Shaw Capital Management: Tips on Managing Risk in Investing

The most important tenet in trading is preserving your investable capital via the use of risk management. The last thing you want to happen to you is to trade sloppily and lose your tradable capital.
FOR IMMEDIATE RELEASE

new york city, New York, United States of America (Free-Press-Release.com) March 25, 2011 --

Markets have hit a barrier in the near term. The charts are concerning, as the NASDAQ, DOW, and S&P 500 are all trading just below their respective key 50-day moving averages on neutral Relative Strength. The near-term technical view for the NASDAQ and S&P 500 are bearish. The key U.S. indices are again underperforming the Chinese Shanghai Composite Index (SCI) this year. The SCI is up 5.02% this year, well above the key U.S. indices.

So, before you get too ambitious and begin to chase stocks higher after dips, let me give you a piece of investment advice.

The key to successful stock picking is to understand the concept of risk management as an essential element to investing success. The reason why I want to discuss risk management is my sense that there are some of you who probably fail to incorporate some sort of risk-management strategy. If you do, that’s fantastic and you are probably sleeping well at night. If you have been delinquent in this area, be careful.

I have been involved in the markets for over 20 years. After reading the strategies of some of the world’s best traders, a commonality surfaces: the most important tenet in trading is preserving your investable capital via the use of risk management. The last thing you want to happen to you is to trade sloppily and lose your tradable capital. Instead of being a player in the exciting world of trading, you would be relegated to watching from the sidelines. But guess what? You can avoid this by following some simple strategies.

When the price of a stock trends higher, you should always think about a potential exit strategy. This does not mean liquidating profitable trades, but rather protecting your unrealized gains.

If you have a price target for your stock, you can sell the stock when it reaches that target. Alternatively, if the gains are significant, you can take profits on a portion of the position and let the remaining portion ride. For instance, if a stock rises by 100%, you can liquidate 50% of the position and let the remaining half ride. Under this simple strategy, you realize some profits, but at the same time create a zero-cost trade, as you have already recouped your initial investment. You can view the remaining half as your risk capital.

Another strategy that needs to be considered is the use of mental or physical stop-loss limits. The reality is that no one is perfect in trading. I have made mistakes and so have many of you. If you can accept this, then that’s half the battle. To protect against these mistakes, you should use stop-losses on your positions. Where to place the stop depends on how much capital you are comfortable with risking. Stops can range from three percent below the purchase price to as much as 15% or more. Setting a close stop can take you out quickly in a volatile market, like what we are witnessing at this juncture. Conversely, setting the stop too low can entail large losses.

Stops should also be used when a stock is trending higher. These stops are referred to as trailing stops and are constantly adjusted as the price of the stock rises. This can easily be done in a spreadsheet or by hand. Adapting trailing stops helps to protect your gains as the stock rises.

Some of you may be wondering if the stop-loss should be a mental or physical stop. I prefer a physical stop, as it effectively eliminates the potential influence that emotion can play when you trade. I’m going to say it here. EMOTION kills good trades and often makes you keep your losers. Keeping losers is counterproductive and will make you a viewer from the sidelines. Emotion has no role in trading.

I consider emotion the cancer of trading and it needs to be eradicated!

And for those of you familiar with options, you can employ a “Put Hedge” or “Protective Put” to help minimize the downside loss. If you own mutual funds, you can buy the appropriate index Put by determining the type of fund it is (i.e. small-cap, blue-chip, S&P 500, technology, etc.).

If you are already adhering to risk-management strategies, good for you! Otherwise, learn them and it will make you a better and more successful trader and investor.

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Shaw Capital Management Headlines : South Korea’s squeeze on financial news: Shaw Capital Management

FOR IMMEDIATE RELEASE

Baton Rouge, Louisiana, United States of America (Free-Press-Release.com) March 21, 2011 --

http://www.latimes.com/news/nationworld/world/la-fg-south-korea-image11-2009apr11,0,1348704.story
By John M. Glionna
April 11, 2009
Seoul is waging a propaganda campaign against foreign journalists and economists whose writings run counter to the official line on government action to stem South Korea’s economic slide.
Reporting from Seoul —
In South Korea, image and perception are paramount — especially when it comes to how the conservative Lee Myung-bak administration is dealing with the global financial crisis.

In an apparent effort to restore confidence among international investors, officials here are waging a not-so-subtle propaganda campaign against foreign journalists and economic experts who publish articles or reports that are contrary to authorities’ view of events.
Offenders are lectured, blacklisted and sometimes threatened with legal action by officials who use domestic newspapers to decry “Korea-bashing” reports by the foreign news media.
Last month, Finance Minister Yoon Jeung-hyun said at a gathering of officials that they must “monitor and correct misinformed reports” by foreign journalists who chronicle the nation’s attempts to stem its frustrating financial slide, according to local news reports.

Yet just days after Yoon called for better communication with the journalists, his office declined an interview with The Times about the Lee administration’s tactics when dealing with what it views as inaccurate or biased reporting.
“I regret to inform you that senior ranking officials would rather not accept your interview request,” read an e-mail from the agency’s public affairs office.
Several market analysts here say they have come under pressure from officials not to make negative comments on the government’s efforts to revive the economy.
“The government takes any bad news as an attack on their system,” said one analyst, who asked not to be named because of the sensitivity of the situation. “It sets off alarms. And then they wage a counterattack.”

