Saturday 20 March 2010

Your must-know guide to landing your first job


Once upon a time, graduates could take their pick of top jobs. But with a degree now considered the minimum qualification by many employers, and most people progressing to higher education, starting a career is more competitive than ever.
According to Cheryl Hill, national manager of business support at Mosaic Recruitment, the first thing graduate job seekers need to do is keep their career options open - your core knowledge and skills are likely to be suited to a range of jobs in today’s rapidly changing workplace.
“Take the time to evaluate your abilities, explore your career possibilities, and find out what you’re truly passionate about,” she says. “Then speak to your university career councillor or a recruitment agent to determine which career path and employers to pursue.”
When it comes to preparing a CV that stands out from the crowd, Hill recommends tailoring it to the job you’re applying for and emphasising your commitment, energy and enthusiasm.
“Details of part-time or casual jobs, extra curricular activities, and club or society memberships are all valuable achievements,” she says. “Don’t sell yourself short just because your professional experience is limited - give employers a well-rounded view of your talents by including all relevant experience to date.”
And for a head start in the CV stakes, try listing your volunteer history. “Committing your personal time to a cause you feel passionate about demonstrates your values, morals, and ethics,” says Hill. “It also shows your willingness to go that extra mile, which is something employers look for.”
These days, all employers want conscientious go-getters - so what you wear and how you present yourself is often as important as your grades. To this end, choose an outfit that’s appropriate for the job you’re interviewing for, and for maximum impact, pay attention to your facial expressions, body language, and tone of voice.
“Research the company you’re applying for, or better still, anticipate the questions you might be asked and practice your answers in mock job interviews with friends,” says Hill. “Also consider your strengths and weaknesses in advance, and prepare a list of questions to ask your prospective employer.”
Finally, don't forget that all job interviews are learning curves. Self-analysis can help you ace the next round and increase your chances of an offer, or if you're turned down after the job interview, constructive feedback can be your best friend.
“Professional rejection should never be taken personally,” says Hill. “After all, everyone's had to apply for their first job at some point.”
Published: 12 September 2007

The many flaws of Wall Street's latest rally


March 19, 2010
    With US stocks pressing up against 17-month highs, the inevitable question arises: "Does this rally have legs?"
    From one perspective, things couldn't look rosier for the bulls. The S&P 500 touched another 17-month high on Wednesday, breaking through levels analysts identified as significant resistance. More stocks in the S&P are hitting fresh 52-week highs than at any time during the course of the rally.
    But the steady rise in the last six weeks has been accompanied by middling volume and underperformance in key areas, such as semiconductor companies. Market technicians and strategists believe the current run is overbought, suggesting at least a near-term pullback.
    "What we are seeing represents a very defensive stance among investors," said Mike O'Rourke, chief market strategist at BTIG, an institutional brokerage firm in New York. "You are seeing investor disinterest in equities and that's why volume is languishing here."
    This week's consolidated volume has been telling. With major averages hitting recovery highs, Monday marked the third slowest volume day of 2010 when about 7.24 billion shares traded on the combined New York, American and Nasdaq stock markets, below last year's estimated daily average of 9.65 billion.
    The tepid volume suggests a lack of broader conviction, and is a sign momentum is mostly behind the latest run-up rather than any broad-based accumulation of stocks.(comment: an interesting point)
    Momentum investing relies on chasing short-term price action on hard-charging stocks and shunning those that appear to be out of favor.
    John Kosar, market technician and president of Asbury Research in Chicago, said there was a growing risk the run-up that resumed in February was a "countertrend" rally within a larger decline that began in January.
    "Volume measures investor urgency and this recent lack of urgency to buy is characteristic of either peaking markets or countertrend rallies," he said.

    Overbought
    Investors were abuzz this week as the benchmark S&P 500 took out resistance at the 1150 level. Investors see that as clearing a path to a run to 1200. But other important technical metrics are not garnering the attention of the overall average.
    According to Reuters chart data, the S&P 500's 14-day relative strength index (RSI), which measures the magnitude of the gains to determine overbought or oversold conditions, is hitting levels not seen since September 1995 - approaching 91, a threshold that technically signifies an overbought market.
    An RSI ranges from zero to 100. When it approaches 70 that traditionally signals an overbought condition in an asset or an index, and the risk of a pullback increases.
    Additionally, research firm Bespoke Investment Group pointed out that 89 per cent of S&P 500 stocks are trading above their 50-day moving averages, a level that usually augers for a pullback in the short-term.

