Convicted fraudster and self-confessed criminal Christopher Angus is kicking off an educational video series on boosting investor confidence so you may steal from them. He is providing over a dozen detailed free video tutorials on how to defraud investors. This third video is 22:38 & was shared on March 18, 2016. The criminal who shot these videos delivered over a 99% investment loss, as he simply stole the money and integrated it into other investment scams abroad. https://www.oxfordmail.co.uk/news/18155553.oxford-fraudster-christopher-angus-defrauded-friend-2m/
Crown Police never followed the money trail.
0 minutes 40 seconds: did not do any trades because risk in market was too high, sat on hands
3 minutes 30 seconds: talks about how 5 point range in S&P 500 is absurdly tight & how normal range is 17 to 20 points
5 minutes 20 seconds: gambling is not what we do
6 minutes 20 seconds: difference between high volatility & low volatility markets in terms of margin of safety in entry and exits
12 minutes 5 seconds: does not believe in crystal ball & only trades reactively to good trade set ups
15 minutes 10 seconds: again talks about hedging any positions
16 minutes 20 seconds: vix at 20 is often a decent entry point to start buying
19 minutes 20 seconds: (over next 1 minute & 10 seconds) explains how low volatility makes entries harder & states he thinks options get too complicated. mentions most the smart people in options make money selling premium, which is writing options betting volatility will fall. then states he can't deviate from what he does which works even in bad markets we still make money.
20 minutes 30 seconds: states importance of discipline & states people who lose it and start fooling around are basically gambling
00:00 Christopher Angus: Okay, so, just a quick recap. I didn't do any trades today, reason being is nothing happened. Looking back at the opportunity, there was possibly one move that may have worked, but it was such a tiny move that the risk far outweighed the reward. I'll get to that just in a second. Let's go here. And this is the move that I'm talking about. You probably can't see these numbers 'cause on the video, it always comes out with slight low quality, but that's starting at about 13.82. The futures again operate at a slightly different number, but... And they move a little less than this. So, even if we're just trading the VIX here, we would have really struggled to do anything and actually come out with a profit and not get trapped in a trade over the weekend, which is something which should always be avoided 'cause you don't know what's gonna happen.
01:13 Christopher Angus: So, as you can see, this is the open and we... Because it's... We're in such a low, low, low place, we are only buying. So, as it came down, this is the only time we could have bought it. Bear in mind, when you take into account the spread, this move is about 0.4, and the spread is 0.1. So that leaves you with 0.3 points to play with. Again, you're not gonna nail it on the bottom, maybe you'll get a 0.1 off the bottom and 0.1 off the top because you gonna let it roll on you as it starts going over and then you're gonna say, "Okay, you know, it's... The markets turn, I'm gonna take my profit here." So, take into account that's 0.4. You can take off 0.1 straight away for the commission. Yes, we get a tiny bit of that back, but it's not much on one's tiny trade. So then we've got 0.3 left and we're gonna give away 0.1 to stock, and we know it's actually turning, and we're gonna give away 0.1 when we think it's rolling over. So, from 0.4, we're left with 0.1 profit, which is one tick, 10 ticks to a point on the VIX, which is the very smallest increment you can make. Bear in mind, I like to make one point a day, not 0.1 points a day. Its just the risk doesn't justify the reward.
02:48 S1: And if I just go back to the S&P here, you can see the S&P opened, what's that, 2045, went up to 2050, went back down to where it opened, and then went back up to where it closed. So the whole day, this was in a like five-point range, which is insane. That's just algos fighting each other, basically, with no big market participation. Volumes are very, very low at the moment, for some reason. Normally, there's around 200,000 shares traded on the DOW. At the moment, there's 200 million shares traded with all the DOW constituents, there's 30 companies within the DOW. It's 200 million shares, and that's kind of the average. At the moment, I'm about 90 million, so we're really down on volume. So, we need some news. So to have a market that's stuck in a five-point range... The average daily movement on the S&P normally, like just in a normal day, the normal range is like 17 to 20 points. It was 17 a while ago, but when the volatility really picked up in the last three months, went to about 20. So, even stuff which is historical that... The movement on the S&P will be about 17 points; today, it's five.
