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Topics - The Trader

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The Investor Challenge / Can we short shares
« on: January 15, 2015, 07:03:23 am »
Is there a way to short shares in the competition?

For instance, if you look at Imran's transactions it would seem there is.....

2015-01-08 12:42:31 CGR 7377 1350 R99 987,86   
2015-01-08 13:00:27 CGR -7545 1350 -R101 737,50

18 minutes after buying CGR he was able to sell more shares than he owned at the same price, thus netting a small profit because price was the same. However, it doesn't show him as being short in his holdings.

Patrick, any ideas on this?

2
Shares / 2015 Thread
« on: January 09, 2015, 08:35:32 am »
Hi all,

I used to post under forward curve (and previously contango, which is a shape of a forward curve) but thought I would start the year with this name. I've traded most physical commodities for banks and trading companies in London but now I run Thebe Ventures and am trying to create jobs here in SA. So if anyone has any great business ideas that need backing then get in touch.

Anyway, back to topic. From time to time I'll try and post some thoughts on the markets and give some insight into commodities etc. Right now it looks like equities are getting ready to break out to the upside (see Dow daily chart below). This should get everyone yakking on about how bullish the year is going to be and that maybe QE will extend forever. At least in Europe we know they have to do QE unless the Germans are somehow able to block it.

But, I'm sure that the Fed will end QE mid year and the Dollar will then weaken, yes weaken. Right now FX traders are "buying the rumour" that QE will end and interest rates will rise (meaning they are buying and strengthening the USD i.e. markets are always forward looking). When QE actually does end then traders will "sell the fact" and the Dollar will weaken and thus commodities will rise and equities will fall.

For now however, expect equities to have a nice little run and commodity prices to remain subdued. Although I do expect crude oil to return to a marginal production cost of around US$60 to US$70 quite quickly, possibly by end Jan / mid Feb.

Enjoy and good luck. And remember that the bull walks up the stairs whilst the bear jumps out the window. Study Pythagorus, Gann and the Masonic liberal arts for more insights. So being long around 90% is probably the right position, just try to avoid being "caught and short" for that crucial 10%.

P.S. Thanks to Patrick for creating this space and running the competition. Great work sir.

3
Shares / Coal Shares
« on: January 08, 2015, 10:36:47 am »
The below graph tells you all you need to know about export coal prices. International coal prices are finally in their death throes as China stops building massive new coal plants as they try and get pollution under control. China will be the world leader in renewable energy in a few short years, mark these words. Perhaps India might still be able to save international coal prices as they import huge amounts of SA coal still. However, even India is focusing more on renewables as they also battle to get their own coal production sorted out (India has far larger coal reserves than SA)....

Of course in SA we have Eskom to help out the local coal miners. Eskom is becoming the darling client of all coal producers, even though Eskom only pays around R280 per tonne whilst export prices are currently around R480 per tonne Free on Truck at mine. Also, with Eskom you can get a sales yield of around 90 to 100% whilst with export coal you only get around 60% yield. Then of course there is the local industrial market (for sugar mills, paper mills, cement mills etc.) and they are paying around R750 per tonne FOT mine for high grade coal. But that is a very small specialised market controlled completely by Wescoal now with their acquisition of Macphail. Most of these guys want to move to cheaper natgas anyway.

Buy coal shares at your peril now. I can't see the coal price ever getting back to a level which makes any sense for the deeper level mining which is now required. Waterberg? Forget it. Eskom only. Glencore is the most exposed to world coal prices and this year should see them getting a hiding from the market. Sorry Ivan, you had your day in the 90's and 2000's....

P.S. I co-founded globalcoal.com and traded international physical coal for a living from around 2006 to 2012.

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