Saturday, December 27, 2014

Why Financial Advisors Don’t Show Their Returns


thinking
Financial Advisers: Show Us Your Numbers was an article written by Jason Zweig a couple of months ago that did not get much press, its mind boggling actually,  especially now when everyone with a blog is consider a pro and guru.  Here is a short excerpt from the piece.
“If you want to know the track record of a mutual fund or exchange-traded fund, you can look it up in a matter of seconds online.  But what about the track record of a financial adviser who is offering to pick investments for you?  
“I have to think investors would want to know that, but I don’t know how many are actually asking for it,” says Charles Rotblut of the American Association of Individual Investors in Chicago, a nonprofit with 170,000 members nationwide.
“If the adviser is talking about how much return he can get for you,” adds Mr. Rotblut, “then it’s a very fair question” to ask him what his own returns have been.
While some financial advisers who cater to individual investors are willing to calculate and report their own average historical returns, the vast majority still don’t—and probably won’t until investors smarten up and start demanding it.
“It’s baffling to me,” says Tim Medley, president of Medley & Brown, a financial adviser in Jackson, Miss., that manages $575 million and publicly updates its performance monthly online. “The advisory business has grown dramatically, and I would have guessed that by now a lot more advisers would be posting their rates of return on their websites.”
Mind you, every client opens and closes accounts at different times, in a variety of investments, with various levels of risk. But that doesn’t mean an advisory firm can’t calculate the average return it earns for its clients. Every investor in a given mutual fund also is unique, but all mutual funds report their past returns in the same standardized format.”
The way I see it, they are some real grey lines with showing performance, the rules themselves don’t make it clear for those who want to do it.  I see some RIA’S that do it with a million disclosures, I have seen mutual funds that say their numbers are hypothetical on their main site but are the same numbers that morningstar reports, so they are not really hypothetical, some just post back-tested results.  Like everything else in life for most people, if you have good numbers you want to show them and if you don’t then you don’t want to show them.
Zor Capital LLC is a New York based investment management firm, founded in 2011. Our goal is superior performance, with preservation of capital as our number one priority. Zor Capital manages separate accounts (both taxable and retirement) for accredited investors and institutions. This structure gives clients access to a hedge fund like strategy while maintaining 100% control of their accounts.  Managed Assets

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tuesday, December 16, 2014

The Current State Of The Market

–These are the facts about the current state of the market.  These are not opinions nor I’m I trying to imply what the next move is, the information below should give you an idea of what to maybe expect.
–The SP500 is down 4.96% from its all time high which it reached on 12/5/2014, the average correction since 2009 is 6.7% lasting on average 16.9 days.  The average correction this year is 5.3% lasting 16 days, we are at 4.96%.
–The VIX is now higher than the future months, since 2010 the returns after this happening have been mostly positive and promising. Chart here
–The VIX is now 39% above its 10 day moving average and up 76% this month with SP500 down only 4.96%.
–The average VIX spike since 2013 from the $12 level has been roughly 64% we are at 76% now.
vix
–Telechart’s McClellan oscillator closed under -200, dead cat bounces start from these levels, see chart below.
spx
–The stocks that were holding up well finally got hit today $FB $KORS $UA $Z to name a few.  What got hit first, the oil names, they were the ones that closed up today.  FIFO, first in first out, (oil names are probably only good for a dead cat bounce).
–The Russell 2000 and the Microcaps are holding up better than the DOW and SP500 since we peaked on 12/5,  many view that as a positive, some might say that the smaller names have less overseas exposure (perhaps Russia) so they are holding up better.
iwm
A proprietary indicator from Pradeep Bonde has spiked to a level that has led to bounces.
RUT
–Even with today’s reversal we had more stocks up from the open than down.
Frank Zorrilla is the founder of Zor Capital LLC a New York based investment management firm.  Our goal is superior performance, with preservation of capital as our number one priority. Zor Capital manages separate accounts (both taxable and retirement) for accredited investors and institutions. This structure gives clients access to a hedge fund like strategy while maintaining 100% control of their accounts.  Managed Assets

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Saturday, December 13, 2014

15 Tips To Improve Your Trading

bullseye

  1. Tune out the noise (maybe the financial news).
  2. Tune out the noise (maybe social financial media).
  3. Tune out the noise (maybe the indices, Dow Jones, SP500).
  4. Figure out what your edge is.
  5. Learn how to lose and accept it, you will be wrong 50% of the time if you are good, if you are great you could be right 30% of the time and still make money.
  6. Try to eliminate any bias to a stock on your watch-list. On any given day you don’t know what stock will be the big winner so you have to be able to pull the trigger on the ones that trigger and play the probabilities.
  7. Know your time frame and yourself. You can produce large gains with many trades and low volatility or with a few long term position trades with higher volatility.
  8. Constantly go over your recent trades and watch-lists to see what is working and how its working.
  9. Tune out the noise, I’ve been browsing some books lately, one of them the author says he made all his money buying IBD type stocks; over $15 dollars, accelerated growth and E.P.S etc, and the other guy made a fortune doing almost the exact opposite with beaten up stocks left for dead. Know what is important within your trading time frame, and do your own homework. Money can be made with all type of stocks, a lot depends on what the market is favoring and your time frame.
  10. Come to play everyday, be prepared especially on the down days.
  11. Know your advantages; don’t trade like Fidelity Contrafund unless you are moving billions of dollars like them. Liquidity is completely relative on the size of your portfolio.  A stock that trades only 250k shares might not be liquid enough for a billion dollar fund but it is for most retail clients.
  12. Constantly try to improve by recognizing and working on your weaknesses.
  13. Try to stick with the trend, don’t let what you think is logical stop you from believing in the trend. This is when tuning out the noise helps.
  14. Position size and risk management is the key to all this.
  15. Stay humble, biggest draw-downs normally come after big up swings. The minute you feel euphoric take some chips off the table.
Frank Zorrilla is the founder of Zor Capital LLC a New York based investment management firm.  Our goal is superior performance, with preservation of capital as our number one priority. Zor Capital manages separate accounts (both taxable and retirement) for accredited investors and institutions. This structure gives clients access to a hedge fund like strategy while maintaining 100% control of their accounts.  Managed Assets
Photo; John Chapman

