About Cassidy Lucas

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20 Pips Equals Your Success

Ever dream of being that one investor? The one who predicts market events before anybody else knows they’re coming, and gets away with millions of dollars fitting nicely in your pocket? Well, it might be hard to stuff that much money your pockets… but I’m sure you would have no trouble finding a nice safe place to store your millions. Wouldn’t it feel great to make it on the list of legendary traders known for their cunning and incredible returns?

1929: Jesse Livermore shorted the stock market (predicting the crash) and made $100 million.

1987: Paul Tudor Jones shorted the stock market (predicting Black Monday), making an estimated $100 million.

The 1980s (after Black Monday): Andy Krieger shorted the Kiwi (predicting it was highly overvalued) and made $300 million.

1992: George Soros shorted the British pound, making $1 billion dollars (meanwhile Stanley Druckenmiller invested in the german mark and made an additional $1 billion for Soro’s Quantum fund)

2000: John Templeton made $80 million in a week shorting the Dot-Com bubble.

2003: Andrew Hall went long (like, 5 years long) on oil and made enough to land a $100 million dollar bonus.

2007: John Paulson and Kyle Bass both made $3-4 billion shorting subprime mortgages and mortgage-backed securities.

2009: David Tepper went long on banks (predicting they would recover from the financial crisis) and made $7 billion.

Of course, while some take opportunities in the market to make millions, you have to realize the enormous risk behind these trades. As investor Spidey-man would say, ‘With great returns comes risk of great losses.’ For example: Yasuo Hamanaka lost $2.5 billion shorting copper, Brian Hunter lost $6.5 billion in natural gas futures, and Jerome Kerviel lost an incredible $7.1 billion in European futures. Just this last May, China’s richest man lost $15 billion when his company shares plummeted. Ouch – somebody didn’t have their stops on!

The difference between us and them is as simple as a couple of zero’s. Say you make 20 pips with one lot, while somebody else makes 20 pips with 100 lots. You both made 20 pips, but the one with 100 lots made a lot more money. Honestly, it all depends on how much money you put into the trade. The more you practice hitting your 20 pips a day, the more comfortable you’ll become trading in the market. The more comfortable you become in the market, the more money you’ll invest in it. The more money you invest, the more money you’ll make (as long as you’re smart about it). Then, you’ll be hitting your daily 20 pips with 100 lots and making a lot more zeros.

Happy Trading!

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What About Benjamins?

Born in Boston on January 17, 1706 was the tenth son of a soap maker. He was known as Benjamin Franklin, and not only did he contribute to the shaping of science and history but his face graces every $100 bill that’s been printed since 1914. How does our dear friend Ben measure up to his treasured namesake, the $100?

BENJAMIN_FRANKLIN-1 c-note
Benjamin (Franklin) Benjamin ($100)
-Born on January 17, 1706 in Boston, MA -The version we know (with Ben’s face) was born in 1914, when Reserve Banks were established in 12 locations through the U.S.
-Alias: “silence dogood” -Alias: “c-note”
-Spent time abroad as an ambassador in both England and Paris -About 2/3 are in circulation outside the U.S.
-Invented a type of oven, swimfins, and bifocals -It costs 12.5 cents to produce
-Apprenticed at, worked at, ran, and owned a print shop -Printed in Washington D.C. and Fort Worth, Texas
-In 2009, one of the only 1733 original printed copies known to exist of his ‘Poor Richard’ Almanac was sold to an anonymous bidder for $556,500 -When the new version of the bill came out in 2013, the bill with serial number ‘1’ is estimated to be worth somewhere between $10,000 to $20,000
-Lived for 84 years (died April 17, 1790) -Avg lifespan is 90 months (~7.5 year)

 

One more thing you might not have known about Benjamin Franklin. His scientific and financial savvy (along with his good advice) inspired Apiary Fund’s Benjamin Formula. A formula that can help you determine whether or not to take a trade as well as how risky your trade will be. Pretty neat, huh? So follow the example of Benjamin Franklin while you’re trying to make your benjamins today!

“Well done is better than well said.” -Benjamin Franklin

Happy Trading!

For more information on the Benjamin Formula (not the Benjamin Graham formula) click here.

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Bunnies and Money Management

It is essential to understand money management before you enter the market. In fact, learning the essentials is important before you try anything. I learned this lesson years ago while caring for my neighbors animals.

babybunnyLast summer, my neighbors went on their annual camping trip to Beaver, Utah. Every year they ask me to take care of their pets while they’re away. The number of pets they have is always growing, and that year consisted of 12 chickens, 2 fish, 1 cat, and 4 bunnies. I never have, and am doubtful that I ever will, own a pet, but I agreed to help them out. I received 3 pages of typed instruction, and training on how to place the labeled chicken food into the labeled chicken pen using the labeled chicken scoop (I may have accidently mixed up the cat and chicken food the year before). I even practiced feeding the chickens with their daughter two days in advance. They left feeling reassured that not even I could mess up their detailed instructions, and I watched them go feeling confident in my ability to keep their animals alive for five days (one year the cat jumped into the fish tank, resulting in a decrease in the fish population).

The next day: I fed the fish, I fed the cat (not the fish), I fed the chickens, gathered the chicken eggs, and opened the door to the bunny cage. Unfortunately, the bunny in there ran out as soon as the door was opened, and I spent the next hour chasing it around the backyard. Finally, with the bunny safely in my arms, I returned it to the cage with the other bunnies. I replaced the food and water, and left feeling like a champ.

