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End of week update: 30th Jan 2016

Writting at 45,000 feet, would feel like a jet setting ceo were i not sitting in economy next to 2 football fans and a crying baby.Anyway it lets me pass the time by writting (slowly) about some issues now that the first month of the year has come to an end.
January was a one off and I do not think it all sets the tone for 2016. The risk aversion, panic and massive sells off did not sustain. Indeed solid employment data from the us, uk and stimulus from the BOJ and 6.8% growth from China shows that while things may not be as perfect as everyone had hoped, they are doing well and there is hope at the end of the tunnel. Proof of this s( and i believe numbers are the best evidence) should be the sharp turn around in January of our Etoro account that went from a -35% return for the month to a 25+% gain. Or our strong performance on HF which saw us post profits of 15% for our first month of trading there, despite all our problems.
Will the JPY lose its haven status in 2016?
The main thing I wish for you all to ponder over this afternoon (and i want to keep an eye out for this change as well) is what the BOJs latest action means. (N.b. Do not believe all the BS that it shocked the market, if someone as primitive as mysef has been calling this since November, do not believe for one second that any of the institutions were caught off guard). Returning to the mater at hand, the BOJ have made it clear they want a weak Yen. This is important to Japanese inflation, exports etc. when the USDJPY goes below 120 it hurts Japan at these fragile times and the boj has made it clear that they will keep cutting rates into further negative territory as required to leep the yen weak. In short the days of sustained yen strength are over and are unlikely to come back.
But what we have as a result of this is another issue. Where do haven seekers go from here? Haven seekers used to love the chf and jpy due to current accounts and status as a safe currency. When the snb made rates negative, the chf lost some of this status as investors do not want to effectivey be charged for holding a currency. The same will be true for the yen. Due to negative rates, it will lose some appeal as a haven refuge due to the cost of using it as such. (Incidentally longs against the yen will also refund larger amounts from now on as a result of these cuts).
The UK will outperformthis year
With regards to the UK. Inflaion due on Feb 16th will be firmer than expected in my estimation. I base this due to 1.) the price of sterling falling a lot which will negate the effects of oil somewhat. 2.) larger employment leading to more spending. 3.) the healthy housing market. When this happens people will see how cheap the Stering is and will likely buy it back to its fair value of about 1.50 (based spreads between two gear generic govt bonds). And before all the “pros” jump on this and start calling me wrong:

1.) you ridiculed me in august 2015 for saying the fed would hike in December. Who was right?

2.) you ridiculed me since Novemeber for saying the BOJ would act at its jan meeting. Who was right?

3.) you ridiculed me in december for saying the rnbz would cut. Who was right?
I am saying now that the Sterling will outperform the other majors in 2016 and thhe BOE will move at the end of the year. (You can begin ridiculing again)
Account safety:
Some people have been asking me if we could have avoided the events of December and the answer is no. And as for the other people on Etoro who want to claim they are different. Yes you are. There are NO other people like us on Etoro. We go for 1,000s of percent a year. We consider a 10% month a failure. Sure you may have lost only 15% in Demeber but these people make less than 5% on their best months. The sheer fact that someone on a 14% annul return was comparing his risk and drawdown to someone on a 2000% return should show you just how dellued these people are.
We can never be a 100% safe account. We can not go for 4000 percent in a year and not take big risks. I wish we could but we can not. Its easy for people like to critisize because they are not the same as us, they have never turned 10k into 300k. We try to make wealth, they try to guard it. The fact is they all laughed in December but had 15 random and most unlikely events not have unravelled at the same time, i would have made half a million dollars from 10k in less than 9 months. Something none of these people can even comprehend (hence why they are so eager to just get an extra 100 a month….). What went wrong, just to name a few (and all in those 6 weeks):
1.) russia going into syria

2.) turkey shooting down a russian plane

3.) russia threatening turkey

4.) sanctions on iran lifted

5.) oil hitting a 15 year low

6.) commodities doing the same

7.) circuit breakers in shanghai throwing the markets into panic (twice!) before being suspended.

