The Eye of Sauros : The deal of a lifetime

Today, I had it wrong on most of my positions that were hurt as the Dow skyrocketed above the 8000 points mark to end just below with a "mere" +216 for the day, boosted by strong G20 action and easing in US accounting rule. As you could guess I was not really bull on the situation...

A few surprises in Europe this morning, firstly in the UK where the average cost of a home unexpectedly jumped 0.9 percent in March from the previous month to £150,946 (impact of the Bank of England’s interest-rate cuts?). Then came the ECB that cut its benchmark rate of 25bps to 1.25% (a 50bp cut was broadly forecast). which push the EURUSD higher. The bank deferred the decision on what other tools it can use to rescue its economy to May, probably due to opposing views of the Council members. Let's wait for May then.

An extra boost in the market sentiment came as the G20 meeting was taking steps considered as significant, including an increase in ressources for the IMF and a $1.1 trillion commitment of funds to boost trade finance. The strength of the market reaction showed how the market participants anticipated disappointment. I was the first of them to be frank, guessing that despite of all the efforts I knew they would make to show co-ordination, no agreement or concrete action would be reached, notably on measures to clean up banks' balance sheet and monetary policy commitment. What happened is those two points have been merely avoided...

The other news that moved the market today was the decision of the Financial Accounting Standards Boards (FASB) to relax the fair-value accounting rules, allowing companies to use "significant" judgment in the pricing of toxic assets in their books, pressured by US lawmakers and financial companies. According to Bloomberg : "Analysts say the measures may reduce banks' writedowns and boost their first-quarter net income by 20 percents or more." Only 20 percents ? Me, in bankers' shoes, I would "judge" my equity tranches of CDO of CDO of subprime ninja RMBS close to 100, based on my proprietary model using Moody's historical rate of default of equity tranches of CDO of CDO of subprime ninja RMBS since the Antic Greece, actually it's zero as we observed no default. The US gov introduced more leverage in the over-leveraged system, they introduce now the possibility to mismark dearly something which worth nothing, that's absolutely brilliant! I quite like the point of view of the BusinessInsider on the topic.

So globally a bad day for my short positions and I have been stopped on a few of them (after a few weeks of positions), I will sit on the survivors, keeping them tight : no real doubt on my global view and I start hearing a few bull rhetoric like the ones I'm waiting for to strengthen my short. To me, the only actual question is just how far this will rally ?

Ehh, I was about to forget to mention that I closed today the deal of a lifetime on a position I initiated yesterday (I have now become a scalper !!!) banking a profit of about +60% of my equity in one day. If I want to market my skills as a money manager I could say : " mmmh, I'm doing not too badly this year, for now I just have an annual rate of around 32,000 trillion percents, yes, a 16-digit performance, nothing really outstanding here but I think I can improve that"

More about this deal : we did an experiment yesterday with my dear friend BillBund (the Hobbit). He was arguing that it is easier to loose money than to make some in the markets. My point that both were equally difficult (obvious no?)
So my question : "What should I now to loose money? Let's say 2-3% of my equity"
"That's easy, go against a strong trend, for instance go long EURUSD" (actually I looked again on the chart, I still can't see any strong trend on the EURUSD yesterday, maybe if you look closely at a 2 sec chart but that's not the point here)

"OK, let's go for it" I said.
I then opened a practice account on OANDA, leverage x40, 100,000 peanuts, went long EURUSD as much as I could, pyramiding a few times on my profits. Actually, I caught a (local) bottom and my dear friend Trichet gave me a helpful hand today to make the difference (Thanks Jean-Claude, I owe you one old chap)

We can draw two conclusions from this higly scientific experiment :
1 - It is as difficult to loose or make money on one position
2 - It is much easier to make huge amounts of money trading PRACTICE accounts and FAKE money.

I have an idea, I will write a book : "Make a living playing Monopoly"