Welcome…

ScottWelcome to The Capitalist Trader, where I discuss markets money and math, while promoting reason and liberty. I’m Scott, better known around the interwebz as Capitalist, and I’ll be your host.

If this is your first time at The Capitalist Trader, you may want to read about the site and maybe even a little about me and my mission.  Have a question or a comment? Head over to the Contact tab.

I’ve traded several different markets including equities, fixed income, and options since the 1980’s (yep, I’m old).  Since 2004 however, I’ve concentrated on the foreign exchange, or Forex, markets. Many of the trading resources you’ll find on the site relate specifically to Forex.

So come on in, make yourself comfortable and…keep pipping up!

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A failed coup and a lost opportunity

Greetings all!

 

TurkeyAs a former U.S. military officer, I’m generally not in favor of military coups. One of the first things that officer training emphasizes is that the military is subservient to civilian authority. The military is governed; it does not govern.

So for me to come down on the side of a military coup, there’s got to be a very compelling reason. Such a reason exists in Turkey today, and can be summed up in one name; Recep Tayyip Erdogan. As I’ve written in this space before, this guy needs to go.

Let’s look at a very brief historical overview of the Islamic world and Turkey’s place in it.

The religion of Islam started in the early 7th century, in what is now Saudi Arabia. After the death of its founder, Muhammad, the new faith saw a succession of four stewards, known as caliphs. As I understand it, certain Muslims, the Shia, considered the fourth of these, Ali, to be the only legitimate successor to Muhammad, resulting in the Sunni-Shia split. At any rate, the area governed by these four caliphs comprised the Rashidun Caliphate.

In the nearly one and a half millennia since then, the world has seen the rise and fall of several other caliphates. The first of these, the Umayyad Caliphate, extended its power throughout the Middle East, North Africa, and up into Europe. It was only at the decisive battle of Tours in 732 AD that Charles Martel halted its expansion. The Abbasid Caliphate took over the reigns shortly thereafter, and lasted until the early 16th century. Not to be outdone in the field of superstitiously motivated barbarism, the Christian world had a blast launching crusade after crusade during this time. Yay for fights and knights and tights and stuff!!

OttomanThere were some other competing caliphates during all this, but the next big entry onto the stage was the Ottoman Empire in 1517. I don’t know why they named it after a comfy footstool, but there you have it. Anyway, these guys found themselves on the losing side of World War I, and the allies partitioned the empire soon after.

Of course, many Turks were dissatisfied by the allied occupation of their country, and fought a war of independence led by Mustafa Kemal Atatürk. Guess what? They won! So the Republic of Turkey was born in 1923 with Atatürk as its first president. He proceeded to implement a series of reforms which abolished the institution of the caliphate, modernized Turkey, and created a secular democracy based not on religious fundamentalism, but on the rational recognition of individual rights. He was sort of the George Washington of Turkey. Yay for Atatürk!

Since then, Turkey has been mostly awesome. They kind of sat out World War II, but threw in with the Allies in the final year. Then during the cold war, they became a member of NATO, and along with Iran, helped form a southern bulwark against Soviet expansion. There have been problems too of course. Turkey has been at odds with Greece over the island of Cyprus for years. They’ve also got a substantial Kurdish separatist minority which causes internal tensions.

Then, finally, we have the coups.

The Turkish military, since the time of Atatürk, has been one of the most trusted institutions in the country. It sees itself as the guardian of Atatürk’s secular democratic reforms, and whenever the military sees a threat to Turkey’s secular identity or the stability of the country, it will not hesitate to take the reigns of power, albeit temporarily. This has happened in 1960, 1971, and 1980.

Then, in May of 2014, I called shenanigans. I won’t rehash the craziness called Erdogan again in this post, but suffice it to say that this guy seems to fancy himself as a modern day Ottoman emperor. He has increasingly seized more power for himself, created an autocracy in Turkey, and moved the country away from secularism back toward the dark ages of the caliphates. Also, he’s nuts. So a couple of years ago, I predicted that his actions would push Turkey to a breaking point and that there would be chaos someday soon.