8.) a warmer than usual winter.

9.) saudi tensions with iran.

10.) uk bringing forward the eu referendum.

11) boj easig in dec by a tiny amount and saying no more would happen (which we know now they did).

12) draghi losig control of the ecb in december and failing to deliver.

13) opec abandoning its quotas
How unlikely was just one of these things, let alone all 13… And there is so much more.
So no we can never be 100% safe because chasing insane returns means heavy investments that leave us exposed when freak things like this happen. Do not expect 4 figure returns with no risk. That is unreasonable and shows ignorance of markets and investment. 
Right, back to the movies,
Mohammed
P.s. From tomorrow will start writting a weekly outlook for the week ahead. Hopefully it will prove useful to the community.

14 Comments

  1. Hi Mohamed,
    i’m on etoro i was following you for more than 4 month and I want to copy you.
    I want to copy you but i don’t know what’s the best for me HF or Etoro??
    Are you leaving etoro or not? do you think $1000 is enough to copy you?

      1. Thank you for the reply i have other questions if you don’t mind.
        Do we have the same option in HF ? Can i copy you there? why did you chose HF?

        Thanks Mohamed.

        1. Yes you can. I picked HF due to:
          Good number of instruments available
          Very competitive spreads
          Very good and reliable platform
          Excellent support
          No interferance from staff with trading
          neglibile withdrawal fees.

          1. Hi,

            I’m probably asking some very dumb questions here so you don’t need to trouble yourself with these Mo, just anyone who has joined you on HF. What sort of account do I need to sign up for in order to copy? I assume the social account? As much as I’m sure HF is a great platform I’m not finding it to user friendly for amateur traders. Not finding a dramatic amount of information on what each account does either (maybe as an amateur I just don’t fully understand it). My plan will be to put a small amount to copy Mo in HF but keep etoro for my own trading as I know how to use it and I have cash tied up in it at the moment. Thanks Mo for all you have done for myself and this community, it’s a shame your leaving etoro and I totally understand. Hope to get HF up and running in a week or so if you’ll have me along but still want to do my own trading on etoro. I won’t make anywhere near your returns but it’s not so much about the money, I want to try and make my own trades and analysis which is quite important to me. So yeah if someone can just email back to give a hand to get HF up and running I would be most grateful πŸ™‚

          2. Hey Michael Vargas – if you wish to join on HF you need to create a PAMM investor account, after you’ve gotten yourself registered. You will transfer money into the wallet, and then do an internal transfer to the PAMM account. It wasn’t that easy to figure out for me either, until I got some help from the guys in the forum πŸ™‚

      2. Hey hey , cant wait to have money enough to return! Would you please consider to stay at etoro because its a perfect marketing tool for you !!!

        1. Its the wrong sort of marketing. The average etoro user thinks they can click a button and retire unfortunately.
          Etoro markets itself to people not familair with investment, its risks or goals.

  2. Thanks for the read Mo.
    I wonder about the pound: what do you think the outcome of the brexit vote will be and what effect will it have on the cable?
    Thanks and have a good day!
    Tania

    1. In the build up to it, it will be bearish for the pound. I think the British want out but let us see what happens. This is sentiment more than fundamental.

  3. Dear Mohammed,

    Thanks heaps for making so much profits within this short period of time and reversing the loss of December! After adding the money to sustain my copy to you on eToro, I could witness personally again on how you reversed those losses into smaller and smaller percentage. I started copying you in November 2015, and from almost touching the copy stoploss in December, you manage to turn the percentage from 90% to merely 5.68% as of today(30th January 2016). This is a great and amazing work to me!

    Thank you very much again! Have a great weekend!

    Regards,
    Liszen

  4. Hello OMGEE

    I’ve been copying you on etoro for a while now and I really appreciate what you are doing. How do I copy you on hot forex as I’d like to do that but i’m unsure how to go about it

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