Former head of the FOMC Paul Volker

We are on our own now

Paul Volcker was the Federal Reserve chairman before Greenspan. He was appointed by Jimmy Carter in 1979 and served as the US central bank’s chairman until 1987. Volcker was the man who, in an inflation obsessed era (the 1980’s), worked out that reacting to a rise in inflation didn’t work, and that central banks had to…

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Risk/Reward Ratio

Capital Management – Risk/Reward Ratio

Today we conclude the Capital Management series by discussing point number 4; Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering Professional traders spend more time thinking about how a trade could…

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United States Federal Reserve System

The Central Bank Bombe

The FOMC has cut interest rates overnight (the first inter-meeting cut since 2008), the RBA cut rates yesterday and the rest of the World’s Central Banks are doubtless preparing to cut interest rates sometime soon – because of the coronavirus. Read the RBA statement and there was no cut and paste this time – nine mentions of…

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Position sizing

Capital Management – Position Sizing

Today we look at step three of our series on capital management Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering Calculating your position size is probably the easiest step in the process, but still a…

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Identifying your stop price

Capital Management – Identifying Your Stop Price

This article covers Step 2 in the Capital Management process; Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering When people first come to the market, the biggest question is ‘which stocks to buy’. So much…

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Wolf of Wall street

Crap Cars and Impotence

G20 met at the weekend. The headlines included – “Heads of ECB, BOJ, Fed and Eurozone meet at G20. The Bank of Japan has lessons to offer on dangers of low inflation” There is a potentially interesting development at G20. The usual uselessness of overpaid bureaucrats on a junket appears momentarily to have given way…

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Why the Stock Market Exists

This is a chart from the Australian Listed Investment Company Cadence Capital (CODE CDA) – the table is a little out of date but they make the point that out of around 2000 Australian stocks only 700 are profitable and that out of that 700 stocks they consider only around 35 are “good” stocks and…

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The ASX 100 Made Simple

Let me make the Australian stock market simple for you. There are over 2000 stocks most of which don’t make a profit. But you don’t need to worry about most of the Australian listed stocks and if you are like most investors one of your best ‘quality’ filters, as brainless as it might be, is…

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Capital Management – Risk Sizing

  Here are the four steps we have outlined previously regarding Capital Management. Below we will cover the first one in more detail. Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering Capital management is a crucial…

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