Trading with Focus – Fresh memes and the Yeet Index
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They say that you should try and learn something new every day. I strive to achieve this goal as often as possible, and it brings with it a sense of achievement even though it is a very, very low bar to jump for perpetual personal growth.
Sometimes I forget things on purpose, just to relearn them, especially if its late at night and I haven’t ticked ‘learn new thing’ off my list of chores for the day. Sometimes I think I’ve learned something, but vaguely feel that I already knew it, and so then I can only half-learn something so as not to ‘over-learn’ for the day.
We’re in the process of getting more market data into the platform for you, like some international indices, commodity and metals pricing. We discussed just making some memes to replace the market data, but we’ll leave those sorts of shenanigans to our competitors. Y’all know what memes are right?
So, this market data is not easy to get, and in most cases it’s not cheap either. Again, we considered just not getting it at all to compete in online stockbroking’s Lowest Common Denominator Awards (the LCDA’s), but again it seems important for a trader to have, and we hold ourselves to a higher level.
I left the Marketech brains trust in the middle of all this debate and called up the New York Stock Exchange for a bit of a chat. I was hoping to get a good deal on their pricing and index data and thought the personal touch would go a long way to securing mates rates. No more are we from the land of Crocodile Dundee; now we are from the land of the Hemsworths and Wolverine. So gimme respect as an Aussie!
The call didn’t go as well as planned. But I’ll come back to that.
Back in 1998, the ASX listed itself on the ASX. So, like all listed companies, it now needs to make a large amount of money to keep all you pesky shareholders happy. And the biggest asset that the ASX has is the prices and news of the companies that are listed on it. So, they sell it.
Every time you look at a live price, it costs money to show it to you. But delayed pricing only costs a fixed amount regardless of the number of people that look at it – but it still costs a lot, even though it’s not current data anymore. Same with live news and delayed news (but at least with news they go into a trading halt if it’s deemed to be important, so even with 20-minute delayed news you can often react in time).
Flipping back to the NYSE call. I knew we had to get approvals to display the data because the ASX isn’t the only exchange with its hand out (ya gots to keep them investors ‘reasonably’ informed), so I rang up the NYSE as I wanted some index data and some…wait, what?
OK, so one of those ‘half-knowns’ came back to haunt me mid-call. I guess I knew that the Dow Jones index wasn’t run by the NYSE? I guess it makes sense that the Russell Indices aren’t owned by London Stock Exchange. Weird though that we really rely on the ASX for all of its indices, but even then S&P act as a third-party to help run the composite data. (Fun fact: Rupert Murdoch owns Dow Jones…naturally)
Anyway, these indices are fabulous things to compare whether a whole sector is rallying (and you are just ballast in a ship in a rising tide) or if your stock is beating the sector (in which case you are virtually the best trader that has ever been), and you should explore them.
And in the spirit of free and fair exchange of information, here is a plug for the ASX:
All of these indices are primarily focused on sectors. I also know that there is a ‘Small Ordinaries’ (XSO.ASX), and that is managed in collaboration with S&P, but at least I don’t have to pay any more for you to search for it on our platform as it comes included in our ASX data package.
To summarise all of this, the main asset of a stock exchange is the data and there is a business (like ours) trading on the market that requires access to that pricing for its users (you). Even those businesses that manage the indices, or newspapers or tip-sheets or whatnot – anyone that displays market data pays for it. On your behalf. Meaning the best way to save money as a trading business is to convince you it’s not important.
Now over the years, probably because of the fears of socialism, being a monopoly became frowned upon. So they brought in a competitor to the ASX, a young upstart by the name of Chi-X.
Without being branded a commie, I want to state that there are certain things that a government should own, and there are certain things that work well under a capitalistic environment. Prisons and armies – government. Healthcare – bit of both. But, and this is where I put it all on the line, I think the government got it wrong by letting the ASX list itself.
Nowadays, if we want to keep users fully informed, instead of just paying the ASX, we also have to factor in that Chi-X now accounts for a growing amount of market trading turnover. So to give the full picture of the market it would now cost 150 per cent of what it would have if there was no ‘competition’! Great stuff, capitalism nailing it.
