tactical trader

I am about to invest in China (better late than never!) and found it fascinating to read some of the current material on the likely growth of this market in 2007, none more so than an article I came across in a magazine called ‘Prospect’. This is a gripping exchange between the very well known Will Hutton and Meghnad Desai of the LSE. Whether you are already in China, want to be in China or are simply interested in the China story I urge you to spend some time reading it by following the link.

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Are the current market jitters justified or is it more doom and gloom from the bears who have been consistently proved wrong over the last year? Personally I am a bit more nervous than I was at the end of the year, the trouble is I cannot really put my finger on the reason. I had expected the rate rise today (thanks to all those idiots borrowing far beyond their means over Christmas) but even taking this into account I had expected more stability by now.

After the major correction last May I thought it would be at least October before we saw a return and in particular a buying opportunity, true enough there were some of these but not as many as I had hoped.

India is a case in point, after the huge collapse last year it was recovering nicely and in an orderly fashion then all of a sudden it dropped for no apparent reason, so much for technical analysis!

As usual, everyone was very knowledgeable after the event and they all saw it coming. What a pity none of these experts were able to point out the likely fall when I had my finger on the buy trigger. The amount of the fall is not my concern because I have bought India for the longer term, what bugs me is that the research I carried out and the examination of the fundamentals all supported a buy and yet here I am almost immediately out of pocket. This is not the first time this has happened over the last year and it really has to call into question the value of trying to time entry and exit points where longer term trading is concerned.

This raises an even more interesting point, should I even be looking? I bought India as a longer term hold and there is no doubt that barring a major world event or global correction, the growth of the market in India is set to continue. I should just leave it alone and keep a monthly check on progress against my own objectives rather than listening to so called experts who always seem to let me down when I need them most .

The trouble is that in this information age there is so much attacking us from all sides that you cannot help but listen to it and make judgements accordingly and as much as we are told to make our own decisions we are only human. So my challenge for the next few weeks is not to listen, only to watch the price action, measure against my own growth objectives and interpret accordingly. We shall see how well I can stick to it and how I feel about my Indian holding then.

Some very interesting views from Martin Pring.

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Three very interesting interviews with the man himself...

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A disturbing trend that I have noticed just lately is the increasing number of tips services hiding behind the apparent safety and credibility endorsement afforded by FSA registration.

How can it be that a service clearly telling you the trades being made and the relevant entry and exit points then hide behind the statement that any information given is for educational purposes only? This is an absolute disgrace and the FSA should do something about it.

This TV broadcast tells us a bit more:

Welcome to the program.

First tonight, the property market might be coming off the boil but there's still plenty to be made in the get-rich-quick business.

Property buying seminars came into sharp focus last year with the collapse of the Henry Kaye Group, resulting in a meeting of creditors today that voted to put Mr Kaye's property education company into receivership.

Now the Australian Securities and Investments Commission says the spruikers of wealth seminars are getting back into selling stock market schemes and the complaints are rolling in.

But while the regulator says it's watching these schemes closely at least one is trading under the auspices of an ASIC licence.

So what protection is there for the punters?

Business and economics editor Tim Lester reports.

TIM LESTER: It's been a theme through human history.

Our ancestors dreamed of finding the secret to great riches, maybe a gold map.

So do we.

Though now, the nuggets are in shares and property.

ROGER MONTGOMERY, INVESTMENT TRAINER: They want the red button that says sell.

TIM LESTER: The maps are schemes to outwit the market.

ROGER MONTGOMERY: They want the green button that says buy.

TIM LESTER: And they're for sale to anyone who believes.

ROGER MONTGOMERY: Just, tell me when it lights up and I to want press it and I will make the money.

PETER KELL, ASIC CONSUMER PROTECTION: The level of complaints that are coming through to us about share trading seminars and software is beginning to pick up again.

TIM LESTER: Peter Kell heads consumer protection at the authority governing those who give us financial advice, the Securities and Investments Commission, or ASIC.

PETER KELL: What we are also seeing is more people promising more exotic sorts of schemes, derivatives and other options.

TIM LESTER: Gold Coast-based trainer Daniel Kertcher sells a weekend of training, this 8-set DVD and trading software and for just under $4,000 per student.

