AU rising!

I want to talk about Gold. Gold has been bottoming out in terms of the AU dollar for the last few months. It recently broke out of its trading range and looks set for the next leg up. Here we have a graph of GOLD on the ASX which represents 1/10th of an ounce, over the past 6 years. Overlaying the graph in red is the 50 week moving average, green representing the 100 week moving average and pink representing the 200 week moving average.

Key ideas

• You can see that the price of gold in the 100 week MA has only been penetrated once and subsequently recovered. The strong 200 week MA has never been penetrated.

• Each time the price of gold falls to the green line this is a signal to buy.

• Every time the MACD bottoms this is a signal to buy, the MACD bottoming corresponds with the fall of the price to the 200 week MA

• Most importantly, it clearly shows gold in an uptrend

In my opinion this represents a very low risk opportunity to buy gold.

Over the past several years if you had purchased in November and sold in February you would have at least made a pretty good return with 3 years out of 5 with double digit returns. Note that these do not represent trough-to-peak returns, so returns may vary slightly but the idea remains the same, buy in November sell in February.

Nov 5th 2004 (565) - Feb 11th 2005 (537) (5% loss)
Nov 4th 2005 (627) - Feb 11th 2006 (758) (20% return)
Nov 10th 2006 (821) - Feb 16th 2007 (853) (3% return)
Nov 9th 2007 (899) - Feb 15th 2008 (1000) (11% return)
Nov 7th 2008 (1070) - Feb 13th 2009 (1400) (30% return)

Price of housing rises not sustainable

It's all very simple. It comes down to calculating the gradient or slope of a line

difference in y / difference in x.

Why nothing ever goes up forever? Because x cannot be 0! No matter what bullshit the media sprouts about housing going up forever, it's not sustainable. Sure, it can go on for a long time. Years even. But nothing ever rises forever, simply because of that mathematical fact.

Put simply, plot a graph of X vs Y. Imagine Y to be the price of housing and X to be demand. For Y to keep rising, X has to keep rising. Now, what is X? People. People buying. And there's a finite number of people, yes? Ah ha... now if everyone in Australia buys a house, what do you think will happen then? Is there a true housing glut? Oh really, how many people are speculating now buying several houses?

Bullshit is what I call it.

New version of QFR

At 1am this morning (8/8/09) I released the 8th version of QFR. It's been 2 years since I last released a major version. WOW. I just realised 2 years just went by.

At the end of the month I'll be doing volunteer tutoring for seniors, i.e. aged 50 and above. It's my hope that I'll start a school of sorts next year. Or end of next year. Have to train myself to be patient and figured this will teach me that. If not, well I'll have lots of old buddies. Or something. We'll see how it goes.

It's late now.. time to sleep.

C++ in the real world

I read something a few days ago on the stanford computer science notes and it was thought provoking so I'm going to write it down.

In C++ the default behaviour of a method is passing parameters by value. e.g.

void DriveWith(Car myCar)

myCar is a copy of what's passed in. Now think about why did the writers make myCar a copy instead of the actual thing that's passed in? It's good software engineering practise at work. Loose coupling. Simply put just imagine you're a parent with a tenacious 18 year old. He takes your sports car for a spin and runs into an accident. Now because the car that he drove, is your actual car, it's been damaged. Taking this to a different level altogether if the car that he drove is a copy of your sports car, and he damages it somehow, well since it's only a copy, your car is never damaged!

If that only applies in the real world.

Of course you can also pass in myCar by reference, which means you pass in the actual car.

This would look like

void DriveWith(Car& myCar)

Why would you do this in C++? Well it's quicker to pass in the actual thing for one. You don't have to make a copy. And this makes perfect sense, using the above example, it would be extremely time consuming to make an exact copy of your car and then passing it to your 18 year old to drive. Even if it's not car, say watch, shoes, whatever, it would be time consuming to make an exact copy of the same thing instead of passing the actual thing, right?

Now let's say you want your 18 year old to do some shopping, you want them to use the car, but not damage the car, so you give them a copy of the car. To put groceries in, you give them a bag, but you don't give them a copy of the bag, you give them the actual bag, so that they can put stuff in it and it won't disappear. We don't care about the car, if they damage it, it doesn't affect the original car, but we want the groceries, so we pass the actual thing in.

void GoShoppingWith(Car myCar, Bag& shoppingBag);

Now you can get your 18 year old to drive the car without worries, and the only thing you have to worry is them buying the right items to put into the shoppingBag. :)

It's just a pity you can't do that in the real world, well, you can, but it would be very time consuming to create copies of things. Just like in the programming world!

UNG and risk

My UNG trade ended up in a loss. Was it a trade worth risking? Yes, absolutely. The odds at the time were good based on what I looked at. However in life there's no guarantees. Well, I live and I learn. What did I learn from this? Markets are unpredictable. It's always best to take a loss than to lose everything!

Time for a trade!

I'm going to trade the stock symbol UNG for natural gas. Looks like it's set to take off. The 30 day EMA looks like it's baselining. Higher lows have been made from May to June. The RSI is about to turn bullish. MACD is about to turn upwards and the slow stochastics look like it's about to turn upwards as well.

So the idea is to sell the 14 July put strike and buy the 13 July put strike, this is a short term play of 3 weeks. This is a bull put credit spread. You gain a credit depending on how many contracts you buy. You get to keep the credit if UNG is or above 14 when it expires. Looking at this graph I'm willing to bet that it is going to be above 14. Looks like a pretty good bet to me.