04:25 Christopher Angus: Really an impossible trading environment at the moment. Now, the market really just couldn't break out, it didn't break down, either, but it seems to be running out of steam. So we're positioned in a very good position, again, we've had a shitty week. I'm sorry, I do apologize, but there's literally nothing I can do. There's one move today and it just does... It didn't make any sense to even bother trading that and getting stuck over the weekend. You know, I would have been reporting 0.1% at best. You can see it's just what the market's doing, and even if you're trying to trade another market like the S&P, it would be a very similar story. What's the alternative? Go pick some small stocks and gamble. It's not really what we do.
05:25 Christopher Angus: So, I wanted to just take some time as well just to explain how things work in low-volatility environments and how things work in high-volatility environments and where the risks are. I don't know how... Oops. I don't know how high I can actually get this. That's a bit better, and then... That's kind of better. So, the brown tree or the green tree here... This is high volatility. See if I can do some writing here.
[pause]
06:31 Christopher Angus: And then the brown tree here is low. Low volatility. And what this... Imagine it was raining and you had to go stand under a tree, and both of us had to get under a tree. The brown one's only gonna take one person because it's narrow, so, that's you. And it's raining, here's me. I'm getting rained on. But we could both easily fit under... Stupid analogy, maybe, but we could both easily fit under with some other friends under the green tree, which is high volatility. Which means as the market moves, there's more time to take an entry, and there's more profit to be made. You don't have to get your entries as correct. You can come in anywhere and make a lot more profit, and you can exit earlier and still make profit. Now with the brown tree, you've gotta really nail it in the right place. And imagine this was one move, you'd have to get in here, and then you'd have to get out here to make the smallest amount of profit. So it's high risk for low reward, which is not a good trading theory.
08:28 Christopher Angus: And this is exactly the brown tree. It's, you've gotta nail that baby on the nose because if you screw up, you're basically underwater straight away and there's no recovery. And again, I hope that makes a bit more sense. That's a low-volatility environment which we seem to be in, which we'll be in this week. High volatility, when you have tremendous moves... I'm just gonna put this on a little bit longer. It's not been great the last couple of weeks, but here's a high... That's a three-point move, nearly, so, we could've... Today, we had a total range and one possible move of 0.4 on that... This example here that I showed you, that was basically within one day. I kinda ran over two days, but just for this example, there's a three-point move.
09:44 Christopher Angus: So you can see the difference in volatility at the moment is enormous, and the risk of getting stuck underwater is high. So, in a way, it takes a lot of discipline not to feel pressured and say, "I'm gonna do something because I feel like I need to do something, 'cause we haven't had a really good week." But I'd rather do nothing than have to report that we're stuck underwater in some horrendous trade over the weekend, 'cause it's gonna be stressful, and it opens on Sunday, I'm not gonna have a good weekend. I actually have some kind of coldly-flu thing coming on, so I'm not feeling too good anyway, so I'm pleased. But what I'm trying to say is... I'm not trying to toot my own horn, but I did the right thing today in not doing anything. Because there was one move, and it was such a small move that I could've made almost no money but could've been stuck much more easily than I could've made money.
10:46 Christopher Angus: So, as you can see, this is the longer-term thing from beginning of March 'til today, and the moves have been much more dramatic. It's just these last few couple of days... Well, this week, because it's been a downhill train and as you know, we can't sell volatility here because we're heading to the bottom. And there's basically... We could've grabbed a point, yeah, but the risk, again, risk-to-reward ratio is... It's pretty close to the bottom so there's not a lot of downside to capture, but there's a ton of upside to capture. If I roll this back a little longer, 28 days, there's volatility of 29. So, as you can appreciate, there's 15, 16 points on the upside, but like one on the downside. So that's why we can only buy when it gets down to these levels, and when it's there, I'm waiting for about a bottom, basically. Like I said, I trade reactively, not proactively. I don't know the future. My crystal ball's fucked. It's never worked. And I think anyone who tries to think that they have a crystal ball that is efficient and works properly, we usually end up losing money.
