YouSaid · the spoken record

Simon Ree

lines on the record: 82
first: 2023-04-17
most recent: 2023-04-17
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Yeah, if you look at positioning in SP 500 futures, it's particularly bearish. Now, you never know what's on the other side of that. That could be a hedge for long equity positions. But the fact is futures are a leveraged instrument and these are positions that can get squeezed if they're on the wrong side of a move. All right. So if there is a strong move up, you can see a short squeeze, which causes people who are short futures to start buying back their short futures, which fuels further gains in the index.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Talked about positioning. So there's going to be upward buying pressure because of positioning. What does that mean? And can you go through the argument of, oh, if everyone is bearish, then there's no one to get margin to get bearish, you know, because everyone's already bearish or they have to do buying.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Extend risk or try and hit any home runs. I'd much rather try and do that in an environment where we've got a strong trend to play with. We just don't have that at the moment”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“We're sort of in a range. The SP 500's in a range of kind of 3800 to 4200. I think unless we break out of that range, it's hard to get particularly excited about anything. I don't think we're at a generational buying opportunity. That said, I don't think markets are about to roll over and die here, not in the immediate term anyway. I think there's probably some more upside pressure than downside pressure looking at things like that CPI print and positioning. But it's hard to get excited about a market that's chopping around in a range. And this is the sort of environment where really you just want to keep your risks small and just hit base hits. You're not looking to really.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“OMC rate decision, whether it's FOMC minutes, for goodness sake, whether it's CPI, whether it's non-farm payrolls, these have all become massive binary risk events. Now, there was a time, Jack, in the not too distant past, where CPI print would hit the tapes, stock market wouldn't care. It was just go on as business as normal. But we're in a paradigm now where the market is just obsessed with economic data releases and trying to impute what that means for the Fed's next move. Clearly, the market doesn't love it when the Fed is hiking rates and everybody's been baying for this dovish pivot. Be careful what you wish for, I think, in that regard. But yeah, it's kind of unusual. I don't think it'll be like this forever. We'll get through this eventually. But at the moment, the current paradigm we're in is where every major economic downturn.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“I mean, it is kind of weird. The other thing that you need to, I guess, appreciate is that we've been in a bear market. Arguably, we're still in one. I won't touch that argument. But what we've seen is every economic announcement, whether it's...”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Look, if I showed you a chart of the SP 500, a daily chart over the last year and compared that with previous downtrends, I don't think you'd look at it and say, wow, look at the difference zero data X pre options has had on the market. Look, I think it probably exacerbates intraday volatility. I think it probably helps to depress volatility, implied volatility because most of the action is in people selling vol, not buying vol. There's been a lot of hand-wringing about, you know, is this going to be the next kind of cataclysm to hit the market? I'm not convinced. I'm fairly, I guess I'm fairly sanguine about it at the moment. I haven't seen any compelling evidence that this is something I should be losing sleep over.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Correct, right? So that's really kind of thrown people offside. To me, if you're following trends and following technicals, it's fairly easy to avoid mistakes like that. You just wait until the trend is reversed and you start buying the first higher bottom rather than trying to catch the falling knife.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“There's been an absence of sort of abject fear. I mean, we've had a couple of spikes in the VIX above 30 or above 35, but that's been about it. We haven't seen anything truly scary. And, you know, some people are sitting there kind of waiting for the big one and saying, oh, the VIX hasn't hit 80. Therefore, we can't be anywhere near a market bottom, whereas other people are kind of pointing out other market dynamics such as zero data expiration options and their rise in popularity and the impact that might be having on realized volley. So yeah, every kind of market cycle is different. I guess the big difference between 2022 was the simultaneous fall in stocks and bonds. And that's as a result of the inflation regime. We had many, many calls throughout last year. Now's the time to buy bonds. Actually, now's the time to buy bonds. Well, now is really the time to buy.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's as you say, it's been fairly different from completely different from 2020, but also very different from 2008 in both of the previous falls, we had kind of volatility exploded and it was when volatility kind of has a big move, it sort of becomes a little bit more predictable. Volatility is a real mean seeking beast. What we've seen in 2022 is I think volatility is really underperformed most people's expectations given what happened to the market, particularly the Nasdaq. And so it's been a surprisingly orderly sell-off.