daytrades may 21 morning ..., page-46

Today is probably one of those days where we wished the clock radio didnt turn on.
It is also a good time to reflect on the things that really matter in our immediate world rather than the world of finance.
Below are some of my thoughts.
Given the 200 Day Moving Averages have been broken on the SSEC, HSI, & now the Dow Jones (last night) we are certainly looking at a real possibility these markets will have further to fall, yes there will be short rallies & bounces, but it may be worth waiting till a point like last March 2009 to find a real buying opportunity. The use of moving averages on the markets as well as individual stocks could come in handy i.e. crossover overs of 10 & 30 day moving averages.
Governments & politicians around the world are not up to speed on the financial products our financial geniuses in these investment banks & hedge funds are using. The real Warren Buffett warned us some years ago about the dangers of derivatives. We currently have a derivatives market that is 40 times larger than the equities market & the term quadrillion rather than trillions is used to describe the size of these markets.
So far the governments have used debt to try & solve debt problems (bit like putting out a fire with petrol). This can only end in inflating the value of the real physical items that are scare in supply. Who is going to sell hard assets or commodities for the same price knowing there are now far more bits of paper out there in circulation, unless a forced seller.
While gold shares will initially move with the general emotions of the sharemarket, eventually they will be recognized. Gold & gold reserves are most likely part of the solution & eventually owning unhedged gold in the ground will prove a very profitable investment as the gold price adjusts. We need to remember gold has outperformed all asset classes over the last 10 years & looks like continuing this performance. Gold shares enjoy a huge leverage factor i.e. any profitable gold company certainly enjoys a $100 an ounce price increase as it goes straight to the bottom line. Currency movements will also in some cases improve gold companies margins as well, so it is a double play for gold.
The importance of having spare cash reserves is again highlight to all short term traders, whilst it may not be used today there are opportunities being created that will be excellent investments at the right point in time, .i.e. not unlike early last year around March 2009 .
Bill Gates told us of the Super Highway in information & it is certainly here. The internet has problem increased the volatility of all financial & commodity markets, unlike the days of sailing ships or morse code carrying the information, we all know what is happening in Europe, China, America ever minute if we wish & unfortunately react accordingly in our behaviour. Share investing used to see day traders as very near term, well the bots controlled by a very few individuals & organizations have changed the game. It looks like we have created plenty of new products without any rules to control their outcomes. The game has given a few players huge advantages over the rest. As usual the politicians will eventually develop the rules after the system fails. If you are old enough you may even remember the Rae Report after the Poseidon boom (early 1970s)
Enjoy your immediate surrounds today & aim to get more educated in this game if you intend to stay in it.
Regards
Buffett
PS No investment advice given please DYOR.