12:18 S1: So I can only trade reactively, so I wait for an event to happen. Unfortunately, the S&P's stuck in a five-point range, it's just unbelievable to have a tight range like that all day. Some of the spikes of two minutes might have been a little higher, but fundamentally, it would've spiked up. That's just market manipulation at a micro-level market microstructure. So there's nothing to do. It does become infuriating and creates sort of unreasonable doubt, and it is unreasonable because I know over time, this will come right. I was hoping the end of the week was gonna turn. You said a couple more days, I think that's Monday. And you seem to have a better hand on the markets than I do, to be honest, so, I'm just trying to run this out.
13:21 Christopher Angus: I don't know what I've done to my thing now. Okay. So as you can see, volatility does come back. It's just a matter of time. And... I'm gonna just put this into a more reasonable timeframe. It's pretty cool when it's at the bottom, because you can grab full points over and over and over, and literally it does become a bit of a printing press, as I've said a number of times. We're yet to see the printing press. At the moment, the fucking machine is on some kind of go slow, but it'll speed up, I promise. Like here, you can see, there are times when it is quiet, but it always comes back. And I could run this back years, and it's been the same. So, this is back to '91, 1991, when I was 11 years old. You can see, there are down times, of course, but it always comes back. The spike here is the great recession of 2008, 2009, when the VIX went to 80. Now this has smoothed out a lot of... This has smoothed out all the intra-day stuff and all the daily stuff so that this probably went a little higher last year, 24th of August, Black Monday, which was actually the day that my girlfriend left me, so I'll never fucking forget that day, when the S&P lost like 200 points in one day and the VIX also went to like 60 or 80.
15:08 S1: Now if you've loaded up, and you're short, that could really fucking damage your account; it really could. That's why, when you're on the short side, you have to run a hedge, so it catches you by a point, you run it up to 60, you start taking the leg, you start lifting the legs, and it starts to come down, and then you've had a really good day. And if it goes to 65 or goes to 63, you put the... You put what the hedge will be on anyway, because it goes on automatically, but it'll pick up the hedge. And yes, you do slide backwards a little, but it doesn't stay here. So the day that the VIX rockets up here, even if we're in a hedge, we'll be opening bottles of champagne, because it'll be awesome. Anyway. I diverge.
15:58 Christopher Angus: So, things are cool. It could be cooler if we actually had a decent week, but I'm sorry, I just couldn't do anything. This week's been shitty. It's been on a... Like you can... And I'll change this here. It's been on a downward slide all dog goddamn week over there, and I just... Once it gets below this 20 point, 20 is like my cut-off, I don't sell anymore, because I wanna start buying it, and so now I'm waiting. And yes, it was a little better 'cause I could scalp like a quarter point and half point. Not even that much, but a couple of small trades like third of a point, third of a point kind of thing. Something like that, plus the rebate.
16:42 Christopher Angus: But today, there was fuck-all. There was nothing to have. But you can see, this is going back to 2010, 2010, just short of beginning of 2010. So, it won't be like this forever; things go up and down. It's just that we're in a down phase and it's loading up before it goes back up again, so there isn't anything to worry about and I'm gonna trade much more aggressively next week 'cause we're at a really good level. But I just... I have to be reactive and not proactive, and I have to see the market turning, because like I showed you the thing the other day, we're waiting for the fed. I was deliberately holding off until something happened. If I'd been in a trade, the VIX dropped a full point straight away, we would have been underwater, and we'd still be underwater if I had actually taken a trade. And that's experience talking. My experience, I know when it's good to go and when it's not good to go. And again, today, if I'd taken a trade, the probability that I'd have either maybe just scratched the trade, which would have been like barely okay, or we would have been stuck. There would've been over 50% probability.