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“In a bear market, I'm far more likely to be taking directional positions long and short and looking to trade both sides of the market rather than putting hedges on top of a portfolio of positions. And generally, I guess the holding period tends to be shorter in a bear market as well. As I said, positions moves tend to have less follow-through. They tend to change direction a little more quickly. So in a bull market, I might hold positions for two to four weeks on average in a bear market, it might be anywhere from two or three days to a couple of weeks.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“So with a bear market. I find that with a bull market, okay, you can pretty much ignore counter trend moves. All right, if the market gets really overextended to the upside, like I said, I can just buy some SBY or some triple Q ports or something like that. I'm not looking to trade individual stocks short. It's just not worth it in a bull market because really you're looking to buy the next dip. In a bear market, There's a lot more two-way price action. All right, the counter trend moves in a bear market can be massive. You know, you can see 15, 20, 30, 50% rallies and still be in a bear market. If you look at the tech rec from 2000 to 2002, the Nasdaq had eight rallies of 25% or more, and it had a couple of rallies of 50 or 60%. If you're just trying to short the market through all of that, you're going to have a really tough time.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I would. If I was, if my long exposure was SPY calls, I would just sell the calls. And if my long exposure was a basket of somewhat correlated stocks, And I thought that certainly if the index might be looking overvalued, but some of these stocks still look like they could run, by implementing a hedge and spending a small percentage of my NLV on doing that, yeah, it's going to be a little bit of a drag on my portfolio if things keep going, but that's fine. It's going to be an absolute godsend if things fall over”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“I'm not necessarily looking at it as a profit center, but it's just part of my risk management. See, I've got a very strict rule. I will go to cash if I have a portfolio draw down of 15% from a high watermark. I will sell everything and go to cash for a minimum 24 hours. Now, doing that isn't a lot of fun. And so what I do is I implement strategies that make that extremely unlikely. Hasn't happened to me since October 2018. But that's part of why I hedge. So it just smooths out the fluctuations in my NLV, which means it smooths out my emotions, which means I'm in a better position to make high quality decisions.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Crazily overpriced. And if that happens, I don't want to bail on all of my long positions because there still could be some juice in the tank. But just as well, I don't want to get caught if things do fall in a heap because markets are overextended.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, so the way I think about it, hedging to me, it's more relevant conversation in a bull market, all right? We'll talk about how to trade a bear market in a minute. In a bull market, Say I'm long, some call options in some large market cap stocks and the trend is up and everything looks fantastic. That is when you want to hedge, all right? You want to hedge when everything looks amazing, all right? I always get people saying, oh, what do I do about hedging after the market's fallen 10%? Well, that's like buying house insurance after your house has caught fire. You know, it's like applying for life insurance the day after you fail the medical, right? You've got to be preemptive about this. So the way I approach hedging is if we're in a bull market, I've got some long positions on. If the market gets to a point where it is probabilistically likely to revert to the mean because it's stretched a long way away from the mean, you know, I'll do some hedging. I'll buy some SPY puts or some triple Q puts or put spreads or something like that. Now, as we know, markets can get...”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Oh, you're going to just hedge the interest rate risk out. It's like the 10 year bond is interest rate risk, you know. So you're just now you have a swaps red risk. So I'm just, I'm getting into the my own little hobby horse, but talk to me about hedging. Like, how do you think about hedging? Because the idea of like if I own 10 Apple shares, the way to get rid of the risk is to sell the Apple shares, not to, you know, right?”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“The word hedging is just making me so emotional. We've got to get into it. The word hedge. It's like, don't worry about it. You're hedged. You know, I have a stock I own this stock, stock A, stock B, stock C. I can hedge it by shorting a basket of stocks. I can short S&P 500 futures, but I'm just changing my risk profile into a different blend of risk that I may be taking my beta exposure down, but I'm increasing my exposure to the spread between what I own and what I short. So I think a lot of hedge fund managers say, oh, the stocks that I own because I'm so smart, they're going to go up and I'll short the future that the herd owns. But it's like sometimes the herd is right. Sometimes you're wrong. So if you're wrong, you get, so, and this is the banks, like with people talking about interest rate hedging, where there are a lot of good points. And like, you know, all of the very large banks have very sophisticated hedging programs and some of the regional banks do as well. But the idea of if you own a 10-year treasury bond.