Month: January 2018

eToro popular investor trading update week 4 2018

Another interesting week, in which I think we have created potential for the coming days and weeks.

 

CRISPR-Tech

Our best performing positions are currently the CRISPR-Tech stocks like Cellectis SA $CLLS, Merk Inc $MRK, Editas Medicine Inc $EDIT, Intellia Therapeutics $NTLA and Sangamo Biosciences Inc $SGMO. CRISPR stocks are highly speculative, so setbacks are to be expected, but the potential upside in gene editing is enormous.

 

Crypto-currencies

I have further reduced our crypto-currency holdings. Just before eToro increases the weekend spread, I have  gone one step further, partially hedging the remaining crypto-buy-positions, with so far only one short each on Dash and Bitcoind each. I would love to open a few more sell positions, specially on Ripple, but, as cryptos are purely speculative, I find it incredibly difficult to gauge the entry points. I hope the smoke lifts sufficiently, to allow me to see which of the opposite positions (buy and sell) I should close. I found eToro’s crypto discussion on Thursday informative in that I feel that the participants (eToro traders liamdavies, Wesl3y, Jaynemesis, stebliss, matthewne) failed to address the central questions putting crypto coins’ medium term value in doubt; eToro failed to put up a single panellist questioning cryptos as to create a debate.

If you are heavily invested on cryptos, you may want to consider copying my crypto-sceptic portfolio as a hedge.

 

FOREX: EUR/USD

ECB chief Mario Draghi failed to stop the Euro’s rise against the greenback. Though the US president has then said that he is supporting a strong Dollar – this may have been because he simply finds the word “strong” appealing. For its unpredictability, we have no US-Dollar currency positions in our portfolio. The drop in the value of the US-Dollars is in the short term bad news for selling CHF/JPY and in particular GBP/CAD, where I had to cut losses on two positions (eToro’s risk ratings unfortunately force popular investor’s hands in such circumstances), check the situations and I re-entered later with a smaller profit. The US-Dollar’s extreme weakness is – at least in theory – also bad news for European stocks, e.g. Unilever plc $ULVR.L and Commerzbank AG $CBK.DE. I closed Commerzbank at €13.59 and a profit of 10.13%. Though thanks to sustained growth in the Eurozone, European exchanges remained largely unaffected by the common currency’s appreciation.

 

In view of the €997 million fine against LTE chipmaker Qualcomm Inc imposed by the European anti-monopoly watchdog, I opened a CFD short position in Qualcomm $QCOM at not particularly lucky $67.44. It is near break even and I will close it soon.

 

Looking at Paris

We closed a buy position in Essilor International SA $EI.PA of Charenton-le-Pont (Val-de-Marne), France, at a small profit and opened a buy in L’OrĂ©al SA at €183.97 – analysts see a target well above €200 for $OR.PA.

 

Green bio-pharma

The two bio-pharma stocks in our portfolio, AbbVie Inc $ABBV of Chicago and GW Pharmaceuticals plc of Cambridge, UK (my second home), are growing well (no pun intended). Before I could get around to readjusting the take profits, our position in $GWPH with leverage x2 hit a take profit overnight. I took the opportunity to open a new position in GW Pharmaceuticals plc without leverage.

 

Have a good weekend and profitable trades!

EU Commission fines Qualcomm €997 million for abuse of dominant market position

Apple was a key customer for LTE baseband chipsets. In 2011, Qualcomm  signed an agreement with Apple, committing to make significant payments to Apple on condition that the company would exclusively use Qualcomm chipsets in its “iPhone” and “iPad” devices. In 2013, the term of the agreement was extended to the end of 2016.

The agreement made clear that Qualcomm would cease these payments, if Apple $APPL commercially launched a device with a chipset supplied by a rival. Furthermore, for most of the time the agreement was in place, Apple would have had to return to Qualcomm a large part of the payments it had received in the past, if it decided to switch suppliers. This meant that Qualcomm’s rivals were denied the possibility to compete effectively for Apple’s significant business, no matter how good their products were. They were also denied business opportunities with other customers that could have followed from securing Apple as a customer.

In fact, internal documents show that Apple gave serious consideration to switching part of its baseband chipset requirements to Intel $INTC. Qualcomm’s exclusivity condition was a material factor why Apple decided against doing so, until the agreement came to an end.

