Betty L. - Freshman Equities Trader

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Overall, A Productive Week
Posted by Betty L. - Freshman Equities Trader on Jun 18th, 2010 5:10pm

I'd say that it has been a productive week.  The S&Ps made a slow grind higher, closing up 2.4% on the week.  The markets were tame, the VIX continued on a downtrend, and volumes remained modest.  But more so from a business perspective, this week has been productive for me.  I did not necessarily grind out more work than usual.  But I did gain more clarity in terms of how I should be working at this firm. 

I will continue to turn to the principals for insight and projects and to learn as much as possible from them.  My appreciation has grown for the principals' willingness to teach and mentor the freshmen.  I know that the real world does not function like this so in that respect I value the collective intelligence approach of our firm.  Additionally, I will assume greater ownership of my learning process.  Of course, even without my initiative, the environment at this firm will naturally provide plenty of learning experiences for me.  However, I will give more direction to what I learn by seeking learning opportunities that I gravitate towards on a personal level and will learn with intention as opposed to just for the sake of learning.  I will continue to push myself to create a balance between focusing on the content/media aspect of our fund and getting involved in deliverables that will engage me in the study and analysis of technicals and fundamentals of the market.  And with that I'll say have a wonderful Father's Day!

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Waiting on the Sidelines
Posted by Betty L. - Freshman Equities Trader on Jun 17th, 2010 6:18pm

Most of the views that we've been hearing are bearish.  People want attention and recognition, and they typically won't get it by painting a rosy picture.  I guess that's why it caught me off guard when I saw predominantly bullish commentary on the Yahoo message boards that I go to each morning to post our market recap notes.  Does it have something to do with the mentality of the everyday investor as opposed to that of a spotlight-seeking analyst?  I believe that the everyday investor would like to cling on to hope, a bullish view, the "things will work out" mindset.  Maybe they don't have the heart to short the market, as if they'd jinx the market by becoming a bear. 

I'm still undecided about market direction.  When I'm listening to Klein and our permabull CEO, I feel reassured for the rest of the trading day.  But when I hear the bearish calls of Nouriel Roubini and Meredith Whitney, I find myself wondering whether I could possibly question their analysis.  I still have not clearly labelled myself as a bear or a bull, although our streak of higher highs and higher lows in the Spooz for six consecutive days looked very promising to me.  Today we broke that streak and so we'll have to see in the next couple of trading days whether the market can continue on an uptrend. 

I know my indecision sounds like a cop out, and even to me, it sucks that I can't have a defined opinion.  But as I mentioned previously in a blog, I refuse to form an opinion without my own substantial indicators; in other words, I refuse to form an opinion based on BS.  So until then, I will continue waiting on the sidelines in hopes that the market will show its true color very soon.

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Rich or Overleveraged?
Posted by Betty L. - Freshman Equities Trader on Jun 16th, 2010 4:19pm

As I try to keep up with the luxury goods market, an article in Businessweek about Ermenegildo Zegna caught my eye.  Zegna is a private Italian menswear company, providing suits to brand names like Gucci and Yves Saint Lauren.  China is the largest buyer of its fabric and accounts for 1/4 of the company's annual sales.  The popularity of Zegna helps bring to light the upward trend in luxury spending in China, which  Bain & Co. estimates will grow 15% this year, that is over $11.3B.  On a global scale, the $187B luxury industry is expected to grow 4%.  Interestingly, these numbers do not imply that all luxury companies will have similar success in China.  Companies that have manufacturing plants in China like Hugo Boss and Armani were not as well received as the Chinese had a tendency to perceive products made in China as fake.

Zegna seems to be playing off another concept as well.  The article cites that Chinese who are middle class view themselves being on the way to total affluence.  What?  That sounds a little presumptuous.  Isn't that the type of mentality that got us into this overleveraged situation in the first place?  People spend more money than they actually have.  And so I wouldn't jump to the conclusion that a boost in luxury spending translates to an improved outlook on the economy and wealth of those across the globe.  A word to the wise- as the Real Housewives of New Jersey star Teresa Giudice wisely once said on the show, don't spend money you don't have.

