IMF releases global report card

On 22 April 2009, the International Monetary Fund (IMF) released two semi-annual reports, the World Economic Outlook: Crisis and Recovery (April 2009) and the Global Financial Stability Report: Responding to the Financial Crisis and Measuring Systemic Risks (April 2009).

According to the joint foreword to the reports, ‘global activity is projected to contract by 1.3 per cent in 2009. This represents the deepest post-World War II recession by far. Moreover, the downturn is truly global: output per capita is projected to decline in countries representing three-quarters of the global economy. Growth is projected to re-emerge in 2010, but at 1.9 per cent it would be sluggish relative to past recoveries.’

The joint foreword notes that ‘[t]he difficult and uncertain outlook argues for continued forceful action both on the financial and macroeconomic policy fronts to establish the conditions for a return to sustained growth. Whereas policies must be centred at the national level, greater international operation is needed to avoid exacerbating cross-border strains.’

It goes on to state: ‘At the root of the market failure that led to the current crisis was optimism bred by a long period of high growth and low real interest rates and volatility, together with a series of policy failures. These failures raise important medium-run challenges for policymakers. With respect to financial policies, the task is to broaden the perimeter of regulation and make it more flexible to cover all systemically relevant institutions. Additionally, there is a need to develop a macro prudential approach to both regulation and monetary policy.’

The full summary version reports are available at www.imf.org

Addictive trading

Famed trading psychologist Brett Steenbarger has delved into the deepest drivers of trading behaviours, covering regions most other trading psychologists don’t dare touch.

Most trading coaches, brokers or trading publications won’t discuss this topic, because without addictive trading behaviour, trading professionals are out of a job – or at least losing work.

The thing is you don’t need to be trading constantly to be a successful trader. In fact, constant trading will more likely see you losing money than making money.

You trade the market because an opportunity has become available to make money. You don’t trade it for the simple action of trading.

And if you are trading just for trading’s sake, or because you are bored, then you might have an addiction problem.

The nature of addiction

We hear a lot of talk about alcohol addiction, gambling addiction and addiction to drugs – but not trading addiction.

Trading addiction isn’t a “hot topic” in psychology circles, but the funny thing is if you talk to any successful trader they’ll be able to tell you story upon story of colleagues and friends who are addicted to trading.

Addiction is driven by repetitive behaviour that generally comes from a loss of discipline. And in the market in particular, losses of discipline are related to addictive trading behaviour.

Addiction occurs when a stimulating activity leads to psychological (and sometimes physical) dependence over time.

And it makes sense, when you think about it, that trading could become an addictive behaviour. You get a buzz out of making a winning trade, and what is addiction but a constant need to feel a high from repetitive – yet stimulating – behaviour?

An addiction generally becomes apparent when it interferes with your life. And when you are unable to stop an addictive behaviour, it generally has consequences on your life.

You can see this in your trading behaviour if you find yourself seeking out trading activity even in the face of negative consequences.

Signs of addiction

It’s hard to identify that you’re addicted to trading – or rather, it’s hard to admit it to yourself.

There are a few signs that will tell you if you’re addicted to trading. Steenbarger identified the following questions as important in identifying whether or not you have a trading addiction problem:

* Have there been times when I told myself to stop trading, but still found myself placing trades anyway?

* Do I find myself over-trading by putting on positions with too large a size or by trading during periods when nothing is going on?

* Have my trading losses created problems for me in my relationship(s), or have they caused financial problems for me?

* Have people close to me told me that I need to stop trading, or that I am trading too much?

* Is the pain from losing more extreme than the satisfaction I get from winning?

* Do I find that my moods fluctuating with my P/L?

* Do I trade simply out of boredom sometimes?

* Do I find myself preoccupied with trading outside of market hours at the cost of other work and relationships?

Anyone who knows anything about addiction can tell you that the word “trading” here can be substituted with other forms of addiction, such as drinking or gambling, because all addiction problems are caused by the same root and characterised by the same repetitive, damaging actions.

It’s a good idea for any trader to ask themselves this question, no matter how successful they feel or “in charge” of their trading behaviour they seem.

This is because it is incredibly hard to admit to oneself that trading has become an addiction – and you’ll often hide the signs of addiction from yourself.

A false sense of security?

It’s dangerous to succumb to trading addiction in these times when the market is so volatile and things are, for the most part, rather bearish.

Right now trading addicts need to be very wary.

Each bear market will see what is known as the “bear market rally”, where a sudden spike in equities makes it look like we’re entering a new bull market.

It is important not to have your confidence overly bolstered by temporary rallies or bullish comments from trading bodies. That is, don’t take too much heart in those who say that though things are tough now, they will pick up in the second half of the year. They might, they might not.

Taken from Australian Stock Report

Excellent earnings and no debt

Carnarvon Petroleum NL (CVN, formerly Metana Petroleum NL, MTP) is an oil and gas exploration company with projects across Australia and Thailand.

The company continues involves generating exploration success and transforming that into larger reserves, stronger production and higher earnings. At the same time the company remains fiscally disciplined, with no debt and a strong cash position of around $80 million, despite difficult market circumstances. This has meant financial stability and no prospect of dilution for ordinary shareholders, unlike so many other distressed resource companies out there at present.




From a charting perspective, there has been an encouraging improvement to the outlook for CVN over recent months. As evident on the daily chart, a solid range of support has emerged in the 25 cent to 23 cent region. In my opinion, downside risks are limited to this region.

Although initial rally attempts have been limited to the 37-cent level, the recent period of base building has the potential to support a sustainable rally in the months ahead. Combined with the resilience of the broader upward trend, CVN continues to offer solid longer-term potential.

In the Elliot Wave 09, we can see that wave for is between the 32 cent and 34 cent region. This will be a good buying point. That will complete with wave 5 at the 41 cents region.

CVN’s interim net profit after tax was $21.7 million, a substantial increase from $5.1 million a year earlier. The increased profit primarily reflects higher production combined with lower operating costs. For full-year 2008/09 , anticipate earnings of around $43 million, putting the company on a prospective price-earnings multiple of just five times, dropping to just three times in 2009/10 as anticipate profit growth to around $80 million.

This is outstandingly value, particularly for a company that has a proven track record of delivering on its exploration and production ambitions. CVN is in a good position with no debt, medium to long-term production and a growing bank balance compared to other peer in the same industry.


Disclaimer :This is just an opinion for general information only.