- Huge downward spike in P&L during the period I was away with very limited access to trading screens. Fortunately, the Goldman/SEC fraud charges news broke on Friday night as I was preparing for a very early Saturday morning flight.
- Thus, had the opportunity and did take action on Friday night to cut peripheral risk positions in Copper (was long) and Bunds (was short), freeing up margin to help withstand anticipated large margin account volatility. How right I was!
- Would have been drawn into panic-induced decisions had I not taken the preemptive action just before going away. Thankful.
- Left with long Gold+CAD vs short EUR+GBP. Shocked by the extent (albeit temporary) to which the former sold off and losses not offset by the latter.
- Understand that the sharp downside outperformance in Gold was due to Paulson & Co's unwinding of positions in their gold fund (or markets' fear of it). [Under normal circumstances, one would expect gold to rally in a panic situation].
- Also realize now what high beta CAD is. Scary!
- Market extreme positioning in short EUR+GBP limited their downside in the risk selloff and thus was of limited help in portfolio protection.
- P&L has since recovered sharply to a nice positive on subsiding of the GS triggered panic and Bank of Canada statement that almost certainly points to a rate hike on their next meeting on 01Jun10, if not earlier.
- A great reminder that managing one's capital is more important than getting the market direction right.
- 1 other thing I have learnt from the price action observed amidst the panic - long CAD is now the one position that I want to continue to build up. It is now very much a tried and tested downtrend I trust.
No comments:
Post a Comment