It's always good to reflect on happenings past, with the end of the year being a good time to do so for many people. Matt and Tim do just that in the latest episode of Trading Justice. Matt lead with the Fed starting its program of normalizing interest rates and the implications that will have on the market moving into 2016, while Tim split his top pick between August's flash crash and the Yuan being added to the SDR. Tim chose another major event that left the world stunned in mid-January:s the Swiss Franc de-pegging to the Euro, wrecking countless businesses overnight and playing havoc on forex trading. Dovetailing the uncertainty, Matt listed all things China, from its stock market intervention to its ongoing recession and the impact it's having on the world. Coming in at number three for both Tim and Matt was the drop in price of crude oil. Unrestrained pumping by OPEC countries to attempt to drive out frackers, Iran about to come back into the international market, and a global slowdown in demand have all lead to a market glut that will likely not clear out through much of 2016. With interest rates still at record lows earlier this year, many businesses, including names like Apple, took advantage of cheap loans to buy back shares from the public, consolidating ownership for these companies back inward. Both Matt and Tim highlighed this, with Matt at number four and Tim at number five. Tim's fourth biggest news story of the year was the European Central Bank announcing its own QE program. With markets slowing down worldwide earlier this year (and Greece taking center stage at the time), Draghi announced a $1 trillion Euro QE program in an attempt to stimulate the Eurozone's economy. Massive valuations for tech companies are the order of the day, much as they were in 1999 - 2000. With companies like uber weighing in at over $1 billion(US) in valuation by private equity firms, it feels reminiscent of the previous tech bubbles in the past. Whether those valuations will actually carry over into the IPO for these companies (particularly for lawsuit targets like uber), remains to be seen. Matt pegs this impending bubble at number five for the year. The Brothers Justice take a look at their respective top five major news events for the year and went back to check on predictions made back in 2014. Matt   They're also joined by mentor student Nicholas Kingsbury to discuss trading.

1. Fed Lift Off with Interest Rates
2. All things China
3. Commodities especially Oil slaughter
4. M&A / Stock Buy back activity
5. Tech Bubble 2.9

Tim's Top News Stories for 2015

1. Flash Crash / Yuan SDR
2. CHF de-pegging to EUR
3. Crude Oil slide
4. European QE
5. M&A Activity

 

When learning martial arts, you don't start with training the body. You start with training the mind. A recent student of Tim's shared this insight at one of his classes, and the insight applies just as much to trading as martial arts. You need the right mindset and and attitude or you're setting yourself up for failure. A stereotypical view of the market is that it's a place where you can make money hand over fist with little to no effort. Trading from that mentality is akin to begging industry professionals to take your money, though. Big plays can happen occasionally, but they are far from common, and not actively pursued by veteran traders. Trading is about taking the long view with your account and utilizing those two magical words: compound interest. If, instead of trying to go after one big multithousand dollar payday (which doesn't really exist), you simply trade for a 3% return on your investments, over time you can be making multithousand dollar trades as a matter of course if you reinvest your earnings back into the market every month. We're not talking just a year or two, either; we're talking over a decade or two. It takes hard work, discipline, and patience, but it is absolutely doable.   In this episode, Matt and Tim talk about the importance of mindset when approaching trading.  

With the impending announcement on Wednesday of a potential interest rate increase for the first time in over seven years, there’s a lot of talk about the effects it may have on the market. What about the central bank itself? What is it exactly? …and when did it come about? Does a country even really  Continue Reading »