We'll see in a few weeks if I'm right! The above at present will result in a 30% profit based on the margin required, which is pretty good!

2009 finances checkup 1/3

Today's I just checked my finances out of fun for the first 4 months.

In this period, I spent at most 24% of my total income, and saved the rest.  The most I've saved so far a month is 86% of my income.  Most of the money I spend is on rent, usually about 50%.  In April rent represented 70% of my expenses.

So far business is doing okay, surprisingly.  I don't expect this to continue for very long.  From a realistic point of view of course.  But that's alright, nothing will stop me from developing software.  I don't think I can ever stop even when retired.

Gold is currently $960 and everyone is expecting it to go higher, lately the rise has been based on small volume.  Based on the number of shorts that the bullion banks are currently taking I expect Gold to probably fall to as low as $890 or lower.  The current 200 day moving average is about $850, 50 day moving average at $890, which will be a great entry point.  The stock market is having a bear market bounce and poised to fall lower.  Based on what Richard Russell has said, there's been little buying and selling pressure has not fallen much.  I don't expect the rally to go on for much longer, maybe a month or less.  I've sold all of my stock in Singapore which I bought in February, made a tidy profit.  Time to get out of all stocks and let the bigger fools buy.

Value and technology

I feel like typing about value today.   So what is value?  Value is perception of what you think what something is worth.  I'm going to talk about value because value is important in a customer's consideration for what something is worth.  Why is this important?  Because people often spend time developing things which often contribute nothing of value to the end product.  Often it is something else which drives them to purchase the product.

Well let's consider apple laptops.  Bloody expensive compared to similarly priced spec'd machines, yet they cost a premium and people still purchase them.  Apple has "fooled" people into thinking it has more value.  How?  Better design.  Social status.  It's considered "cool" to own a macbook, own an ipod, etc.  Whether or not that's logical or rational is another question.  Macs, PCs, ultimately they are the same things underneath, wrapped in different packaging.  People are not rational, hence you can always add the perception of value through better design, or the image of providing "higher social status", in order to differentiate yourself from the competition.

Adding value is extremely important because you do not want to waste time and effort on tasks which do not contribute to the bottom line aka profits.  The whole idea is to develop the greatest value at minimal cost and time.  People often wonder why they spend so much time developing something only to produce minimal results, very often it's just that what they spent time developing has no value to anyone else other than themselves.

So how do you develop value?  Ask people what they want, then think about how you can make it easier to solve the problem or even better, get rid of the problem.  Think of the best way to do it in the least amount of time.  This is when technology comes in.  Remember, no one cares what technology you develop in, as long as you can solve the problem.  Technology gives you tremendous leverage in not only allowing you to charge the full cost of what it would usually take, but also save you a LOT of time.

Most recently I developed a custom software solution for a company in New Zealand.  If I had chosen my traditional choice of software development, (MFC!) it would not only take much more time but would require me to write more code (potential for more bugs!) as well.  So I went the the .Net route instead, not only did I save a lot more time, I charged my usual rate which amounted to a pretty good amount considering the amount of time I actually spent on the project.  Create value in the eyes of the customer using technology as leverage = recieving a greater amount of money for your time.

S'pore vs Australia wealth comparison

I'm bloody exhausted.  I don't know what's happened but ever since coming back from Singapore I've been extremely tired, I can't even run for 10 minutes without feeling like someone's dropped a ton of bricks on me.

Today I received a monthly sales report from a reseller of mine.  In the sales report it says this.

PS. We are happy to announce our new Partner Discount program! 

We now offer all our partners 15% discount on most of our products.

Alternatively we are happy to accept barter deals. 

Contact xxxx for more information.

Barter deals for software.  Wow it has really come to bartering, people aren't willing to fork out cash so we've come to bartering.  I wonder what it's going to be like when the USD becomes worthless.  It's a sign of things to come.  For them to mention bartering, it must really be serious.

So right now I'm more interested in economics than anything else.  Oil is trading in a range, which is exactly what Lindsey williams has said.  I don't know if what he says will happen will happen, but right now it's happening exactly like the way it is.  This is going to be a very interesting year.

Singapore vs Australia, in terms of wealth

I have a gripe with Australia.  I don't know how the heck a country this developed ranks 178 out of 181 countries in terms of current account balance, which isn't even positive.  Okay so the Australian dollar is falling like a rock at the moment.  The government's increasing the cost of public transport.  There's high taxes in Australia.  You'd think with high taxes, the country would be richer.  Nope.  Singapore... low income taxes, no taxes on capital gains.   The Singapore dollar is stable.  The population's less than 20% of what Australia is. Yet the country is one of the richest in the world with a huge soverign wealth fund and ranked 10th out of 181 countries in terms of the current account balance.  People in Singapore complain about the government all the time but the thing is they are doing a really good job of managing the country's economy.  If you ask me, if Australia didn't have all the natural resources that other countries require, it wouldn't even be a developed country.  I like Australia but I'm wondering WTF is the government doing to improve the country's situation.  Things like tax returns were unheard of till I came to Australia.  One of the things I notice here is that to me it seems that many of the young adults seriously do not give much thought about saving or thinking of the future, no plans, nothing.  Compare this to many people in Singapore, who actually plan, the ones my age anyway.  Well, other than someone I know, everyone else does.  It's just so different.