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“No, I mean, what I would do if I was looking to hedge a position, what I might do, if I've got long positions in Apple, Microsoft, JP Morgan, for example, and I'm concerned about a CPI print that's coming up, I might buy some SPY puts or some triple Q puts or something like that. But again, hedging isn't something that I would do on a whim. I've got a specific sort of risk dashboard that I follow, a hedging checklist. I will put a hedge on if my process tells me that now is an important time to do so.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“If I'm looking for an uptrend or lower highs and lower lows, if I'm looking for a downtrend, I want to see some evidence that what I'm expecting to happen is happening. And so then I'll enter a trade and just manage the risk very carefully. First sign of trouble, first doubt I have on a position, I'll just get out. My job as a risk manager is to prevent small losses from becoming big losses. That's been a very important lesson for me is keeping losses small. If the stock ends up doing what you thought it would do and moves in your direction, so what? You can always get back in. Trading costs these days are de minimis, often even zero. It's really only ego that prevents us from getting back into a position that we just got out of.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I trade options on stocks and ETFs. So I'll trade indices, I'll trade sector ETFs, I'll trade. A bunch of single stocks, you know, usually the larger, more liquid names. And yeah, I'll buy call options if I want to go long. I'll buy put options if I want to go short. We can talk more about that if you like. And what I'm looking for is specific technical criteria. So I've got three or four trading methods that are my bread and butter. I've built scans for them. I literally run those scans every day looking for opportunities. So I run a scan that will, some days it might show up. No results. Some days it might show up half a dozen. Sometimes I might get 50. If there's 50 scan results, I'll rank them in descending order of market caps. So looking at the largest, most liquid stocks first. And really what I'm looking for is stocks that A meet the technical criteria, but also B look right. I want to see stocks that are actually making higher highs and higher lows.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Is trends, and I'm looking for a high probability moment in time to join a trend, whether it's an uptrend or a downtrend. What has been certainly more relevant over the last year, certainly since 2022, in addition to that, is counter trend trading, where we're looking for high probability turns in the market. And that's because the market's been volatile, it's been very choppy, moves haven't had a lot of follow-through. When you're trading a bull market, all you really need to do is just buy the dip. You just buy every single dip and it's really not that hard. When you've got a bear market, like we had in 2022, you can't ignore the counter trend rallies. Yeah, I mean, shorting is fine, but you'll get wiped out if you get caught up in a big counter trend rally. So you really have to trade both sides of the market long and short at the appropriate times.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“So, what I'm always looking for, Jack, is high probability moments in time to enter the market. All right. So my default position is cash, and I'm only going to put my cash to work when I see a really good opportunity to do so. So here's an important point. the way I think about what I do and in all of my self-talk, I'm not a trader. I'm a risk manager. That's how I think of myself. That's how I talk about myself. And I place a high bar on any risk that I'm going to take. It's got to tick lots of boxes. I always say I need three or four reasons to get into a trade. I only need one reason to get out of it. All right. So risk management is always paramount and that's what I see my primary role as. So yeah, I use technical analysis. I use charts to identify those high probability moments in time. And what I'm looking for primarily”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Consistency is a superpower, and it's something very few people have. I mean, the reason why most people don't have the body or the physique that they would ultimately want is because they can't consistently follow a few very simple rules. And it's the same for trading. There are just a few simple rules that you need to follow with any good trading plan that if followed consistently will yield results. But it's just that consistency, it's that discipline, it's that showing up every day that eludes most people. It's certainly not lack of sophisticated financial knowledge. It's certainly not lack of IQ or intelligence. It's really just that consistency and that ability to show up every day.