18:00 Christopher Angus: And again, it comes down to experience. I have to be reactive, I have to see the market turn before I go. And it's the whole... I'm looking at not just volatility turning; I'm looking at what the S&P is doing, what the DOW is doing, what t-notes are doing. You can see in my screenshots the flight to quality. Sometimes I leave that watchlist up if don't close it. And I don't see anything. I see the markets locked up, and just this really backward and back and forth fighting all the time over like two points each way. Two points up, two points down, two points up, two points down. And it's not... If you are trying to trade the S&P as like a regular trader who, there was unlimited upside and basically unlimited downside, you would have been chopped to pieces. You would've just given away loss after loss after loss because you had got in a trade, seen it go up a point, said, "Okay, it's gonna break out now." It would have turned on you and then would have come down a point, gone down another point, then you would have scrapped... Taken off for one point loser and you would have been chopped up.
19:13 Christopher Angus: These very, very low-volatility environments are no good for anyone. The only thing I could probably do is I could take a straddle with some options, betting that the markets aren't gonna move. I don't know, fuck options. I like options, they do interest me, but they're so complicated, and that's not what I do. I only like them 'cause I'm interested in them. But we're... If you're in these low-volatility environments, you're selling premium, because you're betting that the markets are not gonna move, not buying, not buying puts and calls, you'll be selling them.
19:47 Christopher Angus: And that's how all the big-option guys make money, really, is they sell premium. And all the smart ones don't sell naked calls and naked puts because you make 15% a month until one month, you lose everything. So, I've heard many, many horrible stories like that. And options have always really scared me, because of it, so I've never... And they're not a big thing in the UK, anyway, to be honest. So I've never really got into them. And at times, I really wanted to, but I can't deviate from what I do; what I do really works. You can see this. Even in a shitty week we don't lose money. We still make money, we just make a little less. And I never wanna deviate. Even once I've made my 50 mil, and you've probably made 100 mil, I don't wanna ever go and start fooling around because I think it's this...
20:41 Christopher Angus: Once you start fooling around, you've lost your discipline and that's that, and then you're basically just gambling. And it's just, even if you feel like you have a strategy, it's not the disciplined, well-honed, bona fide, well-optimized strategy. It's just like fucking screwing around and... I don't know, it's just it's always seemed kind of like really sloppy to me.
21:04 Christopher Angus: So, that's today. When I don't make money, I make videos to explain. So if you see a video, you know it's not been great. But like I said, just hang in there. And I'm sorry that as you've started sending some big money, things have like ground to a fucking halt. It's not good. You're gonna wait at least a couple of weeks before you send any more money. I'm not in any rush, especially not at the moment; everything is quiet anyway. So, we'll make money every week. We will. Even if there's... We have another week, like next week, you know, maybe we'll make 2%, 3%, hopefully. It's not the end of the world; it could be better. I like to do the 1% a day that's like my goal. Of course, February, was fucking wild, so, we had a really good February. Unfortunately, I wasn't with the big money.
22:00 Christopher Angus: Anyway, I don't wanna make excuses, it is what it is, I can't do anything. But thanks for your patience, thanks for the trust in me, thanks for everything. Thanks for remaining happy and calm. I need it, especially at times like this, 'cause I don't wanna feel pressure to perform because there's nothing I can do and then I don't wanna start doing crazy things 'cause I think I need to like put some trades on. Because I just... I won't do it, but I don't wanna ever feel the pressure that I have to anyway. Anyway, bit of a monologue, thanks again, and I'll catch you over the weekend or Monday at the latest. Bye for now.
Convicted fraud and self-confessed criminal Christopher Angus is kicking off a confidence series, providing free video tutorials on how to defraud investors. This third video is 22:36 & was shared on March 18, 2016. The criminal who shared these videos delivered over a 99% investment loss, as he simply stole the money and integrated it into other investment scams abroad. https://www.oxfordmail.co.uk/news/18263036.christopher-angus-jailed-fraud-friend-philippines/
Crown Police never followed the money trail.