Shortening shares pre-market is difficult and I advice it. Currently Qualcomm’s share price has been moving wildly in both directions pre-market.

It is to be seen if US investors will take Article 102 of the Treaty on the Functioning of the European Union (TFEU) and Article 54 of the EEA Agreement prohibiting abuse of a dominant position serious.

In any case, I opened a CFD short position in Qualcomm $QCOM today at not particularly lucky $67.44.

When will the Euro die?

Much of Anglo-Saxon press has been announcing the imminent death of the Euro for over 20 years. Since well before Euro notes and coins were issued to the over 300 million people in the Eurozone it was announced as a dead birth: When the EUR/USD dropped to below parity, the Euro was called a toilet currency, when the $EURUSD rose to above parity with the US-Dollar, Anglo-Saxon banks and analysts were forecasting that the Euro would soon drop back to below parity. Parity is of little value when comparing currencies, but seems be used an important measure of potency in the popular press.

 

The Euro in Europe

Currency traders know that exchange rates move all the time, that’s how you try to make money from it. Currency traders provide liquidity, thereby stabilizing exchange rates.

 

But forecasting – year in year out – the death of a currency adopted by 25 rich countries is tiring. As the future is never here, it is easy to push a forecast down the line. The Deutsch Mark and the Austrian Shilling lasted for just over 50 years and the Euro already about a third of that time. Any serious forecast of the “death of the Euro” should come with a date, to allow the Euro folks to ridicule the naysayers after that day.

 

For my part, I do trade currencies and I will try to profit from the ups and downs, but I won’t recommend anyone to bet on the death of currency used by mature, advanced economies of countries as Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Lithuania, Luxembourg, Malta, Portugal, Slovakia, Slovenia, Spain and the Netherlands.

Why I am Sceptical About Crypto-Currencies as an Investment

Early investors in Bitcoin have profited from staggering gains over the past few years. Crypto-currencies were the hot-investment of 2017. I have to confess, that I have earned some money speculating with crypto-currencies and I hold small amounts of Bitcoin (BTC), Bitcoin Cash (BCH), Dash, Etherum Classic (ETC), Etherum (Ether), Litecoin (LTC) and Ripple (XRP) (though as of week 4/2018 I am shortening in the majority).

 

While I am not sufficiently technical to give a judgement on the different blockchain developments, I understand that there is a future for the technology in a number of fields. However, I make a distinction between the blockchain technology being used in transactions (eg between financial institutions) and a bit of crypto code to be held as an investment. I will try to explain why below:

 

Price fluctuations

The enormous fluctuation in value produced by the speculation in the likes of Bitcoin, Ripple and other crypto-currencies (pump and dump of 40% or more in a week) actually make them unattractive as a method of payment. Who would close a futures contract for oil or sell their house in BTC, if its value fluctuates so dramatically.

 

Anonymity – governments will fight it

The EU and other advanced social-market-economies are slowly advancing their difficult fight against tax evasion. Breaking the secretiveness of tax-havens is a crucial element of this struggle, diminishing the use of cash over traceable electronic payments another one. Crypto-currencies anonymity appeals to certain types of investors, Mafiosi and dictators, as it allows them to store and transfer funds in encrypted anonymity and circumvent embargoes.  Think e.g. of Kim-Yong-un paying in crypto when shopping for missile parts or computers.

 

Seizure of US$206 million from a drug trafficker in Mexico’s capital in 2002. That wouldn’t have happened with Bitcoin.

 

If not just the Mafia and the wealthy elite, but every cabbie and plumber can hide their cash and payments, too, it will make tax evasion more egalitarian, but come to the detriment of schools, roads, police, the armed forces and the health service. Democratic governments will need to fight encrypted payments and storage Dash et al are facilitating, or find a way to secure their tax base by other means.

The appeal of limited supply

Bitcoin and Etherum Classic (among others) appeal through the limit put on the number of so called coins that can be minted – often compared to the way in which gold is costly to mine and its supply limited. However, unlike precious metals, there is no limit to the number of forks or crypto-currencies to be created. There are plenty of alternatives to Bitcoin. According to a recent article in the Economist, “by January 10th, around 40 had a market capitalisation of more than $1bn.“ “Even Dogecoin, which was launched in 2013 as a bitcoin parody… The crypto-currency was never really used, except for tipping online, and one of its founders has called it quits. But recently its price has soared: on January 7th the dollar value of all Dogecoins in circulation reached $2bn” – suggesting not only that investors are going irrational, but also that there is no gold standard in cryptos – every crypto-currency can easily be replaced, potentially rendering a previous generation of blockchain technology worthless.

