The New Washington: Tried and True Traders’ Best Ideas
03/06/2009 1:21 pm EST
Tim Bourquin, co-founder, The Traders Expo and The Forex Trading Expo, led this panel of experts in discussing the best strategies for profiting from policies of the new Washington administration.
Panelists included Eric Bolling of FOX Business Happy Hour; Vince Farrell, chief investment officer of Soleil Securities Group; Dennis Gartman, editor and publisher, The Gartman Letter, and Todd Harrison, founder and CEO, Minyanville Publishing and Multimedia.
Bolling discussed the popularity of buying Treasuries at this juncture, but he noted that once the market bottoms, those issues will become less attractive and the government will have to print their way out of the recession, which will send the dollar back down.
Moving on to the general state of the economy and markets, Farrell noted that historically, bear markets last about a year, and he sees signs—such as the improved credit spreads—that make him believe we are now in the bottoming process. Both Gartman and Harrison admitted to remaining bearish.
Bourquin then quizzed the panelists on their current favorite strategies.
Bolling is a fan of metals, primarily silver and platinum, and recommends buying on dips. Farrell told the investors in the audience that companies paying nice dividends look attractive, while Harrison said he is short gold and long oil right now. Najarian is long munis, while Gartman likes the yield and liquidity of New Zealand and Australian government securities.
The panelists also offered some trading advice, with Gartman noting the importance of using trailing stops and also recommending keeping it simple, biding your time until something happens to validate the reason for your trade. Farrell seconded that, telling attendees to wait until the market or a particular investment turns before buying. Bolling warned investors not to buy and hold the double and triple instruments, saying that they are best for short-term trading.
Harrison advocated using fundamentals, then technical indicators as the catalyst for buying or selling. He also recommended that traders sync their time horizons with their risk profiles. Najarian said that the risk parameters are very tight on large traders, who—for the most part—can no longer hold huge positions over night. That leaves a fabulous opportunity for the individual short-term trader, as long as he/she exercises discipline.
A lively discussion on the merits and demerits of mark-to-market accounting also took place. Farrell argued that mark-to-market accounting had decimated the banking sector and that a repeal of this form of financial reporting would immediately elevate the bank stocks by 25%. Mr. Harrison disagreed, noting that the mortgage mess and other factors were the cause of the banking sector meltdown, rather than the accounting rules. All the panelists agreed that traders need to keep a watchful eye on this important issue.
The panel wrapped up on a positive note, with most participants happy about short-term trading opportunities and anxious to see the trading and investing potential once the market finds a bottom.