Tiger Woods, Dave Armstrong, High Frequency Trading and Other Stuff

By David B. Armstrong, CFA | Apr 07, 2014 | Weekly Market Commentary

The other day, I went to the driving range for the first time this season.  While I was there, I mentioned to an instructor that while I generally hit the ball straight, I don’t get the kind of distance out of my clubs that I should.  What typically takes most players a 9 iron or even a wedge requires me to “club down” to an 8.  The instructor said, “Who cares what club it takes, just play your own game.”  Whoa.  There is a point to all this though…read on.

I know this will come as a shocking proclamation, but I’ll never be as good as Tiger Woods at golf.  He’s had training, access to information, analysis, a lifetime of access to other pros, the best equipment, financial resources, and tons and tons of experience, which I will never have and he is great at his profession.  He golfs for a job.  I, on the other hand, golf for another reason.  It is part of my lifestyle.

As such, Tiger can make the best out of the technology available to get him another yard out of his shot.  For example, the ball he uses can make a huge difference in the distance of his shot.  If I use the same ball, I am just as likely to hit it much further into the rough or that much deeper into the water.

Since lately you could not turn on the news without hearing about “High Frequency Traders”, I will explain it in terms of golf.

Tiger is like a “High Frequency Trader”.  He is able to get more yardage out of his shot, because he is playing with superior equipment.  Now, is this unfair to me?

No.

Why?

Because I’m playing my own game.  And you should too.  If you are reading this, you are not a trader…or at least you shouldn’t be.  You are an investor playing a different game.  Who cares if some day trading dude is sitting at his computer making fractions of a penny if you don’t have the ability, time, experience or direct internet pipeline to do it anyway?

And here’s the real bottom line, if you are all pissed off about this – you can make sure no one ever steals a half a penny from you, Mr “Small Time Investor Dabbling in Trading”.

How?

It’s simple.

Just enter your trade with a limit order.  Yep, set your own price for buying and selling. If you get filled, then great. If not, then you didn’t.  But, no one will have stolen that penny from you…no sir!  You can really show them.

Economic Data Update

Both the ISM for Manufacturing and Non-Manufacturing (Services) have been released for March.  The ISM Manufacturing was estimated to come in at 54.0 and came in at an actual 53.7, while the Non-Manufacturing was expected to be 53.5 and came in at 53.1.  Remember, that a reading above 50 signals expansion.  No real shocking news came out of either report…bad weather, Obamacare…blah blah blah…

Ford F150 Sales

I would love to have a Ford F150 but parking it around town would be a nightmare.  However, I love the following graph that shows the sales of the truck.  The theory is that most people who buy F150s buy them for business utility.  So when sales are going up, it is a good economic sign.  Sales of F150s are at an 8 year high (meaning 2007 was the last time sales were at this level).  See below thanks to Bespoke.

1^st Quarter 2014 Recap

I still freak out typing 2014.  The S&P 500 had a +1.8% total return in the 1st quarter 2014.  Turns out, 1.8% return is the lowest 1st quarter return for the S&P 500 index since 2009. The best single trading day for the S&P 500 YTD was a +1.5% total return gain achieved on Tuesday 3/04/14. SO basically, if you were in cash on that day, you probably had a crappy quarter. 

The best performing individual stock in the S&P 500 index during the first quarter 2014 gained +54%. The worst performing individual stock in the S&P 500 index during the first quarter 2014 lost 34% (source: BTN Research).

The individual stock that was ranked # 3 in performance (out of the 500 stocks) in the S&P 500 in 2013 was up  +237% last year. However, that same stock  was ranked # 500 (out of the 500 stocks) in YTD performance through 3/31/14 – losing 34% in just 3 months so far this year (source: BTN Research).

 Important Disclosure Information  

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument Wealth Management.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Monument Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Monument Wealth Management’s current written disclosure statement discussing our advisory services and fees is available for review upon request.