0 minutes 40 seconds: did not do any trades because risk in market was too high, sat on hands
3 minutes 30 seconds: talks about how 5 point range in S&P 500 is absurdly tight & how normal range is 17 to 20 points
5 minutes 20 seconds: gambling is not what we do
6 minutes 20 seconds: difference between high volatility & low volatility markets in terms of margin of safety in entry and exits
12 minutes 5 seconds: does not believe in crystal ball & only trades reactively to good trade set ups
15 minutes 10 seconds: again talks about hedging any positions
16 minutes 20 seconds: vix at 20 is often a decent entry point to start buying
19 minutes 20 seconds: (over next 1 minute & 10 seconds) explains how low volatility makes entries harder & states he thinks options get too complicated. mentions most the smart people in options make money selling premium, which is writing options betting volatility will fall. then states he can't deviate from what he does, which works even in bad markets we still make money.
20 minutes 30 seconds: states importance of discipline & states people who lose it and start fooling around are basically gambling
00:00 Christopher Angus: Okay, so just a quick recap. We didn't place any trades today as I suspected. I thought today was gonna be another horrendous day, and it was. This is just... Let me just go back a little here, what time is it? Let's see if I can...
[pause]
00:35 Christopher Angus: Sorry I'm just... It's not good.
[pause]
00:50 Christopher Angus: Let me do it like this. So yesterday we closed at down here. And once the cash opened, it basically would've just gapped up. That's not really a trade there. You would've just found the cash there, and then had to decide are we gonna buy it here, 'cause you ain't selling it there, that's for sure. And if you had decided to buy it, which of course I didn't 'cause I just... Instinctively, I knew it was gonna happen. I just watched it and it just fell off again and turned around and came back up. As you can see, it's so volatile just on the open from 9:30 US time to 10:00 that you always have these really big moves. These moves aren't really big enough to make decent kind of money. This one here is like around half a point, which would've actually been able to make money, but we weren't really in that frame of mind where we're trying to take half a point because you're not gonna get half a point. You're not gonna get it right on the bottom; you're gonna get it here, like at 17.2. And then as it comes up, you're not gonna get it at 16.2; you're gonna sell it something down there at like 17.4.
02:20 Christopher Angus: Plus, you have to take 0.1 into consideration, so 17.2 to 17.4's 0.2. And then there's 0.1 in commission that you're paying back. Of course we get some of that back, but in a sense we would've made 0.1. We would've made one tick on that. That's not really a trade. And this, of course, is not a trade at all. There's there's nothing in that like. You're not gonna nail this at 7.04, so 17.1, 17.30. They would've had to have complete precision to make 0.1 after you've paid your commission. And that's not a trade, that you would've not even broken even. So there's just been no opportunities. But like I said, we wanted to see the VIX drop-off. Thankfully, at the end of the day, it sort of dropped again.
03:15 Christopher Angus: Again, the contracts rolling over, the March contract is expiring. Which means that we can now get on and trade tomorrow because we may have been able to make a little money today if I'd really worked like a son-of-a-bitch. Wouldn't have been easy and I wouldn't have made a lot but, with the Fed stuff coming up, that's all Bloomberg's talking about, getting us ready for a June rate increase. No, a cut, sorry about that. Basically, no one's ready trading. Or people are trading, but they're just gently buying it. And you'll see some interesting stuff. If I look at the S&P, so S&P had a big gap down on the open opposite to the volatility, as you could see. And you could see everyone selling into the open here and then covering their positions at the close of the day. These people got short and I guess probably hoping for a breakdown or something. That didn't happen, so everyone just settled at the end of the day.
04:27 Christopher Angus: It would've been obviously virtually an equal number of buyers that wanted to fill this gap. So whenever there's a big gap, the algos are always gonna wanna fill the gap. It's a standard play, so the algos start buying it here hoping they'll get back here. And it didn't even do that. It was so lackluster it was unbelievable. If we look what happened on the open, we opened... Where's the open? Around 17.11, and we traded between 17.11 to 17.05. We closed at 17.15. It's a very, very tight range. No break out, just stuck. And this is really indicative of some really big upcoming news and... Oh, bollocks. If we look at the news that's coming up tomorrow, this the Forex Factory. It's like a Forex thing, but I use it because it lists all the upcoming events. Very, very important because that's when you get a lot of the volatility. And you can see, this is from like this an hour after the open tomorrow 'cause we're an hour ahead on Daylight Saving. That'll be evened up at the end of the week 'cause for some reason, the US changes an hour early compared to Europe, which is pretty cool for me. I wish it was always like this 'cause it lets me finish an hour earlier.