    Semi-tough
    The semiconductor index has failed to confirm coincident 19-month closing highs in the Nasdaq Composite index, a bearish development considering technology's tendency to lead the market's advances and declines.
    The S&P 500 is up 10.3 per cent since its recent closing low of February 8, while the small-cap benchmark Russell 2000 has rallied more than 16 per cent over the same period. Year-to-date the S&P 500 is up about 5 per cent, whereas the Russell 2000 is up 9 per cent.
    To be sure, the run-up in small-cap stocks shows how risk appetite has risen due to optimism about the US recovery. Small-cap companies are viewed as more nimble and among the first to benefit from an apparent recovery.
    But the divergence between strength in the Russell 2000 and the semiconductor index should be taken as a cautionary tale. Divergences occur when key indexes move in the opposite direction of the market's primary trend and tend to catch investors off guard.
    Analysts say another ominous development is the sharp decline in overall volatility, suggesting complacency is setting in. The CBOE Volatility index, Wall Street's favorite gauge of investor sentiment, is trading at 22-month lows below the 17 level.
    According to Kosar, declines to 18 or lower in the VIX have either coincided with or led every important near-term peak in the S&P 500 since October 2007. He said the market's gains may be limited without a near-term decline to work off extremes in investor complacency. VIX futures suggest a rise in volatility later this year.
    "Although the February rally in US equity prices may continue from here on a week-to-week basis, a sustainable advance is unlikely from here without at least one to several months of a corrective decline first," said Kosar.

    Danger of hedging your bets

    John Collett
    March 17, 201



    The promise of high returns and low risk proved too good to be true.

    Hedge funds were sold to small investors as a way to get a slice of the action that had been available only to wealthy individual investors or institutional investors.

    But many hedge funds have proved a disappointment. The money in some, such as Astarra, went missing. Others, notably Bernard Madoff's hedge fund in the US, were no more than Ponzi schemes where new money was used to pay existing investors high returns.

    Most hedge funds have produced poor returns and many have closed, or are in the process of closing, and are returning money to investors. Some other managers have frozen or restricted redemptions from their funds.

    Before their reputations were shredded by the financial crisis, hedge fund managers operating in tax havens in the Caribbean or in the US and Europe were regarded as among the best and brightest of the funds management industry. They rewarded themselves handsomely. The funds tend to have hefty performance fees and, in the good times, hedge fund managers made a fortune for themselves.

    They promised the low risk of fixed interest with the high returns of shares. These two things - high returns and low risk - have long been regarded as incompatible in the same investment. They also promised returns that were not correlated to the performance of the sharemarket.

    In 2001, just after the launch of several hedge funds aimed at small investors, a leading financial planner, Robert Keavney, said there was "nothing on this planet that is more or less guaranteed to give double-digit returns every year". He said investors had other options available to them in volatile periods, such as fixed interest, property and cash, which are not correlated to the sharemarket.

    The hedge fund promoters promised returns of between 10 per cent and 15 per cent a year after management fees, over at least three years, regardless of the direction of share and bond markets. For small investors, hedge funds were bundled up into one offering by the big fund managers. Investing in several hedge funds through "fund of hedge funds" was considered more prudent for small investors because individual hedge fund managers were considered too risky. Hedge funds are mostly small businesses and usually not subject to regulation, though there are moves by governments overseas to bring them into the regulatory net.

    The funds of hedge funds invested in up to 30 underlying hedge funds across a variety of impressive-sounding hedge fund strategies. Some of the more popular strategies include "long short", which is where the manager bets the price of some stocks will fall and others will rise, and "macro" strategies, where the manager looks for small pricing differences between markets.

    From their launch in the early 2000s until the crisis in 2008, most were producing average annualised returns of 8 per cent or 9 per cent - just below the promised 10 per cent to 15 per cent.

    It took the crisis to disprove one of the key claims of the funds of hedge funds: that their returns were mostly not correlated to sharemarkets. When sharemarkets around the world dropped by about 25 per cent in Australian dollar terms during 2008, the returns of most of the funds of hedge funds dropped by about as much.