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“I'd say it's not true The first thing I'd say is don't care about what the market does. Okay, all you should really care about is your own account. Your job as a trader is to manage your portfolio, the NLV, the net liquidating value of your portfolio so that it grows consistently over time. You don't care what the market does. You're not trying to beat the market. You're just trying to generate consistent returns. As an options trader, I'm particularly passionate about options. You can make money in rising markets, you can make money in falling markets. All you're trying to do is Incremental gains. You're not trying to earn your retirement on any single trade. You're just trying to be consistent and book incremental gains.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“When we say success is inevitable, I think for some certain disposition who may be perhaps such as yourself, who's obsessive about it, who understands the concepts, who has the temperament also, temperament much more important. I mean, that's what Warren Buffett has said, temperament much more important than just raw intelligence. Perhaps, yeah, success has a higher likelihood. But a lot of people are doomed. Like a lot of people who are agree, you know, they work 40, 50, 60 hours in a job that's not financed. The odds that they are going to trade the market and beat the market to me over a long term basis to me it seems slim to none and a lot of academic experts as well as investors have said the same is that true or yes or yes”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Practice that gives them a probabilistic edge. Success is almost inevitable. And the second stage of success is becoming consistently profitable and being able to make returns that you just wouldn't be able to make as a buy and hold investor.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Make an outsized return for little or no effort, that they're looking to generate something that they know they're lucky to get away with. Trading, I think the motivation is very different. You're putting in the hard work, you're doing the work, and you are playing probabilities and you know that you're not going to win every trade because there's a reason this job is called trading and not guaranteed profits, right? It's because we're dealing with probabilities, not certainties. If people could approach trading with this idea of I'm just going to master the art of not losing money, provided they're following”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Successful trading is, I guess it comes in stages that the first stage is not losing money. And most people get into trading with this almost lottery ticket sort of mentality of, oh, I'm going to trade and I'm just going to make millions of dollars. And it's essentially gambling. People sometimes associate trading with gambling. And sometimes those analogies actually work quite well. But there's an important difference. A gambler is looking to”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“It was, you know, I guess I got to my mid 40s and started asking myself some of those tough questions, what are you doing with your life? What is your marginal contribution to society? And I just didn't really like the answers I was getting back because really I'd spent my whole career working with and helping people who were already incredibly wealthy either stay that way or become even wealthier. You know, I've always been fascinated by teaching imparting knowledge. It's something I've always loved doing. And I just thought, you know, it's time to use the skill set I've developed to help people who could really benefit from it rather than people who've effectively already made it financially. So I left the corporate world, basically retired from that world in 2017, started trading for myself full-time. And then through meeting mutual friends and mentors, wrote the book.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Uni was as a futures broker. And I mean, that was great. Got a good introduction to markets and derivatives. I just didn't find it frozen orange juice and bales of wheat as exciting as Microsoft and Dell and companies. So I still had that itch that I wanted to scratch and then it was 1996. I joined Goldman. I'd had a fairly strong derivatives background from my work experience up to that point. And I built a business around options, trading options, more specifically selling options at that point in time. So built a business. And then in 2003, moved to Sydney to head up or found and head up the markets desk for Goldman within Australasia, did that until 2010. And then I got headhunted by Citibank in Singapore. So I moved up to Singapore. Which is where I am today. Worked there for six and a half years.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Sure. So I guess introduction to finance was in my second last year of high school. And that was the year of the 1987 stock market crash. And I was studying economics as one of my high school subjects and had a great economics teacher at the time. I had a passing interest in the stock market and really the 87 crash really captured my attention and my imagination. I didn't have any skin in the game at the time. I was too young. But I just found the whole episode really fascinating. And I thought to myself, yeah, I want to do something in the stock market when I grow up. And even as a kid, as a teenager, I'd open the newspaper and we had newspapers back in those days. And I'd read the, you know, the share tables at the back. And for some reason, I just was transfixed by the whole thing. So I studied economics and finance at university. And my first job out of”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT