Tag Archive | Brazil

Position Sizing: Key to Maximizing Returns

In a time when market volatility and equity preservation is of utmost importance, determining the correct number of shares to buy, or “position sizing”, is key to maximizing returns and minimizing risk.

The common investor generally doesn’t spend much time thinking about how many shares to buy or how significant of a position to take.  Instead, most investors use a common methodology of trading the same number of shares each time, which usually translates to a specific dollar amount.  Other, more sophisticated investors, opt to allocate a certain percentage of their portfolio value to a specific position. Following this train of thought, a new position in a portfolio of $100,000 would transcribe either a $10,000, or 10%, investment or a usual position of 50 shares.

Although these methods may work for some, using the volatility of a specific portfolio is likely to be the most effective decision tool.  Measuring a portfolio’s overall volatility enables an investor to decide on what percentage of that portfolio he is willing to risk losing on the new position.  This methodology is better explained through the following example. Read More…

Netflix takes South America

 by Raghu Gullapalli, contributing writer

This morning news came out courtesy of All Things Digital that Netflix (NFLX) the provider of on demand internet streaming video and flat rate DVD-by-mail. was expanding its operations into Latin America.

 Upon the break of this news the stock gapped up in the pre market and looks ready to launch its booster rockets once again in attempt to break the $300 barrier.

Netflix

 This is a prototypical example of a long gap trade.

  1. Netflix gaps above a long-term resistance level, in this case the all time highs of $277.70.
  2. The premarket volume in the stock exceeded 500,000 shares, ensuring liquidity.
  3. The stock gapped up more than 3%
  4. Netflix gapped on a strong catalyst that did not involve earnings, i.e., the news of its impending expansion into the Mexican, Caribbean and South American markets.

This expansion into these markets south of the U.S. borders, gives credence to Netflix’s (NFLX) foreign expansion plans and lends credibility to the company’s overall strategy. If you will recall, just last fall the company expanded into the Canadian market and in just a few quarters of operations it has is emerged as the market leader.

 With the equity markets reacting well to the news of the Greek bailout and the strong surge over the past week, I have little doubt that the tailwinds from the market could be enough to push the stock into the hallowed $300 territory. An area occupied by precious few technology companies.

 If all that wasn’t enough, how about a cherry on top? In the form of an “F” for Facebook the social media behemoth, that has been considering a joint venture with Netflix. Facebook recently added Reed Hastings, the CEO of Netflix to its board of directors.

But a word to the wise, in this dynamic market landscape, today’s darling could well become tomorrow’s dud, as is well represented by the misfortunes of Research in Motion (RIMM). And market sentiment could change very quickly and could become headwinds blowing in the face of upward momentum.

 SmartStops intelligent risk management software has the short-term and long-term stop for Netflix at $239.64

 

NetFlix SmartStops Chart - NFLX

 

 

Three ETFs Potentially Impacted By Floods In Brazil

Brazil is currently suffering from of one its worst ever natural disasters after extensive rainfall and flooding has caused massive mudslides and killed many people, potentially having an impact on production of coffee and sugar in Latin America’s largest economy.

According to BBC News, harsh storms in the nation dumped the equivalent of one month’s rainfall in just a few hours on Wednesday, sending mudslides ragging through towns, destroying homes, roads, and bridges, while taking out power and telephone lines.  Worst of all, municipal offices in the Serrana region, just north of Rio de Janeiro, have reported that death tolls as a result of the mudslides have surpassed the 500 mark and continue to grow.  Read More…

Two Latin American ETFs For 2011

As the developed world continues to struggle out of the Great Recession, emerging markets performed relatively well in 2010 and are expected to sustain this growth and performance in the coming year.  China continues to draw headlines and steal most of the attention; however, in the coming year, Latin America may be the place to look and for good reason.

Inflationary threats and real estate bubbles have taken front and center stage in China, resulting in the nation increasing its benchmark interest rates for the second time in three months and increasing banking reserve ratios to reduce risk, which could hinder future economic growth.  A different song is being sung in Latin America as inflation is expected to remain subdued, which is expected to lower pressure on central banks to change interest rates which will likely further limit the possibilities of tighter monetary policies. Read More…

9 ETFs To Play Currency Debasement

As developing nations continue to implement loose monetary policies, keep interest rates low and boost money supply, a nation’s debt and currency debasement should me of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal.

Some concerns of this exponential growth in debt include hyperinflation, as a result of printing more currency, a decline in the value of a nation’s currency, better known as currency debasement, and increased costs of borrowing, which make it difficult to chip away at deficits. Read More…

3 ETFs To Play Brazilian Bonds

As talks of a bubble forming in the US bond market continue to prevail, many investors have turned to the Brazilian bond market and for good reason.

According to investment data firm, EPFR Global, international bond fund managers have infiltrated the Brazilian bond markets to the tune of $5.2 billion of assets as of September 22, 2010, more than double that seen in 2009.  Furthermore inflows into Brazilian bonds account for more than 10% of all inflows into emerging market bonds.  Lastly, local Brazilian government

Currently, local Brazilian government bonds are yielding more than 11 percent on one-year bonds and are expected to continue to do so as demand is expected to remain strong, especially from countries with low interest rates, suggests Kenneth Rapoza of Barrons.  Read More…

Four ETFs To Play Brazil’s Prosperity

As fears of weak economic growth continue to prevail in the U.S., Brazil has been a hot ticket amongst emerging markets and is likely to continue to witness a booming economy.

The South American nation is rich in natural resources and is a leader in global agriculture.  The recent global boom in commodities has fared well for the largest national economy in Latin America as its exports of beef, soybeans, coffee, orange juice, iron ore and steel have all increased.  Furthermore, this elevated demand for natural resources is expected to be sustainable as global populations continue to expand and the purchasing power in developing nations increases.  Read More…

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