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Learn What You Want to Learn
Posted by Betty L. - Freshman Equities Trader on Jun 15th, 2010 11:52am

Last night I had a phone conversation with a friend who works for one of the top three largest hedge funds just to get further insight into this industry, not from a market perspective, but a career one.  I find it interesting that experienced professionals in this industry always stress personal tastes and personality, which I've found somewhat frustrating when I'm looking for more fact-based, actionable answers.  By "actionable" I mean that I want answers that will clarify next steps for me, that will help me improve and bring me closer to my goals.  Instead, I tend to get more abstract answers about personality and whether this business is a good fit for me, personally.  Similarly, Mosk and Shine talk frequently about the psychology of trading.  In this sense, I believe there is a wide gap in mentality between those who are just at the beginning and those who are in the middle or at the end of their careers.  The relatively new entrants to the job market tend to think, Get the job first, then decide how you feel in that position.  I stand by my belief that there is nothing terribly wrong with that mindset.  Maybe it's because I'm adaptable, or maybe it's because I realize that there is no time to "shop around" given that the job market is not like it used to be at all.

Nonetheless, the key takeaway from my conversation with my friend yesterday was to make sure you know what you want to do.  Many of his friends, and I suspect many in this business, hate what they do.  So when people bombard him with questions like, "How do I get on the buy side?", he asks whether they even want to get on the buy side in the first place.  If you're a people person, get out of this business, and though it is a fairly generalized statement, I'd agree with it.  If you want to be a research analyst, make sure you absolutely love reading and won't mind being cooped up behind stacks of articles and financial statements.  Tidbits like these were useful reminders to take a step back and examine what you're doing.  I guess my frustration stems from my belief that I don't question whether this business is right for me (it is), and I don't feel that my psychology will be a major stumbling block in my trading.  In that case, my friend advised that I continue to learn, even on my own outside of work, and learn what I want to learn.  This business is about what you do and what you know how to do as opposed to other factors like where you are.  Just some motivations for the young buy side trader and analyst.

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Uncertain with a Hint of Bullishness
Posted by Betty L. - Freshman Equities Trader on Jun 14th, 2010 12:44pm

The world seems to be extremely divided with the bears firmly on one side and the bulls on the other.  For those who have seen the latest cover of Newsweek, you'll know that there is a picture of a ridiculous looking bear smack in the middle with the word "GRRRRR!" accompanying it.  The feature article highlights the views of forecasters of the likes of Nouriel Roubini ("Dr. Doom"), Nassim Taleb, and Meredith Whitney, who remained bearish during the period leading up to the 2008 crisis.  They are still bearish in these days of the European debt crisis and banking reform, among other fear-invoking events.

I can't help but feel discouraged by articles like that.  But on the other end, you have a Newsweek article stating that fears of a double dip recession are overblown, that the market recovery is, in fact, real.  It's proven to me that as an amateur to this business, my mind is still so impressionable.  I thought I was bullish, and to a small extent, I am.  But now that I've fully realized that I am just plain uncertain, I prefer not to label myself as a bull or bear.  I'm not going to pretend to be one or the other when I don't have substantial indicators that give me the conviction to join one party over the other.  Hence, for now, I'll have to remain uncertain in my market outlook, only choosing to say that I'm bullish when I'm forced to pick sides.

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Bullish at 10:30am
Posted by Betty L. - Freshman Equities Trader on Jun 11th, 2010 10:34am

I have to say that it's refreshing to see the World Cup on TV instead of the morbid news we've been seeing as of late, not to mention the BP oil spill box that's been glued to the CNBC channel.  I hope Klein is right about the World Cup allowing for a grind higher, hopefully until early July.  I don't keep up with soccer, but definitely a sport that's fun for me to watch.  I actually did wake up at those early AM hours during the '02 World Cup- exciting times :)

So currently it's 10:30a, and yesterday Mosk had asked the freshmen to guess where the Spooz would close today.  I had guessed 1070, but as of now, it doesn't seem like that's going to happen.  No complaints here, I'd like to see more green than red for once.  Some of the major stocks we watch took a while to catch up to other names in their respective sectors, e.g., AAPL, GOOG, JPM.  I'd like to see these names catch a bid and end green on the day.  For a realist, bordering on pessimist, like myself, I'm surprised that I tend to hold bullish views on the market.

