A busy week, isn’t it? Hope everyone getting along well with their assignments and midterms!
This week’s market is pretty stable, nothing surprising. I was keeping checking Stocktrak in order to find a good time to sell my corn as I mentioned last week, however, I missed it! On Monday morning, I could sell my corn at a loss of $2000+, and I hesitated, thinking the loss could go under $2000 since there was an upward trend of corn that morning. Then, it turned out to be that was the highest point of corn this week=< Okay, I admitted I was a little greedy. Here’s my portfolio summary this week.
Trade and portfolio summary:
My portfolio value ending this week is $104069.09 (notice a further loss of approx. $5000 compared to last week!) with an overall 4.07% return and 8/26 ranking( ranking’s not bad, thanks to my wheat!). So far, I have 15 units of wheat, 10 units of maize and 5 units of soybean in my portfolio. This week, I made one transaction to cover my impulse shorting of 5 units of soybean last week. The price was not bad, I only paid an approx.$2000 tuition of my impulse transaction. As before, soybean gives me largest loss and wheat makes up most part of my gain. The further $6000 loss compared to last week comes from dropping price of corn, sadly. Below is the detailed summary of my portfolio this week.(click to enlarge the picture)
Personal reflection & lessons learnt:
As we can see from above, this weeks’s S&P500 was a nice V-trend, with the valley bottom on Wednesday and ended Friday at a slightly higher point than its opening this week. Since there should be a positive correlation between market index and future profitability, I will say the result of my portfolio did not perform well.
Why I covered soybean this Friday is because I realized from last week(actually just after I made the transaction!) that I did not short soybean at a good price. You always want to enter at a HIGH point for short position as opposed to LOW point for long position. I somewhat shorted soybean at a relatively low price which means there is not too much opportunity for me to earn profit from that since the price was already low. So, I covered soybean this Friday and lost $2375.
Highlight events this week:
1.Still, USDA will not release monthly crop reports on Friday as the partial government shutdown paralyses Washington.The Energy Information Administration– a crucial source of oil market information – has operating funds to last through Friday.The lack of government information from satellites and weather services makes it hard for our research. So, take a wait and see position should be most appropriate.
2.Battered by a host of complaints from refiners and blenders, the U.S. Environmental Protection Agency (EPA) is reported to be considering a reduction to the amount of ethanol required to be blended with gasoline in 2014. If the proposed reduction is adopted, it would be a huge win for oil refiners and a nasty blow to ethanol producers and farmers. This will dramatically impact the price of corn as corn is considered as main source of making ethanol. I anticipate a further dropping price of corn as the news came out. I’d better sell my corns next week.(No more hesitation, man!)
Strategy for the week ahead:
1.Hedging
I really got this from our FRE501 class. A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a hedge is used to reduce any substantial losses/gains suffered by an individual or an organization. For our trading game, we could always buy short term and short long term to minimize potential risks.
2. It’s impossible for you to trade at the perfect point.
I learnt this from corn’s price this week. When you see there is a upward/downward trend, you’d better make up your mind to sell/buy. I was being greedy this Monday, otherwise, I could successfully sell my corn at a loss of only $2000 as opposed to current loss of $9000!
Have a nice Thanksgiving & Good luck on your midterm preparation!