 

Want to store money or create value?

There is a fundamental economic difference between storing money in e.g. land, gold or bits of blockchain code versus investing in productive capital (for example through the stock market). Investing in limited supply assets like land or BTC makes these dearer, while investing in shares provides employers and inventors with capital, driving economic growth, potentially improving standards of living. There is no progress deriving from driving up the market valuation of homes or crypto-currencies, investing in it is socially irresponsible. While shares can deliver dividends and houses rent, cryptos have no intrinsic value. At the current levels of money being absorbed in cryptos it may not be a problem, but in some medium size economies with large markets for digital currencies – like South Korea – the crypto bubble may already have taken on dangerous proportions.

 

Could a crypto-currency replace the US Dollar?

If the creator of a crypto-currency can overcome the value fluctuation problem and finds a way to make payments traceable for tax purposes and for the control of illicit trade (and the control of embargoes) etc can be found, the crypto-currency could challenge the US-Dollar in its dual role as currency for the payment of commodities (oil, gold, wheat etc) and as the world’s leading reserve currency. Even if a crypto-currency gets to challenge the greenback in those roles, and that is a very big IF, the US government and financial interests will defend the Dollar. The fight will be worse than the campaign against the so called toilet currency (that was the name given to the Euro) – and just think of for how long the Anglo-Saxon press has been forecasting the Euro’s demise….

 

I will continue to check the market for crypto-currencies and try to extract some profit when I see feasible. But I am sceptical about cryptos as a means of storing value in the medium to longer term.

Currency trading in AUF CHF

Have shortened $AUDCHF over the past two days, placing three orders with leverage X25, entering at 0.7693, 0.7700 and 0.7739 CHF respectively.

I try to trade currency pairs from mature and stable economies, containing currencies mainly linked to another lead currency. So eg GBP and CHF correlating more with the EUR than the USD, while CAD is correlating more with the USD, therefore providing volatility. So I am currently looking at CHFJPY, GBPHUF, NZDCHF, and GBPCAD.

I also like trading NOKSEK, two neighbouring, Scandinavian economies. Norway main exports are energy, while Sweden is highly industrialized country consumes oil and electricity.

 

Gene editing technology – the CRISPR tech fund

eToro is launching a CRISPR-Tech fund with a minimum investment requirement of US$5,000. Some of these gene editing firms are starting important trials, hoping to receive approval in medicine, agriculture and even human gene editing.

 

eToro users who wish to profit from this hot investment trend but don’t want to risk $5,000 of their hard earned cash could copy a trader investing in the fund.

 

As the genome editing technology is at a trial stage, I have taken the decision to place CFD orders on some of the companies developing CRISPR technology: eg Cellectis SA $CLLS (ZVA / FR0010425595, France), Intellia Therapeutics Inc.  $NTLA (38I / US45826J1051, USA) and TEVA Pharmaceutical Industries Ltd (TEV / US8816242098, Israel).

Other CRISPR-Tech developers I have an eye on are Uniqure B.V.  $QURE (UQ1 / NL0010696654, Netherlands) and CRISPR Therapeutics AG  $1CG (CH0334081137, Switzerland).

 

I have opened CFD positions in some health sector firms in gene editing and pharmaceuticals, taking advantage of yesterday’s dip in CRISPR Technology developers : Sangamo Bioscience Inc ($SGMO), Intellia Therapeutics Inc ($NTLA at $20.90) and Editas Medicine Inc ($EDIT at $30.88), Merk Inc ($MRK at $56.60) and Agilent Technologies Inc ($A at $70.62). Had opened two positions in Cellectis SA ($CLLS at $31.46) of France previously. I have also acquired shares Cellectis SA and in pharmaceutical generics maker TEVA Pharmaceutical Industries Ltd of Israel at €16.12 – $TEV also have a hand in gene editing technology CRISPR.