NooseWell, it took a couple of years, but I was right. During the past week,we saw yet a fourth attempted coup in Turkey. Unfortunately, it failed. From what little I can gather so far, the attempt was launched by lower level officers, wasn’t coordinated with the rest of the military, and wasn’t well planned. Oh well, better luck next time guys. Except you’ll soon be hanging from a rope. Such are the fruits of failure, so I guess there won’t be a next time…for you.

But for Turkey, I think there will be a next time. Sure, Erdogan will use this incident as an excuse to seize even more power. But ultimately the people and the guardians of Atatürk’s legacy won’t let this stand. Someday, this guy will go, whether voluntarily or not. And then Turkey can get back onto the path of growth, prosperity and peace.

So until then, I’m still holding my Turkish Lira (were you wondering when I’d get around to the currency trading aspect of this?). So keep your eyes open for signs of that next coup, and as always…keep pipping up!

NOTE: As always, comments are closed due to WordPress spambots. However, to comment on this or any other post, just go to my Forex Factory journal.

 

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Taking stock…some opportunities in equities

Greetings all!

Since this space is primarily focused on forex trading (when I’m not waxing philosophical), it’s not often that I discuss the more mundane world of the equities markets. But lately I’ve been adding more positions to my Fidelity account, so I thought I’d mention those here. First of all though, let’s dispense with the legal niceties…

Neither this post nor capitalisttrader.com in general recommends any investment. As always, do your own due diligence. The information below is for general informational purposes only, and is not to be construed as a recommendation, offer, or inducement to buy any of the securities mentioned. I may have positions in any or all of the securities mentioned below. In partcular, master limited partnerships (MLP’s) are investments with complex tax consequences. Always check with a qualified tax advisor when considering such investments. Finally, there’s no crying allowed in trading.

Back in this post, I mentioned that I had started a position in an ETF which holds global silver mining companies. I’m still holding that with a tidy profit, and have begun building positions based on a couple of other ideas as well. One cool thing that I just discovered is that Fidelity has added a nice little notepad feature for account holders. This is a place where you can jot down ideas tied to specific symbols or keywords. So that was part of the impetus that drove me to begin building these new positions (which was, I’m sure, the idea all along). So without further ado, on to the investments!

The first opportunity I see is long term growth in the liquified natural gas (LNG) industry. I often wrote about this in my articles for The Motley Fool, and here are some of the main drivers I see:

  • Supplies of LNG via shipping lanes, unlike static gas pipelines, can’t be easily shut off to an entire region like Europe by a bullying aggressor nation (yes, I’m looking at you, Russia).
  • Asian demand for LNG is driven by the lack of pipeline infrastructure, Japan’s move away from nuclear power, and China’s attempts to clean up its smog-bound cities.
  • North America has substantial quantities of natural gas, much of which is just flared off at the wellheads. This is the closest thing I can think of to just burning money. The prices for natural gas overseas, especially in Asia, are much higher than they are in the U.S.
  • The recently completed expansion of the Panama Canal makes it a lot easier to get LNG from the U.S. gulf coast to Asia.

So with all this in mind, I’m beginning to build positions in companies that produce and ship LNG. My two initial purchases were Cheniere Energy Partners (CQP) and Golar LNG Partners (GMLP). The first is building liquefaction facilities on the gulf coast, while Golar operates LNG ships. Also, I’m looking for tax-advantaged high current yield, so I like master limited partnerships (another topic I often wrote about for The Motley Fool). These MLP’s are generally found in the energy production and distribution industry.

Another big long-term opportunity I see is a massive new paradigm in industry brought about by 3-D printing technology. I think this will bring a new wave in the way we live on par with the impact of the internet. I haven’t bought anything here yet, but I’m looking at two companies that I made quite bit of money on a few years ago; 3D Systems (DDD) and Stratasys (SSYS). Not sure what I’ll be doing here yet, but I’m exploring both pure equity holdings as well as some options strategies.

So that’s the update on my recent forays into the equity markets. It’s nice to have some extra income to invest again! Until next time…keep pipping up!

 

NOTE: As always, comments are closed due to WordPress spambots. However, to comment on this or any other post, just go to my Forex Factory journal.

 

 

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Globalists for liberty

The day after the Brexit vote, I happened to see a commentator on Fox News who brought up an interesting point. She said that for many people in Britain, the vote wasn’t about immigration, nationalism, economic theory, or any other highbrow issue. Nope. It was about toasters and tea kettles.