DANIEL KERTCHER (TRAINING DVD): You're going to learn how to develop a guaranteed passive income for life.

TIM LESTER: On it the images and rhetoric of the 30-year-old self-claimed multimillionaire ooze wealth.

DANIEL KERTCHER: I am in the process of turning $2,000 into $1 million.

TIM LESTER: At this Sydney seminar last year, he told student investors he was making $1 million for charity.

DANIEL KERTCHER: It's very easy to turn $ 2,000 into $1 million.

All you have to do is keep doubling up - 9 trades, you're done!

TIM LESTER: And of course they could make their million.

DANIEL KERTCHER: Who cares?

You could have it done in the next year.

My friend, who taught me this, has done it over three times in the last three years.

He does it for sport.

He doesn't need the money.

He's a multimillionaire.

PAUL DOLAN, AUSTRALIAN STOCK EXCHANGE: It's all about the selling of the lifestyle, the selling of the dream.

TIM LESTER: Australian Stock Exchange trainer Paul Dolan says the wealth gurus use an American motivational model, attracting customers to an introductory night to sell a more expensive course.

PAUL DOLAN: At that 3-hour event you will be told that there is a secret and, basically, how great your life is going to be after you discover the secret.

TIM LESTER: Daniel Kertcher took his seminars across the Tasman to windy Wellington two years ago.

PHIL MITCHELL: A 100 per cent money back guarantee.

TIM LESTER: With an advertisement that caught the eye of NZ consumer journalist Phil Mitchell.

PHIL MITCHELL: They're saying I can make 331 per cent return in three months.

GEK MUI LEE, WEALTH SEMINAR STUDENT: Financial independence, you know, you could give up your job.

You could just live on trading full time eventually.

TIM LESTER: So Wellington resident Gek Mui Lee enrolled in a Daniel Kertcher seminar.

GEK MUI LEE: He once said if you are quadriplegic and all you could do is blink, you could do options trading.

I beg to differ.

TIM LESTER: Phil Mitchell did the same course.

He and Gek Mui Lee both then followed up with fellow students almost a year later.

GEK MUI LEE: Maybe two of them were just breaking even.

The rest of the people lost money or were too afraid to try.

PHIL MITCHELL, NZ CONSUMER JOURNALIST: Overwhelmingly, people had lost money and a great deal of money and very quickly.

TIM LESTER: How much money?

PHIL MITCHELL: An average loss of $10,000.

TIM LESTER: Though he calculates that one person did really well - Daniel Kertcher, selling students his seminar package for a hefty NZ dollar price.

PHIL MITCHELL: 65 times $4,250 is not a bad return for three days work.

That is nearly $300,000.

TIM LESTER: Phil Mitchell's article in NZ's consumer magazine stirred Daniel Kertcher to threaten legal action.

He insists one third of students in the Wellington course in question made money.

And another 12 didn't even bother to trade.

That still leaves plenty of losers.

But Daniel Kertcher isn't apologising.

Rather, he has organised seminars for five Australian capital cities in the next few months.

If you can't get to see him, no problem.

There are plenty of others selling their own gold maps and they're not hard to spot.

PETER KELL: Often glossy brochures.

ROGER MONTGOMERY: Look out first for any claim that there is a secret.

ROGER MONTGOMERY: PETER KELL: Some sort of magical track record of past performance.

ROGER MONTGOMERY: The more testimonials there are, the more you should be concerned.

TIM LESTER: Roger Montgomery is a Balmain-based fund manager and investment trainer for the Australian Stock Exchange who has given up warning people about the merchants of wealth.

ROGER MONTGOMERY: I spent the early part of my career trying to educate people about these things.

I'm, in fact, just tired of doing it now.

TIM LESTER: Roger Montgomery is unimpressed even though Daniel Kertcher has diluted his astonishing NZ profit claims.

His Australian ads say he can earn us 6 per cent per month, not per year, per month.

That is still about 15 times the interest offered by banks.

ROGER MONTGOMERY: If it was that easy to make 6 per cent a month, we would be doing today.