Luckily for you guys, you now have online trading choices. If you don’t want to know the live price, and are happy to guess, there’s a platform for that. If you are happy to scan old Chi-X prices but want to know the live Chi-X price when you open up a trading ticket, there’s a platform for that. But then there’s Marketech Focus, where live ASX pricing is included, and Chi-X will soon be an option.
Ok, now I think I’ve got all of the pieces in play, time for the closing argument, the whole point of this ramble.
Getting back to these indices: All Ords, Small Ords, Accumulation, Banking, Financials. Pfft. ASX does those for free, and they suit an educated investor.
Given the number of new retail traders that are coming into the market — feeding on information they have from Facebook and old stock prices, throwing fundamentals out the window, using break-out trades, being shamed into ‘buy and hold’ on speculative stocks in online chatrooms, investing in the ‘vibe of the thing’ — given they now make up a large amount of the market volume in all the most speculative stocks of all, I want an index on them!
So to kick off proceedings, let’s start with a few of the more recent stocks that have been ‘most talked about’ on chatrooms, or even popped up in newspaper articles that associated the launch of low cost/low data trading platforms. These should start to give you a glimpse into the need for intelligent trading, but also, huge opportunity for you – as long as you are the predator and not the prey.
Obviously, as the first contender of the ‘Yeet Index’ we have to start with BrainChip (ASX:BRN). Perfect example, zero revenue/infinite promise, a superchip that has just been proven to be producible. Its particular ‘raison d’etre’ is to be a chip that learns, which is thought to be a precursor for Artificial Intelligence, but given that there is no other IT infrastructure to support its existence, is more likely to just make Roomba robots more efficient.
As you can see there was a sustained 10x rally from the 3c mark, where Regal Funds took advantage by investing money at the lowest price the stock had ever been. They call that ‘the smart money’. Then, the breakout trade from 32c was where the danger kicked in, as a violent rally on the basis of there being ‘an announcement coming’ rarely ends well. And it didn’t.
So, in one trade, someone being a hero without the right safety equipment in this market could have dusted at least 50 per cent of their money.
Next, Dimerix (ASX:DXB). Another chatroom darling, another stock being referred to as a ‘buy and hold’. I don’t know a lot about this one, but what I do know is that you never, I repeat never, trade the way you play roulette, unless you really are just a lucky guy. So don’t hold single drug companies through the human trials, and don’t hold oil explorers through the drill – or do, but don’t expect a 100 per cent success rate.
For some reason rats seem to be evolving into super-animals, where you whisper in their ear the response they should have to a drug and they have it. Got rat cancer? Stop it rat. Humans can’t even self-cure a mild skin condition without heavy duty steroids. Human trials mostly fail, well often enough anyway. Just like most oil explorers don’t find oil, but human greed and fear of missing out makes them a great trade.
In this instance, you can also see that it was again the break-out that caused the surge. A measured trader, with greed in check, would still have been able to almost double their money. But, looking at the chatrooms, it would seem that post-negative-release panic was the outcome reality. So another bad day at the side-hustle for our new Retail Yeet Index candidates.
There are quite a few candidates for this index – Mesoblast (ASX:MSB), all BNPL, Novonix (ASX:NVX) — just off the top of my head. What they all have in common is that they benefited from the significant growth in first time traders letting their greed run wild. Depending on where you start the index, it could either be up multiples or down near zero, but in truth I doubt diversification is rife, so it’s probably as good as its last all-in trade.
Even just these two trades will have destroyed the hearts and bank balances of significantly large numbers of first-time investors. The biggest thing we should have learnt from history about these periods of stock market euphoria is that they end, and usually with retail numbers dropping off significantly.
So I’m not going to bother running this index, but it’d be a good one to bet against. Fellow kids, I’m yeeting the Yeet Index.
Don’t try to be a Superhero. Trading isn’t easy. Want more.
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This article was developed in collaboration with Marketech Stockbroking Pty Ltd (AFSL 486148), a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.