    One factor hampering their performance was the hefty investment management fees. Most hedge funds charge their small investors an annual fee of 1 per cent to 2 per cent of the money invested and a performance fee of 20 per cent of any returns above zero or the cash rate. By comparison, most share funds charge fees of less than 0.5 per cent a year.

    The head of research at Morningstar, Tim Murphy, says part of the reason for the poor performances of hedge funds during the crisis was because many were highly leveraged. He says many of the trading strategies produced fairly small returns and they borrowed to magnify these returns. But when credit markets dried up in 2008, many funds had trouble borrowing.

    Another problem with hedge funds was illiquidity. Investors wanted their money back and so did lenders to the hedge funds, forcing them to sell their assets at the worst possible time at poor prices with their returns being savaged as a result.

    The average annual returns over the past five years of the funds of hedge funds, given in the table, range from minus 12 per cent to 2.27 per cent. Murphy says it is "hard to argue" that small investors have been served well by their investments in hedge funds.

    UNDERACHIEVEMENT
    * Hedge fund promoters have failed to deliver on their promises.


    * Hefty fees leave even less for small investors.


    * As a result of the financial crisis, many had to freeze redemptions.


    * Others are slowly handing back money.

    http://www.businessday.com.au/news/business/money/investment/danger-of-hedging-your-bets/2010/03/16/1268501456367.html?page=fullpage#contentSwap1

    2010 Market Trading Strategy


    DARYL GUPPY
    February 23, 2010
      This chart pattern is the most frequent pattern of behaviour in the market.
      This chart pattern is the most frequent pattern of behaviour in the market.
      Running technical searches and scans is an important part of trade identification. It has an important drawback.
      The scans you select and use limit your search for opportunities and they prevent you from making a strategic assessment of the current market conditions.
      Many traders use the performance of the market index to provide some type of strategic background but this analysis does not easily transfer to all stocks.

      Every few months traders do an extensive visual scan of the market, looking at every chart. This gives a feel for the market behaviour. It helps to identify the most common patterns of behaviour, and this in turn helps to select new explorations. The chart pattern above is the most frequent pattern of behaviour in the market.
      The next most frequent behaviour is the sideways pattern. These patterns offer very limited trading opportunities.
      However it should be noted that the sideways pattern may become more dominant in market activity. If this is the case then traders will need to adjust trading methods to take advantage of the short term rally and retreat behaviour.

      It is important know what type of chart behaviour to avoid. It is also important to identify the chart behaviour which provides potential opportunities.  The classic is a GMMA trend rebound pattern.
      Stocks with this pattern are added to a stock pool for assessment with other trading indicators such as Count Back Line (CBL) and Average True Range (ATR).  Once the behaviour is identified, a new search parameters can be established which makes it quicker to find these broad conditions in the future.

      Based on observations in other markets, this rebound pattern offers good trading opportunities in current market conditions.

      Momentum trading opportunities continue to develop, but they are more difficult to catch. This example gives a 100% return in 3 weeks of trading. The key search component is based on returns of more than 10% over a 2 to 3 day period. This may be teamed with a volume filter.
      Chart pattern behaviour is also observed. Chart patterns are assessed in several ways. The first is to determine the frequency of the patterns. In some market conditions, some chart patterns occur frequently and are very reliable. In other conditions they occur less frequently and offer poorer opportunities.
      A visual search allows the trader to decide the frequency of the patterns. In making a decision about trading, the trader will asses the consistency of price activity and volume liquidity. The up sloping triangle in this example is a good pattern, but a poor trading opportunity because of the number of no trade days.