05:55 Christopher Angus: But over here, we can see there's all this, there's crude oil, there's all this FOMC, which is the Fed stuff. And it's gonna be a really kind of crazy day. And even now before the open here, we can see there's building permits which is really indicative of what the economy's doing. Not really, 'cause it's all bullshit anyway. They bend the numbers. But it does cause volatility in the market and the CPI. Tomorrow's a huge news day. Massive. Let's have a look at the end of the week. Unemployment tomorrow as well, and then the Philly Fed Manufacturing Index. Again, this is a lot of the industrial stuff and it gives an indication which way the economy is going or the industrial side because if people are not spending money on industrial goods, like investing in machinery and stuff, it's seen as usually quite a negative signal for the economy.
07:03 Christopher Angus: There's gonna be some massive volatility tomorrow and on Thursday, yay. Finally. 'Cause the last two days, I can't even remember shitty days like this. So, no trades at all. Didn't even bother. I was hardly interested 'cause I knew this is just a way to get caught under water as you try and buy this and then be unhappy. I know it. What did I wanna show you here? Let's have a look.
07:38 Christopher Angus: So I wanted to show you a time where we would hedge... Now we only would really hedge when we are selling volatility, when we buying volatility, there's not really a need to hedge because if it does run through your order and you to go under water you know it's gonna come back, especially if you buy it well. And the time when we would hedge is when we got it wrong on the sell. So let me just see if I can zoom in a little bit here give you a little example this is obviously not going to be... This is just a made up thing 'cause I haven't had to hedge but... So a hedge we would want to... We would think that the market was... This is well out.
08:31 Christopher Angus: Hedge would be once we'd be thinking that the market was going down, but actually what it did was it just turned around and went back up again. So over here last... No, give you a more recent example, yeah. So... See if I can make that a bit better. Okay, so here... It was at February, yep, alright. So we we we... Systems nearly fully automated now anyway. The hard thing is just trying to tell the system where the ranges are because we don't just buy at 14 or 15 and 16 and sell it 25. It depends on where the ranges are being established over a short amount of time. So this would be a really nice range to trade because like one point one point one point one point like it's very obvious, we wouldn't have been selling it here. We would have just bought it wait it bought it wait it... And so on.
09:49 Christopher Angus: Until it got to about here and then we would have sold it because that there becomes quite a clear place, but I want to show you a place where we would have had to hit. So what we do is when we buy volatility, we just buy it. We place it depending on where it is in relation to the bottom and this is very, very close to the bottom but depends on the size of our trade. So its a money management thing. Now, when we sell volatility, we have to have a hedge in place because volatility has unlimited upside. So say we wants to sell volatility here and have a hedge, wait what number is that... 19, have a hedge on 21. So we sell volatility and it doesn't, it goes against us and it hits our hedge, now our positions is Delta neutral. So we've locked in a loss, say we're like two grand down. Now we're gonna remain two grand down as it comes up here. Now, one position is going to be four grand up, for example, and the other is gonna be six grand down. Once it gets here, we'll start to break the hedge and take... Lift one of the legs and we would then lift some of the leg so that the... That the buy side of things has been... Is lighter than the sell side. So we now are going to start pocketing some of the profit.
11:31 Christopher Angus: This isn't a profit gain, by the way. Let's start pocketing some of that profit and start to remove it bit by bit by bit. So now, by the time it gets back here, we probably only have one side of the leg back on. In effect we'd would still be two grand down but our balance would be four grand higher. But we would still be running a negative position and then we would of just let it go through. That's a really over simplified version of how hedging works. It's never... It doesn't really play out that... As simply as straightforward as that because, as I said, there is a cost attached. There's higher transactional fees. When you lift legs, often you lift a leg... Say we started lifting a leg early, we might have to put the leg back on.