It isn't that easy, so we know not to believe those claims and no one else should.

TIM LESTER: Late today Daniel Kertcher strongly defended his 6 per cent earnings claim saying he could provide actual trade examples to prove it and attaching four pages worth in case we had doubts.

PETER KELL: I have never seen anyone sustain a 6 per cent a month return over a long period of time.

In many ways, it is a meaningless and potentially misleading claim.

So if that has been made, it is something that we will be looking at.

TIM LESTER: It certainly has been made but the problem for ASIC is that it has been made with ASIC's imprimatur, as Daniel Kertcher told the 7:30 Report in a recent letter, the securities firm he operates under has an ASIC financial services license.

ROGER MONTGOMERY: It surprises me that someone who has a license can make a claim like that.

TIM LESTER: And it frustrates the Australian Stock Exchange.

Doesn't that tell us that the licensing system is flawed?

PAUL DOLAN: Well, there's a question that you would like to pose to ASIC, I think.

TIM LESTER: We did.

What is the point of having an ASIC licensing system if one of the licensed operators is making claims that you concede is absurd?

PETER KELL: Dealing with someone who has a license is an important first step but it won't guarantee that you will get reliable advice.

Unfortunately, we do run into people who have licenses, who have people working for them, representatives, who may step over the line.

TIM LESTER: It's a sensitive subject for ASIC.

Just last year the commission took Henry Kaye to court after the property millionaire claimed ASIC approval for his training courses.

But Daniel Kertcher has still more credentials.

As an options adviser, he is accredited through the Australian Stock Exchange.

PAUL DOLAN: We're not involved in the licensing of brokers as such or financial advisers as such.

TIM LESTER: Just training them.

And in the Daniel Kertcher case, the stock exchange concedes we shouldn't read too much into its options accreditation.

It only takes a month or two to qualify and the ASIC license, well - PAUL DOLAN: For example, having a license does not make you a great driver.

TIM LESTER: We approached Daniel Kertcher for an on camera interview.

He declined.

GEK MUI LEE: After doing this for one and a half years, I realise that it's not as easy, you know, as some of his claims were.

TIM LESTER: We also approached the Melbourne-based promoter of several other makers of modern day gold maps, the management of Break Free Events would not comment and told us none of the gurus it promotes were available for interview either.

The leaders of this latest gold rush are unwilling to say much outside their seminars, though they are they are quick to point to any credentials they carry, the ones intended to guide us to good advice.

KERRY O'BRIEN: Tim Lester with that report.

As you can see, this is not from the UK, it comes from an Australian show called ‘The 7.30 Report’. Despite this it could almost word for word be the kind of dialogue that would take place between similar people right here.

• The increase in the offers due to more market activity

• The complete lack of protection

• The fact that people want the green button that says buy

• The image and rhetoric of the self claimed multimillionaire

• The introductory night to sell a more expensive course

And so on and so on..

None of this is new of course, this method of conning people out of their money has been around for as long as I can remember and if it was not this it would be something else. If people are stupid enough to keep buying them then I can’t change that and like the person in the interview I am tired of trying to warn people who just do not want to hear.

So why this post? Because as I said at the start, I think it is wrong and almost bordering on the unlawful to claim to be a Appointed Representative of an FSA member firm, sell a service that is clearly designed to tell you when to trade and then say that it is only for educational purposes. This is a step too far, they have crossed the line between clever marketing and outright fraud in my opinion.

I can only hope that the people who sign up the these schemes make their inevitable disappointment known to the regulator who might then get off their backside and do something about it.

Thanks to everyone who took the time to send in messages of support for what we are trying to do here. The overwhelming message was that the site was ours and that we should deal with the bullies without mercy, ironically most people thought we had been far too lenient for far too long.

The real learning for us comes from the fact that a great many former old timers pointed out that the reason for their lack of involvement was nothing to do with the redesign and loss of the old postings but far more to do with the very behaviour that led to my post holiday blog.

As a result we are going to continue to support the forums at our own expense for the time being. We are doing this in the interests of the people who do care and in the hope that the use of the forums will increase.

We will keep a close eye on the level of use (and abuse) and will hopefully not need to revisit this subject again.