      Other opportunities include the classic GMMA trend trade with a mid-trend entry. These types of trades were successful in 2009, but in 2010 there is an increasing incidence of sudden trend collapse. Now the preferred entry point is when price moves near to the Trend Volatility Line (TVL line). This allows for a rapid stop loss exit to protect profits.
      The purpose of this scan is to identify the changes in the distribution of patterns. What are the dominant patterns of behaviour in the market?  
      The prevalence of downtrend and sideways patterns in the current market tells traders that caution is required in trading counter to these trends. Downtrends can be traded using CFDs to trade short but the preference here is to trade only the top 100 stocks with high liquidity.  
      The next step is to develop technical scans which will quickly extract stocks that are consistent with the dominant pattern behaviour. The third step is to apply trading analysis to the stocks in the stock pool to select the best trading candidates.
      Daryl Guppy, well-known international financial technical analysis expert.  He is an equity and derivatives trader and author of books including Share Trading, Trend Trading and The 36 Strategies of The Chinese For Financial Traders. His weekly analysis newsletters are followed in Asia and Australia.
      Information provided is in the nature of general comment only and neither purports nor intends to be, specific trading advice.

      Rally or Trend?

      DARYL GUPPY
      March 15, 2010
        With the XJO rebounding from support near 4500 and with resistance near 4900 is important to distinguish between a rally and a new uptrend. A sideways market calls for different trading methods.
        It's useful to know the difference between a rally and a trend because this determines the best trading methods to use. The difference tells the trader if he should use short term trading methods or trade for a defined percentage return on the trade.
        A rally may be part of an established uptrend. The rally lifts prices well above the long term uptrend line, but then prices retreat. The price retreat retests the uptrend line and uses it as a support. 
        These rallies offer short term trading opportunities. They are similar to a small bubble in the trend. This is shown in area 1 on chart 1. There is no change in the long term trend.

        A rally appears in an uptrend environment after a market retreat. A long term uptrend has developed a retreat. A rally develops when the price changes direction and moves upwards. This is area 2 on chart 2.
        The rally is a short term price movement continuing for 3 to 10 days. The rally often moves to a previous resistance level, and then retreats again. The rally is not a sustainable trend. In this situation the rally may be part of a longer term downtrend pattern. This confirms a change in the long term trend.
        A rally may also develop in a downtrend. The rally follows a fast retreat, or price dip, in the downtrend. The rally quickly lifts the price upwards until they hit the long term downtrend line. Then the price retreats and continues to move down. This is area 3 on chart 3. There is no change in the long term trend.
        A rally is a fast upwards price move that is in the opposite direction to the previous market retreat.
        Sometimes a rally will develop into a trend. When a retreat and rally pattern has developed as part of an uptrend then the rally develops into a new uptrend when the price moves above the previous resistance level. This is area 4 on chart 4.
        In this situation the rally turns into a new trend that may continue for several weeks or months. The rally becomes part of a continuation of the previous uptrend. This has the potential for a long term trend change.
        When a downtrend changes to an uptrend the first development is usually a fast price rally. When the rally breaks out above the downtrend line there is the possibility of a new up trend developing. Usually the rally breakout is followed by a small retreat and then another rally.
        The long term trend line is created when the pattern of rally and retreat behaviour has an upward bias. This is shown in area 5 on chart 5. Traders and investors look for this type of rally behaviour so they can join a developing long term uptrend.

        The danger in the current market is the development of a broad sideways trading band. The upper edge of the band is a resistance level and the lower edge a support level. In this market condition traders see frequent rally and retreat behaviour as the market moves sideways.
        This is shown in area 6 on chart 6.
        These rallies offer very short term trading opportunities with limited profits. Traders use MACD, Stochastic and sensitive momentum indicators including the parabolic SAR to trade in this environment.
        Many traders believe the market is developing a broad sideways movement with many short term rallies.
        A rally is a short term uptrend in prices that usually develops a retreat when it hits a resistance level.
        An up trend is a long term trend that continues for many weeks or months. Trends often start with rally behaviour so traders must be alert for the signals that show when a rally is developing into a trend.
        Daryl Guppy, well-known international financial technical analysis expert.  He is an equity and derivatives trader and author of books including Share Trading, Trend Trading and The 36 Strategies of The Chinese For Financial Traders. His weekly analysis newsletters are followed in Asia and Australia.
        Information provided is in the nature of general comment only and neither purports nor intends to be, specific trading advice.