Saturday, December 6, 2014

What You Can and Cannot Control In Trading

buy
  • You can control how much money you put behind the idea.
  • You can control which markets you trade in.
  • You can control how much you are willing to risk per trade barring any gap downs, or halt situations that might impact you negatively.
  • You can control what type of stocks you buy, big caps, only small caps, only over $20, only under $10, etc…
  • You can control what type of set ups you buy.
  • You can control when you get in or out, barring a halt.
  • You can’t control the outcome of the trade.
  • You can’t control how the market will react to news, try not to impose your views too much.
The point is not to fret over what you can’t control, once you put the trade in along with your stop for the most part everything else is out of your control.
Frank Zorrilla is the founder of Zor Capital LLC a New York based investment management firm.  Our goal is superior performance, with preservation of capital as our number one priority. Zor Capital manages separate accounts (both taxable and retirement) for accredited investors and institutions. This structure gives clients access to a hedge fund like strategy while maintaining 100% control of their accounts.  Managed Assets
Photo; TheGurusEye

Wednesday, December 3, 2014

Trade Ideas 12/3

These are the stocks on my watch-list today that I have for 0-5 days swing trades, the few shorts are 0-3 days ($V $HSIC $CSCO $GD $DPZ), shorts trigger and are actionable if and only they go through yesterday’s low.
Here is the entire list; Trade Ideas  I made some specific commentary on a few names and how to play them onStockTwits
The Process;
Every morning I go through a few of my scans to find buy candidates for the day.  Depending on the current state of the market the size of the list will vary, usually its no more than 50 names.  My process is based on market structure not on beliefs or myths of what works– or what doesn’t work.  They are certain behavioral patterns that have been around for 100 years that are based on market structure, these behavioral patterns are recognizable, observable, and quantifiable.  On daily basis we have 3,000 stocks that we filter based on certain market structures that gives us an edge of a higher probability than a random outcome.  Once the list is narrowed to a handful of names the market will further narrow down the list by getting us in or keeping us out of these names with a range expansion move.
I don’t look at charts in your conventional cookie cutter manner, or have rules as to where the stock should be whether its 15% off its 52 week highs or above or below certain moving averages etc…
These are what I consider “tight set ups” that will trigger a buy signal for me if  and only when they break the previous day’s high.  On a regular trading day I would indiscriminately take every trigger because you just don’t know which one will be the big winner, you might have an idea but in the end you don’t know.
How much you put at risk per trade depends for the most part what your current outlook is for the market over the next 0-5 days.
Put these names on your trading platform, set the alerts at yesterday’s high for each name, once the alert goes off take a look at the chart, decided within 3 seconds whether or not you are going to buy it, decide how much you want to risk on the trade and your stop loss, hit the buy button, and leave the rest up to the market, wash, rinse, repeat.  Buy’em tight, Sell’em loose.
A few things that you should know about this swing strategy;
  •  Its main goal is to get you in when stocks are moving and keep you out in choppy/sloppy markets, it is imperative that you allowed the market to get you in only when the stocks go through their previous day’s high.
  • Your awareness of how the market is behaving is crucial, this will give you an idea of how hard to push the envelope.  My best indicator for this is my rolling 5 day watch-list.
  • Swing trading is a numbers game, you are going to be wrong half the time, risk management is above all, and many times you will have nothing to do because the market did not get you in. We are not looking for any action, we are looking for the right action.
  • Don’t be penny wise, don’t try to anticipate a move just because the chart looks good.  You can have a great looking tight set up with a stock coiling for 10 days but who is to say that it won’t coil for another 5 days.  If you anticipate the range expansion you might buy something that is not ready to go and it will only frustrate you and lower your odds of a winning trade.
  • For me this list is a one way list – long bias.  I do not look at this list as a long or short list, long and short are two different games with different dynamics.
  • You need to be extremely organized.  Most if not all your work will be done pre-market and you will spend the day just executing or you can just automated it with buy orders after 9:45am.

Frank Zorrilla is the founder of Zor Capital LLC a New York based investment management firm.  Our goal is superior performance, with preservation of capital as our number one priority. Zor Capital manages separate accounts (both taxable and retirement) for accredited investors and institutions. This structure gives clients access to a hedge fund like strategy while maintaining 100% control of their accounts.  Managed Assets