 

=== update 12/JAN/2018 ===

The CFD orders I placed on CRISPR-Tech developers during this week’s dip have worked well. Only Cellectis SA CLLS  is still in red (opened at $31.46), while Agilent Technologies Inc (A opened at $70.62 +2.73%), Sangamo Biosciences Inc (SGMO opened at $16.87 +7.27%), Intellia Therapeutics Inc (NTLA opened at £20.9 +5.33%) and Editas Medicine Inc (EDIT opened at 30.88 +12.79%) have turned green.

I am also bullish for my share holdings in CRISPR Therapeutics AG  $1CG (CH0334081137, Switzerland) and Cellectis SA (ZVA / FR0010425595, France). The shares in TEVA Pharmaceutical Industries Ltd (TEV / US8816242098, Israel), which I acquired at €16.12 ended the week 2.38% up.

=== update 31/JAN/2018 ===

Acquired shares in CRISPR Therapeutics AG A2AT0Z CH0334081137 of Switzerland at €21.20 on 12/JAN/2018, during the health sector dip on 30 January, I sold CRISPR Therapeutics AG $1CG at €35 and bought back into it the same day at €34.

 

Used the health sector dip on 30 January to finally buy shares in Dutch #CRISPR developper #Uniqure B.V. at €15.50. Unfortunately, $QURE UQ1A1XDTV NL0010696654 sees little volume.

 

=== addition 16/MAR/2018

CALYXT INC of New Brighton, Minnesota uses CRIPSR -Tech to develop crops with improved nutritional and agricultural characteristics. It uses gene editing techniques such as TALEN to change the genome. The former Cellectis SA subsidiary filed for an IPO in June 2017. CALYXT INC ($CLXT WKN: A2DU9F, ISIN: US13173L1070) stock price has dropped since it’s IPO and I feel it at a good level to acquire shares.

Tesla’s struggles – shortening $TSLA

Elon Musk’s team seems to be failing to get the mass market Model 3 production under control. Tesla’s share price is being punished for it. More investors are betting against electric-car maker Tesla than any other U.S. stock!

 

Currently the world’s best selling fully electric vehicles come from the Renault  Nissan Alliance ($RNO).  I hold shares in two of the world’s biggest electric vehicle producers BYD Co Ltd ($BY6 , WKN A0M4W9, ISIN CNE100000296) and Geely Auto Holdings Ltd ($GRU, WKN A0CACX, ISIN KYG3777B1032), whose share prices grew phenomenally during 2016 and 2017. With Donald Trump watering down US’ emission standards, China’s lead will only increase.

 

P1050735

This EWE Karmann e3 with lithium-ion batteries had a reach of over 100 miles nearly a decade ago. It was independently developed in OsnabrĂĽck and Oldenburg and used by the local electricity provider EWE as test for electricity storage.

=== Update 12 April 2018 ===

Is indebted Tesla running out of road?

According to a report by CNBC, “Tesla short sellers, after reducing their short exposure for the first two months of 2018, have reversed course and shorted Tesla stock heavily over the last five weeks.”

Tracking popular investors and traders on social investment network eToro

One of the advantages of eToro is the social aspect and the opportunity to learn from other traders. Observing other strategies is interesting, even for experienced traders.

I am regularly updating the “eToro popular investors’ spreadsheet”, trying to find the investors closest to the kind of portfolio and performance I aim for.

In early January, the portfolio of the popular investors, traders and two eToro funds tracked was exposed to crypto-currencies with 34.36%. The average exposure to cryptos has dropped to 21% by mid-May. Personally, I am interested in diversified traders with a limited exposure to crypto-currencies (more on why you should treat crypto-currencies with care http://iitm.be/cryptos4asset).

Profitable popular investors on eToro.

 

During the first months of 2018 we have seen losses in share prices, the value of crypto-currencies and most of eToro’s (but not all) popular investors have seen the number of copiers shrink. If in early January you used a $1000 to copy a popular investors or invest in one of the two funds tracked, you would expect to have lost about $180 (on average) by now, but with forex investor goodgoing, popular investor Wesl3y or the OutSmartNSDQ fund your investment could have been profitable. As a side note, eToro copiers should remember that you don’t sell but BUT when prices are low.

 

Having now nine months of data to look back on, has allowed to improve the desirability ranking formula:

=((current month return*6months return*(12months return/3))*(1-(SQRT(Risk)-SQRT(Profitable months of past eight)))*(1-(crypto’s share of portfolio during the past four months)))*(1-investment category exceeding 60%)

 

The ranking is now based on a zero to one hundred percent value relative to the performance of the other investors and funds tracked. The aim of the “Desirability ex crypto” formula is to highlight popular investors and funds with a balanced portfolio, preferably low risk and a continuity in increasing the return on equity.

