Tuesday, 31 March 2009

Trading the G20

One of the most obvious effects of the credit crunch has been to show the importance of politics in the markets.
These past years, hedge funds and banks have had analysts who were quantitative experts. They were maths grads and number men/girls. These people were the masters of the universe of financial prediction. And they were all wrong, almost entirely, swept away by the mistakes in their own algorithms (there is worthwhile comparison piece to be done here with Global Warming algorithmic predictions, but that is for another day).

Instead, perhaps those rubbished political economists should have had more of a say. Certainly the G20 is a gathering of the world's leaders and will point the market direction for some months to come.

In this situation it is therefore perhaps best to think of the likely political outcomes and develop a market strategy around that. Here is what I will do:

- Short Gold (ETF) - Yup, Gold falls on Dollar strength and economic recovery in other commodity assets like copper etc. My assumption is that the G20 will spin as a big success at least until the weekend. As such there will be continuing pressure on Gold which will see it drop below $900 an ounce.

- Buy Banks and Insurers - Stability as promoted by the G20 will push a further small recovery in these bombed out shares

- Buy Shipping (there is even a UK ETF now) - G20 will push for a resumption and completion of the Doha trade negotiations, this will boost the prospects for world trade and shipping in the short term.

All these trades have a very short time horizon as the events are this week and will probably unravel as countries start to spin success in different ways when the leaders are back home next week. I don't plan to stay in them beyond Friday. I wonder how the quants are modelling this?
UPDATE: Ok, closed out my positions this morning, SBUL, bought at 45.8, currently 47 (not selling yet, Gold might drop further if it closes under $900). LLOY, bought at 67.7, sold at 75, ETFS shipping, bought at 1140, sold at 1171. Aviva, bought 220, sold 245. Everything in the black, but I guess was a good week for the markets anyway. Still satisfaying though.


dearieme said...

To pick a nit, ".. the mistakes in their own algorithms" is not quite right. Their algorithms may have been pure as the driven snow; unfortunately, they were lousy models of reality. Someone - I've seen it attributed to George Box - said that all mathematical models are wrong but some are useful. These financial models have proved worse than useless. As for Climate Science; the modelling there may have started off as inept but much of it has become crooked.

CityUnslicker said...

Dearime, you are right, as per usual!

Anonymous said...


That’s what my professor of geology used to tell us as well when we would stand up and confidently present what the oil and gas reservoir was going to be like based upon our models. But his phrase was "all models are wrong but some are less wrong than others" that always brought us down to reality

Demetrius said...

All models, theories, etc. are based on the past. They cannot be based on the "present" because that is only a transitory moment in time. The future is never the same as the past. There may be similarities, or lessons, or aspects of geophysics or human conduct from which we can infer possibilities, but this is an art. When you try to put human conduct in man made constructs that relate to a past situation into rigorous fixed equations or belief systems then you are asking for trouble. And the more you adhere to a fixed system the more likely you are to go get it.

Sebastian Weetabix said...

Models are only good for hindcasting.

CityUnslicker said...

I was shocked to read that many CDO models could not accomodate a negative number for house price growth. They literally had continual uplift to house prices in the model!

CityUnslicker said...

day one of this position: +3%

Steven_L said...

I'm proud of my last punt too. I bought some Man Group shares at 198.5p a couple of weeks before they annouced their results round up thingy.

After reading their last annual report I realised that most of their senior staff got paid their bonus in stock that was locked in for a few years - in other words the dividend was their bonus and the stock their savings.

I gambled on the basis they would be really greedy, maintain the divi and sacking people. They surprised me by going one step further and announcing a buy-back!

Stoploss is off and I'm in for the ride.

Unless, of course, I've just jinxed myself for being so cocky.

CityUnslicker said...

Thursday Midday, just before G20. Will close positions over the course of friday.

Shipping ETF up 0.5% - pretty poor this etf, no volume in it.

Short gold - up 3%

Long banks & insurers - Up 10%

Anonymous said...

aaaa片, 免費聊天, 咆哮小老鼠影片分享區, 金瓶梅影片, av女優王國, 78論壇, 女同聊天室, 熟女貼圖, 1069壞朋友論壇gay, 淫蕩少女總部, 日本情色派, 平水相逢, 黑澀會美眉無名, 網路小說免費看, 999東洋成人, 免費視訊聊天, 情色電影分享區, 9k躺伯虎聊天室, 傑克論壇, 日本女星杉本彩寫真, 自拍電影免費下載, a片論壇, 情色短片試看, 素人自拍寫真, 免費成人影音, 彩虹自拍, 小魔女貼影片, 自拍裸體寫真, 禿頭俱樂部, 環球av影音城, 學生色情聊天室, 視訊美女, 辣妹情色圖, 性感卡通美女圖片, 影音, 情色照片 做愛, hilive tv , 忘年之交聊天室, 制服美女, 性感辣妹, ut 女同聊天室, 淫蕩自拍, 處女貼圖貼片區, 聊天ukiss tw, 亞亞成人館, 777成人, 秋瓷炫裸體寫真, 淫蕩天使貼圖, 十八禁成人影音, 禁地論壇, 洪爺淫蕩自拍, 秘書自拍圖片,

做愛的漫畫圖片, 情色電影分享區, 做愛ㄉ影片, 丁字褲美女寫真, 色美眉, 自拍俱樂部首頁, 日本偷自拍圖片, 色情做愛影片, 情色貼圖區, 八國聯軍情色網, 免費線上a片, 淫蕩女孩自拍, 美國a片, 都都成人站, 色情自拍, 本土自拍照片, 熊貓貼圖區, 色情影片, 5278影片網, 脫星寫真圖片, 粉喵聊天室, 金瓶梅18, sex888影片分享區, 1007視訊, 雙贏論壇, 爆爆爽a片免費看, 天堂私服論壇, 情色電影下載, 成人短片, 麗的線上情色小遊戲, 情色動畫免費下載, 日本女優, 小說論壇, 777成人區, showlive影音聊天網, 聊天室尋夢園, 義大利女星寫真集, 韓國a片, 熟女人妻援交, 0204成人, 性感內衣模特兒, 影片, 情色卡通, 85cc免費影城85cc, 本土自拍照片, 成人漫畫區, 18禁, 情人節阿性,

Anonymous said...

情色電影, aio交友愛情館, 言情小說, 愛情小說, 色情A片, 情色論壇, 色情影片, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊美女, 視訊交友, ut聊天室, 視訊聊天, 免費視訊聊天室, a片下載, av片, A漫, av dvd, av成人網, 聊天室, 成人論壇, 本土自拍, 自拍, A片, 愛情公寓, 情色, 舊情人, 情色貼圖, 情色文學, 情色交友, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 色情遊戲, 情色視訊, 情色電影, aio交友愛情館, 色情a片, 一夜情, 辣妹視訊, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊, 視訊美女, 美女視訊, 視訊交友, 視訊聊天, 免費視訊聊天室, 情人視訊網, 影音視訊聊天室, 視訊交友90739, 成人影片, 成人交友,

免費A片, 本土自拍, AV女優, 美女視訊, 情色交友, 免費AV, 色情網站, 辣妹視訊, 美女交友, 色情影片, 成人影片, 成人網站, A片,H漫, 18成人, 成人圖片, 成人漫畫, 情色網, 日本A片, 免費A片下載, 性愛, 成人交友, 嘟嘟成人網, 成人電影, 成人, 成人貼圖, 成人小說, 成人文章, 成人圖片區, 免費成人影片, 成人遊戲, 微風成人, 愛情公寓, 情色, 情色貼圖, 情色文學, 做愛, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 寄情築園小遊戲, 色情遊戲, 情色視訊,