Editorial Contributor
zak mir’s top pick for march Short term Buy Call on Gold Although the financial industry is keen to present the glamorous side of trading and investing, frequently focusing upon the results of the most successful participants, even for these over achievers the process, on occasion, must be about as comfortable as pulling teeth. Just ask John Paulson who has now endured two annus horribilises! Perhaps the best analogy is to steal from the world of entertainment: you are only as good as your last trade. For me, the real challenge is that very often the best money making ideas in the market are those which are totally at odds with logic, or which most of us would likely shy away from — in essence the true contrarian trades as where the big money is made. For instance, January saw the FTSE 100 deliver its best first month of the year since 1989 — back then continuing its recovery off the 1987 Crash. I can tell you how it happened. We were, it seems, collectively either scared out of our long positions, or even worse, short of the market using the logic that the Fiscal Cliff was still not resolved and the U.S. was staring the barrel of a recession and thus there could be a severe stock market correction.
38 | www.financial-spread-betting.com | March 2013
At the very least, it seemed that the wise move was to exit before the 1st January deadline just in case no deal was struck. Well, of course a deal duly was struck, literally on the midnight hour! In this particular game of Russian roulette there were only blanks in the barrel, and the winners were those who stayed long from November. Last month’s recommendation in ICAP (IAP) was another counterintuitive play — in fact doubly so. It was taken on the basis that CEO Michael Spencer had, inadvertently, created a bear trap in the stock by suggesting that trading conditions for the interdealer broker were the worst in 36 years. The booming stock market post the Fiscal Cliff fears has reversed this logic. The stock was so strong that it gained nearly 10% even after a Libor investigation was announced on January 24th, and despite my good friend Dominic Picarda disagreeing with my buy call in last month’s edition of this magazine — a case of age before beauty perhaps here?!