Australian Property and Dire Straits! How being a contrarian saves you from crazy bad IPO's

Couldn't agree more with this article.

https://www.intelligentinvestor.com.au/heres-proof-property-has-peaked

Property tops.... Australian Economy drops .... Bank default rates increase .... Aus banks cut dividends ....
Aus banks drop.  No saving from China this time!

Macau/China's Fragility

I had not been to Macau in two years even though it's only 50 miles away,  but as evident today, they are still building at their fastest rate including an Eiffel Tower in third or half scale, a colossus, and a Massive land reclamation. I see probably a dozen mega casinos being worked on still.  Macau loves creating Fragility!

Or is it just another big Gamble!?

8 years ago this was a quant Portuguese - local Chinese mix with great food and meandering back alleys. All gone except a few of the restaurants. 

Ka-Boom!!! The Swiss go to War on Currency - CHF

Recently I wrote a post looking at Leverage and Trading success that I came across, and the observation that the best performers limited their max drawdown percentage risk to less than 50%.  Further the greatest number of net profitable traders held less max drawdown percentage risk at around 30%.

http://investingpsychologyblog.blogspot.hk/2014/12/leverage-bringer-of-destruction-risk-vs.html

"Humans have a great awareness of risk through survival instincts, but this does not seem to translate into the markets!"

I certainly didn't predict the move the SNB made to unpeg, but the observations seem to be borne true, especially when you consider that FXCM users owe FXCM over $300 Million, forcing FXCM itself to seek a bailout to satisfy their fiduciary obligations.

FXCM had even been one of the champions of allowing greater leverage use by traders to the US Commodity Futures Trading Commission review.

http://www.bloomberg.com/news/2015-01-16/fxcm-lobbied-against-leverage-limit-before-franc-trades-went-bad.html

I had a bit of a loss on the USDCHF move, saved largely by stoplosses limiting my risk, but I also learnt a couple of lessons as a result of the "close-call."

1. I will from now on keep my option and any spot positions separate in another account.  Whilst I didn't suffer any option liquidations, I would have been VERY annoyed if those long term options had been closed on me.

2. EVERY Spot position needs a solid stop loss.  Fortunately I had that.  The danger with Risk, is that is is unknowable until you suffer its effects.

3. Forex options are a better alternative to Spot.  These are still alive at least, and not subject to leveraged margin calls.

4. Leverage must be watched like a Hawk, and controlled to levels that allow survival in surprise events, as proven in the chart of trading success and leverage above.

5. VOLATILITY + LEVERAGE = DYNAMITE