12:18 Christopher Angus: It gets, as I said really, really complicated and its something which we try hard not to do because what happens is you don't lose money but you end up focusing a lot on trying to unwind hedges and you have to unwind them very, very slowly because as soon as you take off big pieces in one go, you inevitably will have to be putting them back on because you don't want it to continue out. So that's fundamentally how we handle trades that don't work this... You would have seen the market turning. Okay, maybe it's turning... This is around the level which its turned. No it didn't, caught in a hedge, picked up a hedge here, lift the leg over simplified and then let it run down and if it had turned here we would have had to put it back on again.
13:12 Christopher Angus: Often make money from hedging just because you're picking it up, it's running back down, and you'd taking some money, then you take that money you take it out then you reduce your risk on the other side. So say we'd made four grand there but was six grand down, we could basically take... Make that position a lot smaller and then we would still be two grand down but our actual risk could be much smaller because the contract numbers would be much lower, if that makes sense. The position would be much, much, much smaller. So if there is a big rip, it's not going to be hurtful. There's many ways of doing it, that's kind of my way of doing it. Anyway, like I said, we fully automated the problem teaching the computer or the algorithm and trying to train it is to train it where the ranges are. And as I said, this is obvious as a human being because you buying selling wait, buy sell wait, buy sell wait. This is also a range which we were trading, was it we were trading for you here? I don't think so. But this is a range which we were trading.
14:17 Christopher Angus: This is arranged we... I think, we traded a little bit, but you don't make as much money. This is where you make lots of money. I think I said yesterday, these big one-way moves down or up. And this is not even a range. This is just like this needs some Viagra or something because it's like nothing's happening. Anyway, this one's a little easier because we kinda knew it was at the bottom anyway because of where it had been and what the broader markets were doing. Over here, you can see I'm a little bit more cautious because I know that it's highly likely to come down a little bit further. Because that's kind of [chuckle] what it does. And I wanna get a good position. Over here, we would have handled that in a different way and been a lot smaller. But I'm looking to really try and capitalize on this and do well for us here.
15:25 Christopher Angus: So, we'll have to see. As I said, tomorrow, it's very likely that we'll start trading again, pretty much regardless of what this does. I'm not gonna be waiting around too much longer because just after the stuff in the morning... Where are we? US time. It's evening for you. But just after the stuff at 12:30 UK time, that's at 8:30. That will cause some volatility. And almost certain you'll be wanting to trade there. If unlisted, it's just flat again. But this is gonna cause some incredible volatility. And I'm gonna eat that all up. Yummy.
16:12 Christopher Angus: And then again on Thursday, I've got some unemployment stuff. Yep. Thursday I've got unemployment in the US and that is wild. So yeah. Monday and Tuesday, zero. But I'm pretty sure at end of the week we'll be where we need to be. We're at 5% at least. At least. So that's the video. Not even that interesting I'm afraid because there's so little that's happened all day. It's just been a bit of just a zero day. Nothing. Nothing's gone on. But thanks for your patience. It will come good. And it's the right thing to do. I can't just start forcing on trades because I'm getting impatient or I feel under pressure, I don't. This is what we have to do. We've just got to wait, be patient, and on average, we'll make good money. Thanks a lot. Speak to you tomorrow.
A few weeks back Google introduced literallyorganic-free search results on mobile devices in the travel vertical. Google is now deepening that organic-free offering, announcing their new mobile travel guides would launch in 201 cities.
If you live outside of the United States it can be hard to appreciate just how ad heavy some of Google's search results have become in key ad categories.
Plenty of Room in Hotel California
When Google rolled out the 4 AdWords ads above the organic results layout they mentioned it would mostly appear on highly commercial search terms like New York Hotels. Hotels are one of the most profitable keyword themes, because:
the searches tend to be fairly late funnel
the transactions are for hundreds of dollars
OTAs and other intermediaries often get somewhere between 10% to 30% of the transaction
Google search results for hotels not only contain 4 AdWords ads, but they also have price ads on the "organic" local listings. That gives Google a second bite at the apple on monetizing the user.