In mid-March, the head of the South Korean bank association threatened to sue Fitch Ratings, a New York- and London-based firm, charging that a “stress test” that said Korean banks could lose more than $30 billion by the end of 2010 was based on flawed assumptions.
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Government officials complain that many foreign reporters too often resort to hyperbole, suggesting that the Korean economy will soon suffer a meltdown and exaggerating South Korea’s short-term debt, thus inflating investor fears.
Many of the journalists draw parallels with the 1997 Asian financial crisis, which officials say is like comparing apples with oranges.

The result, some observers say, is that officials have cut off communication on sensitive issues with most foreign journalists.
“I can see how they get worried about it — they have quite a few legitimate concerns,” said Christian Oliver, a Seoul-based correspondent for the Financial Times. “Many journalists seem to always write the economy story with echoes of the last financial crisis. It’s very dramatic, apocalyptic, end-of-the-world kind of reporting.”
But Oliver said the government often goes “after the wrong people.”
“There is the idea that ‘the lady doth protest too much.’ It almost raises more questions — the amount they protest.”

Analysts say the South Korean government is convinced that any negative press will hurt its international status.
“Koreans are extraordinarily sensitive to issues of hierarchy and international ranking,” said David Kang, director of the Korean Studies Institute at USC. “There’s this mentality that: ‘We’re better than we’re being ranked. This is a reflection of how other countries view us. They don’t respect us enough.’ ”
When it comes to the worldwide economic crisis, he said, Koreans don’t want to be blamed for something they didn’t start. And journalists bear the brunt of government frustration.

“Foreign reporters have always had a difficult relationship with the Korean government,” he said. “It’s either a cozy backroom relationship or extremely confrontational.”
In a recent column for the Korea Times, former journalist and author Michael Breen challenged South Korean officials to pose as foreign reporters to see firsthand how officials dodge them and then complain about what they write.
He also criticized officials for accusing the Financial Times and the Times of London of making negative predictions about the Korean economy last year out of hurt national pride after British bank HSBC was thwarted in its bid to buy Korea Exchange Bank.

“British bank, British media. Get it?” Breen wrote. “Memo to Korea: Reporters only support their country in times of war, and not always then. . . . In short, the HSBC story is just another story for British reporters.”
But President Lee has his own strategy f

Shaw Capital Management Scam Info: State cancels contract to combat day-care fraud

By Raquel Rutledge of the Journal Sentinel
After spending nearly $500,000 to implement an electronic attendance system for Wisconsin’s publicly financed child care centers, the state has scrapped its plans and will rethink ways to combat fraud within the troubled subsidy program.
“As this approach was undertaken by the previous administration, it has become necessary to re-examine the Wisconsin Shares attendance tracking and fraud prevention strategies to determine an alternative, successful approach,” Stephanie Hayden, speaking for the state Department of Children and Families, said in a statement.
The news surprised state Rep. Mark Honadel (R-South Milwaukee), who complained a year ago that the state was delaying implementation of an electronic system to log children whose care in and out of child care centers is financed by taxpayers.
Legislators on both sides of the aisle began proposing changes to the $350 million Wisconsin Shares program in early 2009, after the Journal Sentinel first published stories about fraud and other problems in the program.
The investigation by the newspaper exposed how parents and providers worked together to easily cheat the system out of millions of dollars. Providers falsified attendance records and billed for children not actually in their care, and parents were able to qualify for subsidies using bogus employment information.
“This tells me I better get back into it and keep the pressure on,” Honadel said. “My God, I could go buy some equipment and a year later have any kind of program going.?.?.?.?You can go to Walmart and buy one for your small business. How much easier can it get?”
State administrators said that the contractor wasn’t meeting deadlines, and that the system state regulators had chosen – it biometrically scans fingers as children check in and out – isn’t proven to be reliable in children younger than 5.
Department regulators and lawmakers had studied biometric and other options for more than a year before signing the contract with California-based Controltec.
“We’re flummoxed, quite honestly,” said Jeff Draa, vice president of operations with Controltec.
Draa said that the project manager had been meeting regularly with department officials, and that things were running smoothly. Any delays were the result of the state not providing information to Controltec on time, he said.
The $6.5 million, 2½-year project was about halfway through the pilot phase, but no centers were actually using any of the electronic equipment when the state moved to terminate the contract last week. The March 8 letter from the Department of Children and Families says the termination is effective March 29.
The state has paid Controltec $471,776.

System delayed

The Legislature first approved money for an electronic attendance system in February 2009.
But a year later, no system was even close to being in place. Honadel and fellow lawmaker state Rep. Robin Vos (R-Rochester) both crafted bills to move the project along more quickly.
Wisconsin Shares was launched in 1997 as part of welfare reform to push low-income parents into the workforce by covering the cost of child care. But shoddy oversight left it ripe for abuse by unscrupulous parents and providers.
Lawmakers and regulators made sweeping reforms to the program throughout 2009 and 2010.
A handful of laws were changed with unanimous bipartisan support.
Regulators cut funding to more than 200 providers suspected of cheating the program, and more than a dozen providers have been criminally charged.
State officials say the crackdown will save taxpayers more than $100 million by the end of 2011.
Republican and Democratic lawmakers alike have agreed that an automated attendance system would eliminate much more of the fraud.
As it stands, child care providers keep handwritten sheets recording when children arrive and leave.
“This is a huge amount of money,” Honadel said of the fraud. “I am adamant about getting this (electronic attendance system) up and running.”