The next five days passed uneventfully, and I was delighted with my success. My neighbors returned, and immediately checked to see if their dear pets were still alive. I happily informed them that they were all alive and well. Their daughter, inspecting the bunnies, turned around and said, “Mom? Why is the boy bunny in with the girl bunnies?” One month later, they had 34 baby bunnies.

Truthfully, I’m uncomfortable with animals. They sound easy to take care of, and I had the instructions and means to take care of them, but I had no experience or any idea on how to actually handle them. Now, relate this to money management. I know it can feel like a stretch comparing caring for animals to your money (though I wish my money could reproduce as fast as those rabbits), but the similarity isn’t between animals and money. It’s between knowing how to handle and care for them.

Proper care and handling of money in the markets is key to successful trading.  In the same way improper handling of the neighbors farm resulted in unintended consequences, improper handling of money can have unintended effects – loss of capital, longer hold periods, lost opportunities.  However, with some basic knowledge, a good set of instructions, close attention to details and discipline you’ll discover that you can manage your results with much greater control…  And who knows, maybe your monies can grow like bunnies.

Happy Trading!

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The Traffic Laws of Trading

 Awww yeah, that would be life. Cruising down the highway in your sleek new ferrari… or maybe not.

ferrari-458_lA few years ago, a driver of a candy red Ferrari Testarossa managed to nail a $290,000 speeding fine while driving 85 mph through a village in Switzerland. In Switzerland, they base their speeding fines off of income, and since this was a repeat offense they were not messing around. After reviewing the case, the court said, “the accused ignored elementary traffic rules with a powerful vehicle out of a pure desire for speed.” That’s a high price to pay because you forgot one of the most basic traffic laws. speed_limit_25_sign

We can all relate to the pit that drops to your stomach when you look in the mirror and see those blue lights flashing. And while most traffic fines aren’t that hefty, just in the United States they generate between $3.8 billion to $5.4 billion a year in revenue.  Now, relate this to your trading. How many times do we let our emotions, or our pure desire to make the trade work, cause us to forget one of the most elementary trading rules-get out of a losing trade. When we get emotionally involved in a losing trade, we get caught-and you’ll end up with a ‘ticket.’ Just like the driver of that candy red Ferrari let his desire to go fast cloud out the danger (and high price) of speeding, we can forget that taking a small loss is better than big one. So just slow down, follow the traffic rules of trading, and have a good day in the market!

Happy Trading!

One way to not get caught in a losing trade is to have  trading plan or a set of rules you follow when you trade. Here’s the link to a couple of our blog posts about having a trading plan.

http://www.apiaryfundblog.com/how-to-form-a-trading-strategy/

http://www.apiaryfundblog.com/take-market-come-top/

http://www.apiaryfundblog.com/our-philosophy-on-success/

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2015 Fed Rate Hike or Stimulus

The economy is in trouble, but you’re not going to hear that on CNBC.

The prevailing sentiment is calling for a Federal Reserve rate hike in 2015, but the inflation forecast is pointing to a very different scenario.

For the past six years, Fed stimulus has been a major driver of the economy, and by extension, the financial markets.  By official mandate, the Fed’s top priority is to avoid the economic threat of deflation.

Since the market crash in 2008, the Federal Reserve Board has actively used inflation as an apparatus to decide whether or not to add more stimuli to the economy. Any time the inflation rate falls below a target level, they pump money into the economy.

The following table shows each Fed intervention and the corresponding inflation rate for the past six years.

Form of Stimulus Date Inflation Rate
QE1 4th Quarter 2008 2.0%
QE2 3rd Quarter 2010 2.1%
Operation Twist 4th Quarter 2011 2.1%
QE3 Phase 1 3rd Quarter 2012 2.2%
QE3 Phase 2 4th Quarter 2012 2.5%

 

Like clockwork, every time inflation dropped below 2.2% the Fed intervened and announced a new stimulus program.

The problem, not widely discussed on CNBC, is that inflation dropped below 2% during the 4th quarter of 2014.  It is the lowest rate since Janet Yellen took office and it’s a sign that deflation is taking grip of the economy.

If past action is any indication of future decisions, then instead of a rate hike, I’ll be looking for signs of another round of Fed intervention in 2015.

 

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Resolution Solution

Have you ever watched those inspirational videos about people who do amazing things, and you commit to becoming a better person? I love those videos, and I think that they do a lot of good in reminding me of the person I want to become. However, sometimes I set up unrealistic expectations for myself. I tend to find myself being a completely new, inspired person for about an hour until I revert back to just being me. So how do you make a resolution that lasts? Here are some tips I’ve found to be helpful:

  1. Sit down and make a list of what really makes you happy. This one is easy, on my list I put things like my family, the mountains, running, and watching movies.
  2. Decide what you’re doing right now that isn’t making you happy and is a waste of time. This one is more tricky. You might have to put something that might be fun or a habit, but isn’t really helpful in your life. I put down things like checking social media late at night, being drawn into watching too many tv show episodes, or always being just a couple minute late everywhere I go.
  3. Make a plan to change your lifestyle to include things that make you happy, and get rid of those things that are time wasters. DO NOT set unrealistic expectations for yourself. We’re all human, and it’s hard to break habits. Make changes that slowly transform your bad habits to good ones. For example, going to bed half an hour earlier instead of changing your bedtime to 8:30 when you usually go to bed at 12.
  4. Commit yourself. When you make a mistake or fall back on an old habit, stop, and learn from it. Then don’t do it anymore. It sounds really simple, but you really have to work hard to remember and keep up the small changes.
  5. Be happy with who you are. Be happy with who you are, but never satisfied so that you are continually improving yourself.

Good Luck! And Happy New Year! ____________________________________________

 

 

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