Unfortunately, when pundits discuss this sort of thing, they usuually say something like, “Why should someone in far away Brussels tell someone in Liverpool what kind of appliances they can use in their home, yadda yadda yadda…” I call this unfortunate because it confuses two issues.  One is nationalism versus globalism, or more accurately what I’ll call localism versus “far awayism.” The other is freedom versus tyranny.

We hear the localism versus “far awayism” rhetoric not only in the conflict between national sovereignty and globalists, but within individual countries as well. “Why should someone in Washington, D.C. tell someone in Butte, Montana what they should teach their kids?” for example. This is supposedly one of the main differences between the Republicans and Democrats in the U.S.  The GOP generally favors letting individual states decide most issues, while the Democrats favor more centralized federal government rule from Washington.

But that’s really just an inessential issue in my view. My question is, why should anyone tell anyone what kind of appliances they can use or what they have to teach their kids? Whether the ruler is in a far away city or country, or whether the ruler is down the street at city hall shouldn’t make a difference. The essential issue is what kind of government do we have? Is it one based on liberty or on tyranny?

If the government that has jurisdiction over me is right down the street, but they have the power to tell me what to eat, what to buy, what to drive, and so on, then I’m not happy. If, on the other hand, I’m a citizen of a society whose seat of power is half a world away, but is based on objective law, the Non-Initiation Principle, liberty, laissez-faire capitalism, etc., then I’m ok with that.

In fact, I’d go so far as to say that I’m actually a globalist for liberty. Yep, that’s me; a one-world government guy!  The kind of society I’m advocating is objectively right, not just for some people and some cultures, but for everyone everywhere. All over the country, all over the planet, and all over the universe for crying out loud. So really, I guess I’d be a universalist for liberty, wouldn’t I?

So please, in these days and weeks after the Brexit vote, let’s stop talking about nationalism versus globalism as if that’s the real issue. The real issue is freedom versus tyranny.

That’s my rant for this week, and this should be the end of this impromptu series on the Brexit. Until next time…keep pipping up!

NOTE: As always, comments are closed due to WordPress spambots. However, to comment on this or any other post, just go to my Forex Factory journal.

 

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Brexit Celebration

Hooray!  Huzzah!!   Greetings all!!

Just thought I’d celebrate the Brexit vote with this:

Hopefully, Scotland breaks away as well, along with Northern Ireland, which can finally unite with the rest of Ireland.  England is better off without these main Labor party bastions, and can look forward to a bright future of solid Tory majorities, smaller government, less regulation, laissez-faire capitalism, and efficient economic growth.

Well, I can dream anyway. While we’re watching for all that though…keep pipping up!

 

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Fog in channel, continent cut off!

Greetings all,

I’m unclear on whether the above headline ever actually appeared in a British newspaper or not, but I have to agree with the sentiment. Europe needs the UK much more than the UK needs the bloated bureaucracy in Belgium in my view.

Apparently, I’m solidly in the minority on this one. A case in point is this article from Pound Sterling Live, which states:

It would seem that there is an element of British pound buying in anticipation of a Remain victory for Thursday’s vote.

Huh?

I’ve been hearing this drumbeat for a while now, as this coming Thursday’s so-called Brexit vote looms. The overwhelming sentiment seems to be that a “Leave” vote means a GBP crash, while a “Remain” vote is bullish for Cable. And I get it. Uncertainty is baaaadddd, mmmmkayyy??

But in the long run, an independent UK, free from the shackles of the socialist leaning continent, should be positive for the Pound. So if the “Leave” camp wins in Thursday’s vote, any subsequent GBP decline is a great buying opportunity in the eyes of this Capitalist.

So let’s all tune in for the results on Thursday, and in the meantime…keep pipping up!

 

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NZD surprise? Not really…

Greetings all!

Last week, on June 9, CNBC reported that,

The New Zealand dollar took centre stage on Thursday, surging to a one-year high after the Reserve Bank of New Zealand kept interest rates unchanged, surprising some investors who had been betting on a rate cut.

Well, I suppose some investors were surprised, but this Capitalist wasn’t one of them.