The future of the forums is now in your hands.

Certain thing are inevitable on return from holiday, a mountain of post to open, thousands of emails, dead plants and of course the old favourite, people behaving like complete idiots on the forums.

If you have not bothered to read the senseless and spiteful rants of these ‘traders’ who clearly have nothing better to do with their time then don’t bother reading on.

However, if you are one of the, supposedly many, disenfranchised members who long for the glory days of the old site or if you’re merely an interested observer then read on because I have some important things to say.

The loudest complainers will be pleased to know that we have decided to get rid of the current website. We’re going to write-off the months of work that went into it and put them down to experience. We’re going to forget the new sections of the site because, let’s be honest, who cares about articles and reviews? It’s time to resurrect the old site with all of the valuable old posts and happy memories it contains.

Yeah, right!

How exactly do these people think this works? Do they seriously think we make a dime from this site? We do it because we want to help and want to educate. If we were in it for the money we would have given up a long time ago. We make our money trading the markets, something the loudest critics would be well advised to do instead of making unpleasant and threatening comments on what is a free and valuable service.

Amusingly people talk about setting up their own sites and then others threaten that they will leave our site and visit the new breakaway one, how I wish this would happen so we would be rid of these people once and for all. The trouble is that they realise how difficult it is to create a site worthy of any attention and they always come back.

I have now reached the limits of my patience and will no longer tolerate this regular and sickening treatment at the hands of a vocal minority.

If this nastiness does not stop right now and the forums return to their intended use they will be terminated with immediate effect, then everyone will lose out.

The choice is yours.

For those of you that read my ramblings I apologise for the lack of a ‘week ahead’ blog yesterday, I was tied up on post accident insurance battles; I will not bore you with the details.

So, what has come up on the radar this week? First of all a sigh of relief from troubled investors indicating that we may well have reached the much awaited bottom. This from the Daily Reckoning:

If you want to pick the top of a market, just watch the evening news," says Keith Cotterill, the options pro' behind the Resource Trade Alert programme. "When commodity prices make it to prime time British TV it’s over. This is what we saw earlier last month with both copper and gold. You may have noticed that the evening news is now talking about the drop in stock prices. Look for a bottom over the next few days..."

Whilst I am not entirely convinced about the next few days being the timing I certainly agree with what is being said. Looking back you will see that I maintained this was a correction that would retrace and fall again, this is exactly what happened. For my part I am not yet ready to buy though I do not think the moment is too far away.

On the longer term front this has been a very interesting exercise in portfolio management. We are told that diversification is the ultimate hedging tool, I have even written about it myself but I no longer believe it. I spent considerable time and effort researching the best asset allocation models available and it did not help one bit. There was naturally cash protection but where everything else is concerned the charts were almost identical so what’s the point of several holdings? Admittedly there were differences between, say the FTSE and the Tiger Economies, but within the groupings there was no difference at all. Even two holdings that are normally uncoupled fell foul of the same percentage decline so they will now have to be examined.

This has to call into question the validity of the AA model and it is something I will be turning my attention to over the summer. I am now leaning to an absolute return basis but we shall see.

China is in the news again with a very disturbing piece about the impact they are having on the environment. You can see the full article here Link

The plan for large numbers of Nuclear Power stations can only be good for my Uranium play, the more the better so thanks also to Tony and Gordon! Finally, I have recently been made aware of yet another scam hiding behind the façade of FSA respectability. How these people sleep at night is beyond me and over the next few weeks I intend to investigate further. I just cannot see how these cowboys can give what is clearly advice then hide behind the education label. I will report my progress here and hope that we can get some momentum behind a campaign to eradicate these people once and for all. More later this week.

So here we are in another week, will it be as painful as the last one? Who knows?

The pain I refer to is not the markets; it is the never ending diet of football that is driving me mad. When will people realise that not everyone is interested in the World Cup, or any other cup for that matter. It must be getting worse because I just can’t remember quite so much hype in recent times, I was particularly amazed to watch the news last week when the headline story (yes, the headline!!!) had an outside broadcast from a house up in the North that was done up like a Christmas Tree in England regalia.

We were treated to the image of a beer swilling loud mouthed family enjoying the spectacle of England failing to beat Paraguay on anything other than an own goal. I dread to think how much they were paid to behave in this way for the camera (don’t get me started on Big Brother) and I don’t really care, what I do care about is the continual decline in TV standards that make the damn thing hardly worth turning on.

Now,on to the markets.

Certainly there can be little doubt that the correction is now well under way although it concerns me greatly that more and more pundits are talking of major downturns from which we will not recover for some time. It is not helping that there is so much focus on interest rates especially as so little has really changed in the last month. So what are the key points for me this week?

Gold has attracted my interest on the short side, I had hoped to catch it before the break under $600 but I was too late. A short trade with a tight stop is my plan here. Active day trading is proving even more traumatic than usual but there are huge profit opportunities provided careful money management is applied, whilst these profits are not paying back my losses on the longer term they at least ease the pain a bit.

The real challenge on the long side of course is knowing when the buying opportunity comes along and whether, after a roller coaster summer; I will have the courage to buy into it at the levels required. I hope so but time will tell.

I caught a bit of the ITV news last night (the only bit that was not devoted to the blasted football) to discover them talking about the markets. Of particular concern was the idiot who was explaining how everything is now likely to turn around thanks to higher interest rates, as if investors are not spooked enough already. Still, the investors that really decide our fortunes are hardly likely to watch this rubbish and in actual fact bearish sentiment from the populist media is often a good contrarian indicator.

I have been given a trial subscription to a Forex alert service and look forward to trying it out, I’ll keep you posted. I am also read testing a system that claims to be ‘the safest and most accurate charting system ever’, I will forgive you for smiling but I live in hope that one day just one thing will live up to its promise. Once again I will keep you posted.

I am delighted to say that my long awaited second book is now finished, you can find details here Link. The next challenge is to finish the first one (on trading) which was put on hold for the Level 2 one. I am off to Italy soon for a two week writing break; believe this and you will believe that the fat and loud family from the North were for real!

Seriously I must get on with it as it was started a year ago; at least it will take my mind away from the turbulent markets, the World Cup and Big Brother.

Last week my wife and me were involved in the most awful accident, we were driving along a short stretch of dual carriageway minding our own business when, suddenly, a motorbike was heading straight for us at high speed.

The rider, who was clearly exceeding the speed limit, was on the opposite carriageway and overtaking another vehicle, somehow he lost control and hit the central reservation. He and his bike were catapulted about 15 feet into the air and because there was no crash barrier the bike carried on its journey straight into our path.

I managed to steer away from it but the collision was inevitable, we were hit on the back wheel and spun around to a 45 degree angle. The rear wheel was broken in two and the front of the bike disintegrated on impact, rebounding across the main carriageway. There can be no doubt that we were incredibly lucky to walk away, the rider was less fortunate, he was killed in impact with a lamp post.

To make matters worse it now transpires that he may not insured and this brings me to the point of my tale. When I bought my policy I was encouraged to pay extra for legal expenses cover, this also included a hire car in the event that I was involved in a situation that was not my fault.

Because of the fatality the area was treated as a crime scene and the car was impounded as evidence, as you would expect the normal insurance company loan car process would not apply so I contacted the providers of this extra cover to make a claim.

I was told not to bother because the cover only applies where the other driver has insurance and that this is quite logical as they would have nobody to claim back the costs from. What I object to most strongly is that this was not made explicit in any of the terms and conditions of the policy and certainly not in any of the marketing literature.

I eventually found a brief reference buried away in the small print but even this referred to a policy wording that I had not even been sent.

I assumed that the whole point of this extra cover was to provide cover when you most needed it and above and beyond your normal cover, this was certainly how it was sold to me. I was never told of this massive exclusion.

I can only conclude that these policies are a compete waste of money, there are plenty of ambulance chasers on the internet who will take up a case where recovery of losses is certain so why pay out for the very same thing? This is one more in a long line of insurance scams that never come to light until it is too late.

So if you have any such policy I urge you to check exactly what it covers, given that so many uninsured drivers populate our roads you could find, as I did, that you will not have the peace of mind when you need it most.