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Who Cares About Your Opinion?
Posted by Betty L. - Freshman Equities Trader on Jun 9th, 2010 7:56pm

Wall Streeters love to talk about their views on the market.  Will it go south from here or will it rally in a few days, 1 year, 5 years?  Certainly a topic that will never grow old or irrelevant.

I didn't know exactly what I wanted to study in college.  But I knew that I hated writing essays, I especially hated English classes where people would debate literary topics ad nauseum.  I really could not stand how they'd spend so much time arrogantly and stubbornly arguing their views and at the end of all that, the conclusions would always be the same- let's agree to disagree.  How pointless, and if you ask me, nobody gives a crap about your opinion.  I know there are some people at this firm who loved these types of subjects (English, Philosophy, History, and the likes) so I'll stop the bashing here.

I'm sure it has a lot to do with the fact that I'm a results-oriented type of person.  If there was some kind of tangible outcome that came from avidly expressing your opinions, that'd be a different story.  I hadn't thought about this concept with respect to trading until now.  On the desk today we went around the table and stated whether we were bearish or bullish.  Later in the afternoon we also discussed each of our outlooks on the economy.  I was surprised that for someone who isn't too keen on expressing my own or hearing others' opinions, I'm in an industry virtually made up of individual opinions.  I believe that in this business, your opinion does matter.  Why?  Because real results actually come out of forming an opinion, those results being your PnL.  Trades are driven off opinions.  The buyer believes the stock price will go higher and the seller believes the stock price will go lower for xyz reasons.  So while I'll continue to despise pointless and heavily opinionated discussions and debates that lead to no valuable conclusion, I'll freely welcome all opinions in this business (because they actually matter in this context) and from there work on shaping my own sound views.

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A Plan With Flexibility
Posted by Betty L. - Freshman Equities Trader on Jun 8th, 2010 8:20pm

Have a plan and stick to it.  Today is certainly not the first day that I've heard this motto, I'll call it.  After I first heard this piece of advice from Schwartz and thereafter saw how vital it is to trading, I've come to appreciate its value.  Trading is about discipline and what better way to demonstrate it than through sticking to a set plan, or a strategy that works for you.  I feel, however, that it is just as important to add a piece of color to this motto that Shine has repeated on the desk.  Flexibility.  One of his key rules that he stated in our Stock Market Basic Training seminar is to not get married to a trade or direction.  I agree that this point is a crucial one to keep in mind while trading, and one that can easily be forgotten when immersed in a trade.  Hence, I like to enhance the aforementioned motto to "have a plan with flexibility and stick to it."

After the close, Mark M. shared with the freshmen the lessons he learned the hard way during today's trading session.  Again, this motto was brought up.  Mark also mentioned that he follows this motto in his life outside of trading as well.  He said he used to wonder at people who had their lives so meticulously planned out and knew exactly where they wanted to be and when.  Little did he know that he's sitting right next to one.  My entire life up until college was one carefully laid out plan.  Everything--my time, my choice of extracurriculars, my course of schoolwork--was planned out, with intention and logic.  It wasn't as miserable as it sounds; I actually liked having such a precise plan and I was the one who forced it upon myself, not my parents.  Let me fast forward to the end of my days living in this fashion.  I decided to ditch my philosophy of living by a fixed plan when an exogenous event upset my entire 18 year plan.  I can without hesitation pinpoint this day as the worst day of my life.  I still feel anger and frustration boil up inside me when I think about how much hard work and planning went to waste when my plan failed.  That's the thing with having a plan- some events are just out of your control and have the potential of ruining your plan- even in trading.  I'm sure many investors were in the best trades, and then the European economic crisis erupted and fear hit the markets.  So even if you had stuck to your plan, you could not have been saved.  Don't get me wrong- I'm actually still a planner.  But I vow to never get married to my plan ever again.  That is why I'd like to stress the flexibility component for this motto.  So now it's my turn to say, learn from my pain!

