Overnight winner

It was a mega black swan event yesterday. S&P halted trading for the first time since 1997 and DOW dropped 2000 points. STI closed 6% down. Probably the largest single day drop experienced by anybody who's vested in the markets. 

Stark contrast to my blog title - it's massacre for US stocks

My US portfolio which was beaten down earlier by big names such as Disney, WBA, IBM and FB (already long position stopped out) still cling on to 2 long positions - 3M and FB as of yesterday. Yet when I finally logged in to my SAXO account (after multiple failed attempts probably due to servers overload), I was greeted by a slight tinge of green. *Surprise*
Thanks to my one and only hedge, the 20-Year Treasury Bond (TLT). If only I didn't close out all my marginally losing short positions prior to going on overseas trip, I would have gotten a pasture and not some grass. That's black swan for me.

I closed out all my positions at a slight net profit yesterday when the Treasury yield hit a low point like free fall.

What happens when a pendulum swung too far? It will surely swing back the opposite way. 

And so I spotted a sparkling opportunity.



I decided to do something gungho. I scrolled through my watchlist, picked one of the most "elastic" stock that plummeted (it dropped from a high of 207 on 6th March to 195 on 9th Mar, make a guess which one?) and whacked a long position on CFD. This time I got put on seat belt (cos market now on roller coaster mode) - put in my stop loss point and also a take-profit point based on calculations. Then I went to sleep.

Tonight when I logged in to my account, my take-profit point got triggered. Gain point 5.3%.

Enough to cover for all my previous stupid losses.

:)



When we see a black swan, usually the white one is just round the corner (the white one is called Opportunity).



***
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Comments

  1. Rainbow girl,

    Cool :)

    When we are sitting on cash rotting in the bank or have hedges to protect against OUTSIZED losses, we'll less likely turn into headless chickens...

    That's when we'll have the clarity of mind to spot the opportunity like you did.

    By the way, what you've done is "winning back not the same way you've lost" as shared by qian bei CW ;)






    ReplyDelete
    Replies
    1. Hi SMOL,

      It's interesting how people only "action" when there's black swan event, usually - multiple purchases (it's GSS time!) or chop fingers.

      Now even the treasury bond also cannot be used as hedge anymore. It followed the stock plunges last night. https://www.wsj.com/articles/treasury-yields-climb-to-cap-day-of-wild-swings-11583933972

      I supposed there are more and more people chopping fingers.

      Delete
    2. Rainbow girl,

      Traditional correlations are breaking down temporarily as speculators (big and small) are carried out the trading floor via forced margin calls or liquidations...

      It happened to my Dollar/Yen hedge 2 wweks ago went it spiked up to 112 only to plunge down without me after profit stopping me out :(

      Then last week (and this week) precious metals did not breakout to new highs despite the losses in Wall Street...

      Last night it was the 10 year treasury's turn ;)

      So much for Risk Parity and the traditional 60/40 split between stocks and bonds portfolios...

      Not everyday we see both bonds and stocks get sold off!?


      How to trade with convictions and hold over night positions when one day can down -7% to only rise up +4% the next day?

      I"m "forced" to become an intraday trader as my stops keep getting hit all time!

      LOL!


      Delete
  2. Forgot to put disclaimer -
    emulate at your own risk.

    ReplyDelete

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