Why? Because at the end of the prior week, my fundamental analysis method was flashing bullish signals for all NZD pairs. Here’s the one for NZD/CHF, which is the one I actually took.

post20160613b

Based on that, here’s one of the trades I took.

post20160613a

Of course, most signals don’t have such an immediate response. Some research I did recently shows that a look-ahead period of about 8 weeks shows the best correlations between the signals and the subsequent price performance.  But I just had to grin when I read the reports of a “surprise” in the New Zealand rate decision. It wasn’t a surprise to me at all.

Anyway, this is the FA method that I’m covering in the upcoming e-book, if I ever get a chance to finish it given my current work schedule. So stay tuned for more on that, and as always…keep pipping up!

 

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Trading and investing update

Greetings all!

In last week’s lamentations over the technical challenges at Coinbase, I mentioned that my re-entry into BitCoin is but one of a set of investments that I’m making. So this week I thought I’d provide an overview of my current trading and investing universe, along with a brief update on each account or position.

Carry Trading

I last discussed my TRY/JPY carry position in this post and the two following. Since then, however, I was hit with a margin call and subsequently redesigned the strategy yet again. Now I make sure to define a maximum risk level and set a stop for the entire position accordingly. This of course can lead to my being stopped out more often, but I suppose that’s better than margin calls. So at the moment, I just have a very small amount remaining in this position as I continue my rocky love-hate relationship with the carry trade.

FA Trading

This Fundamental Analysis based method is the second of my three Forex strategies, and the most promising. I run it in a sub-account at Oanda in order to track the performance separately from the carry trade position. I use a system that allows me to quickly quantify an estimate of the cumulative relative effects of the various economic releases that come out each week for the major currency countries. I’m working on an e-book describing this method in detail, but my current schedule doesn’t allow much time to work on it.

TD Trading

I had great success with this Tick Density technical strategy over a year ago, but I recently had to stop trading this Forex sub-account because of time constraints. The method is good, but the analysis takes much more time than I have available right now. I have an e-book that describes the Tick Density strategy and the research behind it. At some point, when my schedule allows, I look forward to using this strategy again.

Silver ETF

I just recently opened a position in the iShares MSCI Global Silver Miners (SLVP) Exchange Traded Fund (ETF) from my Fidelity brokerage account. I’ll be adding to the position gradually until I reach a certain planned investment level, at which point I’ll begin trading in and out of the fund as it fluctuates in price. Generally I’ll buy more during declines, and sell into rallies, with a bias towards accumulating more shares over time. I chose this fund for three reasons. It’s one on which Fidelity charges no fees for trading, it’s historically volatile, and precious metals is a good thing to have if the world-wide inflation bomb goes off.

BitCoin

I’m still accumulating this in my CoinBase account, although I’m wary of the problems they’ve been having over there. They refunded my doubly-billed amount quickly though, and my subsequent purchases have gone through normally, so hopefully they’re addressing their technical issues. My strategy with this is similar to the silver ETF strategy; accumulate to a pre-planned level, then trade around a core position to take advantage of price fluctuations.

VirWox

Fun! I opened an account here with a small initial deposit in order to play around with some very obscure illiquid markets. Since this blog is all about exploring markets, money, and math, why not expand that exploration to the money and markets used in virtual worlds? That’s what VirWox does. It’s an exchange where people can trade not only USD, Euros, and BitCoin, but Second Life Linden dollars (SLL), Avination currency (ACD), Open Metaverse Currency (OMV) and My Virtual Community currency (MVC). If you’ve never heard of some of these, don’t despair; neither had I. At any rate, what I’m doing here is looking for opportunities to make a market in very illiquid pairs with high spreads by placing limit orders inside the current bid and ask.

That’s all for this week. Until next time…keep pipping up!

 

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Is Coinbase imploding?

Greetings all!

Head over to the Coinbase Community page.  When you get there, click on the “Latest” tab to see what the most recent posts are all about. Go ahead; I’ll wait.

Yeah.  They’re having some problems.

In my recent list of upcoming topics, I mentioned that I was restarting my BitCoin investment program. Little did I know that I was about to step into a den of technical glitch-snakes just waiting to take a nice big bite out of my time and resources.  Actually though, after reading through some of the threads on the community forum, my experience seems almost like a walk in the park in comparison.