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Social Rant
Posted by Betty L. - Freshman Equities Trader on Jun 7th, 2010 9:49pm

If I had to choose only one type of people to be friends with, I'd pick the Wall Street type.  I know, even to me that sounds a bit strange in light of the stereotype of Wall Streeters being arrogant know-it-alls.  But it took one boring dinner with uncomfortably light conversation to remind me why I don't mind, and probably prefer, socializing with people in banking.  Why?  When it comes to trading, to the economy, and to the market, everything is relevant- literally.  You could probably take any topic, whether it pertains to politics or purely to entertainment, and develop a thesis around it.  To me, that is one of the greatest aspects of being in this business and one of the primary reasons why I wanted to pursue this type of career in the first place.  How many professions can make any one individual that well versed in such a diverse range of topics?  Maybe politics, but then again, who'd want to be friends with politicians?

It's a Monday so I'll let myself continue on my social rant.  I kind of caught myself off guard when I noticed that Jeremy's hatred of ambiguity has somehow rubbed off on me.  I realized it when I got aggravated when someone told me that moving to another country was a "done deal" and then went on to say that he "most likely" will move.  How can you say "done deal" and "most likely" in the same sentence?  You can't because "done deal" leaves no room for probability.  In my mind, I just wanted to blurt out, stop being ambiguous, I hate ambiguity.  I know everything can't be black and white, but when it comes to certain matters, there can certainly exist two very clear extremes.  Something works, or it doesn't.  I think trading, in that way, appeals to me.  Because there are always two side to a trade, someone (the buyer or seller) will clearly and inevitably emerge as the "winner", meaning he/she will prove to be correct depending on the stock price movement.  So it goes without saying that I prefer the science part of trading over the artistic one.  Anyway, this will be my first and last social rant, I hope.

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Who's Hiring?
Posted by Betty L. - Freshman Equities Trader on Jun 4th, 2010 4:57pm

On the desk today the principals engaged in a discussion about the weak nonfarm payroll number released this morning and the implications of this poor result.  Actually, I'll have to agree with much of what Dean stated.  I hadn't been on the "Momo Bus" just yet, but my foot was definitely ready to step on board.  I would say that I am long term bullish on the U.S. market and as I am fully able to acknowledge that I am still a newbie to this business, I will admit that I didn't have solid numbers to back my view.  I had formed an opinion based on what I learned from the principals throughout the past few weeks.  I believed that the U.S. economy would be okay, that it was not in trouble.  However, this nonfarm payroll number, which came in at 431K vs. the 521K estimate, may suggest otherwise.  What shape is the U.S. economy in, really?  Well, I'll add a bit of personal color to the job market picture.  My sister, who I believe to be well qualified as a graduate of the school where Klein obtained his MBA from, has been actively looking for a job for two months.  I believe she has gone to at least six interviews.  Firms typically let you know if they have hired someone else instead of you, but they seem to have weak follow ups as of late, giving shady answers as to why they decided to discontinue the interview process.  I do not believe that is typically how the hiring process works, from my experience.  I have heard similar stories for several months now that many companies appear to be hiring more than they actually are by posting job openings and even conducting interviews.  How many, if any at all, they actually hire is another story.  I'm pretty sure this appearance of hiring paints a false picture of the economy, one that is brighter than it actually is.  Again, I don't believe my sister to be underqualified at all so if she can't land a job, I have to question the robustness, or degree of growth, of the job market.

Nonetheless, I am not ready to ditch my bullish view on the market over the long term.  I think right now we are still in weak territory, but once the markets start to pick up, which I believe will happen by the end of this year (hence my estimate for the year-end S&P cash level), we'll be on our way to a slow grind higher.

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