 

The profitability of an investor or fund with a risk of six who has managed to increase the value of his portfolio during the past six of eight months is 2.10 by the same risk/return value (here 1), as a risk three fund or investor who has ended five of the past eight month with diminishing returns. E.G. eToro gives GainerQtr a risk of three and the past six of eight calendar months trading closed in profit resulting in multiplier of 1.72. eToro gives popular investor “isuuu” a risk seven and six of the his past eight month trading closed in profit, resulting in a multiplier of 0.35.

Pos Trader Desirability 6 months Risk Copiers 12months Profitable May 2018
May handle @ ex crypto return %   last count return, % months (8) return, %
2018 Min 44.57% 0.00% 3 0 4.12% 2 -9.29%
Mean 85.92% 33.75% 5.42 2437 557.66% 5.06 0.91%
Max 100.00% 125.73% 8 12541 12742.00% 7 12.75%
1 karinroth1 100.00% 118.75% 7 7 592.55% 6 10.03%
2 eddyb123 96.85% 98.55% 6 1167 315.85% 6 5.85%
3 JeppeKirkBonde 94.45% 26.54% 4 7022 115.58% 6 4.10%
4 Fastik 92.20% 35.53% 5 2136 126.96% 4 -2.87%
5 goodgoing 91.76% 13.34% 3 7588 37.67% 6 -5.00%
6 alexandrucinca 91.56% 22.48% 5 4736 76.16% 6 1.67%
7 OutSmartNSDQ 91.18% 25.61% 5 256 36.19% 6 12.75%
8 MrThor7734 91.03% 44.54% 5 6911 132.46% 5 -5.35%
9 GainersQtr 91.01% 15.78% 3 650 26.84% 6 0.48%
10 BigTech 90.96% 15.51% 5 608 38.30% 7 6.30%
11 AlexPlesk 90.93% 14.24% 5 7863 66.32% 6 4.96%
12 InTheGame 90.89% 7.84% 5 516 40.83% 4 4.03%
13 Xavier86 90.85% 18.98% 6 3047 75.37% 6 5.81%
14 matanspalatrin1 90.62% 20.94% 6 402 80.62% 6 5.28%
15 Wesl3y 90.47% 11.70% 6 9210 59.99% 6 3.74%
16 oroumann 90.46% 23.04% 5 71 17.62% 5 4.33%
17 TrendingR7 90.35% 7.82% 4 469 51.77% 4 -0.36%
18 27cyrix 90.13% 27.89% 5 143 50.28% 6 7.05%
19 ADC0602 89.75% 16.32% 5 0 42.16% 4 -3.85%
20 Willscuba 89.44% 23.26% 6 273 79.55% 4 -2.35%

Investment in crypto-currencies leads to lower ranking, but not if returns have been stable and high. An unbalanced will punish the ranking, reason why funds investing 100% in stocks, like BigTech, OutSmartNSDQ or InTheGame, rank slightly lower than a popular investor with a portfolio mixing different markets. The goal is to measure the returns produced in the coming months against the effectiveness of this ranking and to re-adjust it accordingly with more data available. If you dislike the formula the data is there available for download.

 

You can access the data at http://iitm.be/etotrader – I am open for suggestions to add to the list.

For control purposes, I am investing $1,000 on each of a over 50 eToro traders on my virtual account, copying only new position (un-ticking open positions) and reducing the stop loss to 50%.  Here some of the results for traders not necessarily appearing on the tracking list above:

The results when copying an eToro trader are dependent on the conditions of the copy and the prices prevailing when the copy started. The above table is therefore in no way representative of the individual trader’s performance. It is just meant as an example of what can happen…

When you start copying a trader, the positions will be opened at the prices, once the respective exchanges are open for trade (crypto-currencies trade 24/7). To get good results, you should copy traders at least for a few months.

But if you want to close the copy of a popular trader, the respective trading centre (Milan, Frankfurt, Paris, Madrid, London, New York, …) must be open, otherwise the stock prices can not be determined. A good time for the speedy realisation of the copied positions is shortly after 15:30 hrs Brussels time (2:30 pm GMT).