I made a small bitcoin purchase in April, but noticed that the money for it never seemed to come out of my bank account. Then all of a sudden at the beginning of May, there it went. Then…there it went again! Yep, I was double billed for the same purchase of bitcoins.

So I did a little searching around on the interwebz, and found that Coinbase had had a glitch back in 2015 involving double billing. I then found the community forum and discovered that several other Coinbase customers were experiencing the same thing I was. I put in a help desk request, and after a few days I did manage to get a refund for the second charge. So far so good.

But as I’ve watched the forum over the past few days, I see that this isn’t the only technical glitch that’s going on. People are reporting all sorts of other problems; bitcoins not being received, locked or closed accounts, transactions listed as complete which never actually happened, bitcoin sales proceeds never being received by the customer, etc.

So I guess this is the promised update regarding my re-entry into the bitcoin market. It’s looking like Coinbase may be heading the way of Mt. Gox, and I may have to find alternate means of trading crypto-currencies.

On the fun and more geeky side of things, I’ve recently opened up an account with VirWox, which allows trading in virtual world currencies as well as real-world and crypto-currencies. I deposited a small amount just so I could try out a few strategies in some thinly traded markets that aren’t all that well-known. It’s often markets like that (think of the early days of options) that have the most inefficiencies, and thus the most opportunities for early adopters. So I’ll report back on that soon.

Until then…watch out for glutinous glitch-snakes, and…keep pipping up!

 

 

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Trump vs. Hillary: So it begins…

Greetings!

Pursuant to the “promoting reason and liberty” portion of my tag line, I occasionally post a philosophical rant in this space while trying to steer clear of day-to-day political analysis. However, I think recent developments in the current U.S. political landscape merit some attention, albeit briefly.

With the exit of Cruz and Kasich from the Republican primary process earlier this month, we may be on the brink of something historic here. But whether that’s going to be a great opportunity or an epic disaster remains to be seen.

The potential opportunity comes from the extremely high negatives of the presumptive nominees of each major party. If there was ever a time for a third party to make a decent showing in a presidential election and thus to propel itself into the mainstream consciousness of the nation, this is it. But what kind of third party?

Since the 1970’s, the Libertarian Party has been the third alternative for many who make a principled argument for freedom, but their performance in the polls has always languished in the low single digits. More recently, the Tea Party and constitutional movements in the GOP have gained traction, but that momentum has been sapped by the arrival of the populist Trump Train this year.

So what if these various factions, the Tea Party, the constitutionalists, and the LP were to reach out to each other and form a new coalition? In this environment of “never Trump” and “never Hillary,” where many in the electorate are finding themselves in the position of having to hold their noses to enter the voting booth, this third alternative could really be a contender.

While such a third party may not win this year’s election, its creation and strong showing could cause a seismic shift in the future political conversation; a shift very favorable to those of us in favor of reason and liberty.

On the downside, I look at the possible split of the Republican Party and remember a bit of 19th century history. In the 1850’s, it was a split in the Democratic Party that started the country down the path from a political conflict to a military one; a conflict which we now remember as the Civil War.

So next time it’s back to the regular topics of this blog, markets, money, and math. Until then…keep pipping up!

 

 

 

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Upcoming topics

Greetings all,

My situation hasn’t changed much since the last update. I’m no longer in imminent danger of living under a bridge, and in fact the new job is bringing in about 60% more income. However, I have very little time for much else, including researching and writing posts here. I’m still working on tweaking my schedule to allow for more writing time.

What I have managed to do though is to accumulate a list of upcoming topics, including:

  • Resources I listed in this post, including the COT report
  • Inter-market analysis
  • My recent restart of the BitCoin investing program
  • Reviews of some basic Forex trading concepts
  • More advanced money, trade, and risk management discussions
  • My exploration of the Chartered Financial Analyst (CFA) curriculum
  • The changes I’ve made to my Fundamental Analysis based trading methods
  • A discussion of the controversy surrounding free trade
  • Continuing whackiness in Turkey and my carry trade program
  • The Brexit
  • China’s Silk Road initiatives

I’m trying to adjust my schedule so that I’ll be able to give these topics the time and attention they deserve. So stay tuned, and…keep pipping up!

 

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