        Smoothing investing extremes a question of timing


        ANNETTE SAMPSON
        March 20, 2010


          With growing talk of a possible second economic turndown, investors would have to have teflon-coated nerves not to consider the prospect with trepidation. Investing long-term and riding out the ups and downs is one thing, but do we really want to put ourselves through all that anxiety again?
          It's bordering on financial heresy, but there is growing interest and debate in strategies that allow investors to capture the best of market performance, without being totally hammered by the worst.
          Yes, we've all heard that it's time in the market rather than market timing that matters. And there is plenty of research around to show that investors who ride out the storms typically do much better than those who panic and sell at the bottom of the market. Unfortunately, most investors pick the wrong time to sell and miss out on the market rebound, as well as crystallising losses.
          But fund managers can be terrible hypocrites. While they encourage you to invest for the long term, most active fund managers buy and sell stocks as if they're playing pass the parcel. It is not uncommon for managers of share funds to turn over 100 per cent or more of their portfolio in a single year.
          Super funds have also increasingly been embracing strategies such as ''dynamic'' and ''strategic'' asset allocation - both high-falutin' terms for a bit of old-fashioned market timing. The funds won't make a big call such as completely selling out of the sharemarket (they'd probably generate a collapse if they did), but an increasing number are prepared to ''tilt'' portfolios away from sectors that they see as overvalued and towards those more likely to outperform - in their consultants' humble opinion, at any rate. And most investors think that's exactly what they should be doing.
          The problem is that ''market timing'' has traditionally been the province of traders and snake oil salespeople promising ways to get rich quick. If it was as easy as claimed, we'd all be doing it.
          So it was with mixed emotions that I agreed to a chat with the former NSW Treasury secretary, Percy Allan, about his latest business venture.
          Given his background, Allan is no fool. But he freely admits to being spooked by the global financial crisis and selling out of his stocks. Yes, he says, he knew that markets could go down and he knew the best advice was to sit tight. But faced with big losses - including the total loss of value of some portfolio stocks - he got out anyway.
          The problem was that having got out of the market, he had to decide when to get back in, and that was a tougher call. Left to his own devices, he says, he would have been too scared to make the move, so he started researching strategies for taking the extremes out of investing. The result is Market Timing, a venture with the former head of Standard & Poor's Asia-Pacific sovereign risk group and a former deputy secretary of the South Australian Department of Treasury and Finance, Alan Tregilgas, and a leading dispute resolution specialist, Bob Gaussen.
          The company uses seven technical indicators to gauge the trend of the market and to identify signals to buy and sell. It's like share-trading on valium. There is no stock-picking and no fundamental analysis of stock value. The company recommends investors buy exchange-traded funds over the market index or listed investment companies, and even the ''active'' strategy trades only five to eight times a year. There's a conservative strategy with three to four signals a year, and an ultra-conservative strategy that comes up with only one or two trading signals each year. It's not about second-guessing every market movement but avoiding the worst of the major downturns.
          Allan says back-testing over the past 25 years has shown the strategy outperformed ''buy and hold'' by 1.5 to 3 percentage points, although this doesn't include trading costs, tax or dividends. Rather than a get rich quick program, he views it as a risk management tool - a way to avoid the worst of the market falls while capturing much of the upside. The back-testing has shown much lower volatility than the overall index, which would be enough for Allan - even if there was no performance advantage.
          Of course, no system is foolproof and any form of market timing carries the risk of false signals - or being whip-sawed, as it's known in the jargon. This is what happens when the signals say one thing and the market heads off in the other direction. Allan says he switched from the active strategy to the conservative because he found he didn't have the stomach to risk being whip-sawed several times a year - even though he knows that over the long term, the active strategy is likely to perform better.
          For investors with a genuine buy-and-hold strategy, the extra trading and tax costs may also outweigh any benefits.
          It also must be said that Australian active fund managers have often outperformed the market. This is different to the US, where market timing and trend-following are more widely used and accepted.
          Nevertheless, Allan says, Market Timing is attracting interest from ex-traders who have been burnt and people hurt by the financial crisis too scared to go back into the market.
          Doubtless on Monday my inbox will be chockers with outraged comments from fund managers and financial advisers who believe market timing is for cowboys.
          But Allan was not alone in his response to the financial crisis, and professional investors as well as small investors have been asking whether there isn't a better way to manage risk in the sharemarket.
          It's a debate we probably need to have.


          Comment:  Yet again, not a totally fool-proof method.
          http://www.smh.com.au/business/smoothing-investing-extremes-a-question-of-timing-20100319-qm57.html