and small. 

Hedge fund manager, Bill Ackman of Pershing Square was reported to have lost $1 billion in a single day due to VRX's latest plunge. Institutional ownership of Valeant's stock was very widespread. As mentioned in our last post, a huge number of hedge funds and mutual funds owned big positions in VRX. Smaller investors may also be feeling the hit in their personal investment accounts or in their pension funds' returns.   

Let's not focus too much on the investors who were unfortunate enough to get burned in this stock crash. The media and the investing world are already having a field day with this debacle. Instead, let's take a fresh look at the chart to better understand why so many savvy investors were hurt in this decline.

As you can see in this updated daily chart (click to enlarge), VRX had been showing signs of distribution (pro…