Click on any of those prices and you get sent to a beautiful(ly ugly) ad heavy click circus page like the following.
today we will begin phasing out the following Digital Magazines: Yahoo Food, Yahoo Health, Yahoo Parenting, Yahoo Makers, Yahoo Travel, Yahoo Autos and Yahoo Real Estate.
Direct Marketing Budgets vs Brand Ad Budgets
Google recently had another vertical search program which paralleled their hotel offering which focused on finance. It allowed users to compare things like credit cards, home loans, auto insurance policies, and other financial offers. They acquired BeatThatQuote, hard coded aggressive placements for themselves near the top of the search results, increased the size of these custom ad units - and then killed them off.
Why would Google invest hundreds of millions of Dollars in vertical search only to kill the offering?
It turns out the offering was too efficient from an advertiser perspective, so it didn't drive enough yield for Google.
If it is a lead-based product the ad rates are set by rational lead values. There is no brand manager insisting on paying $120 a click because "we HAVE TO be #1 in Google for auto insurance."
If Google does lead generation and sells the lead off exclusively they get paid precisely once for the consumer. Whereas if Google scrubs many aggregators from the market & allows searchers to click on one brand at a time they get to monetize the user many times over and take advantage of any irrational bidders in the ecosystem.
As long as Google is monetizing brand advertising budgets they can insert many layers of fat into the ad stack.
Google's vertical ad offerings may come and go, the biases behind the relevancy algorithms may shift, and the ecosystem constantly has some number false positives. As search engines test out various features & shift their editorial policies some companies get disrupted and are forced to change their business models, while other companies get disrupted and outright disappear.
Google's move into auto insurance might have been part of the reason Bankrate decided to exit the business. But Google exiting the Google Compare business and adding a 4th text AdWords ad slot above the organic search results a few days before Bankrate reported results caused BankRate's stock to slide by as much as 47%.
Brand Building to Lower Risk
Part of the SEO value of building a brand is the strength of the brand awareness helps you rank better across whatever portion of the search ecosystem Google has not yet eaten, while lowering your risk of becoming a false positive statistic. Branded-related searches should (in theory) also provide some baseline level of demand which insulates against ranking shifts on other keywords. And having a brand name rather than a generic business name allows one to go from one market to the next.
Just be Apple...
Computers.com won't magically morph into MP3player.com then CellPhone.com then Tablet.com then Watch.com, but Apple was able to move from one market to the next with ease due to consumer familiarity and loyalty toward their brand.
Investing in building brand awareness is often quite expensive & typically requires many years of losses to eventually see positive returns. Trends come and go, and with them so do associated brands.
Heavily invest in the wrong trend & die.
Wait too long to invest in an important trend & die.
Few companies are able to succeed in field after field after field.
For every Apple-like example, there are dozens of losers. Look at how many computer companies shifted to an emphasis on higher margin laptops, then sold off their laptop divisions for almost nothing and chased cell phones for growth. While they outsourced everything and relied on a faux open source software provider they guaranteed their own death. Look at how some of the mobile companies are valued at almost nothing, or those that have been bought & gutted like Motorola or Nokia. There are only 3 somewhat strong mobile manufacturers:
Apple - the source of the original iPhone which Google worked so hard to copy
When the financial crisis happened about 8 years ago Google saw both their revenue growth rate and their stock price crash. Direct marketers receded with the consumer, but many pre-approved brand ad campaigns continued to run. Google's preferred custom shifted away from direct marketers toward large global brands.
Since dumping that profitable as hell company on the public they've only had to invest in removing about 2.4 million articles from eHow.
The site is still torched by the Panda algorithm.
And they are still losing money. ;)
Companies like Mahalo which chased eHow also washed up on the rocks. They've since pivoted to YouTube, to mobile apps, to email & perhaps should re-brand to Pivot, Inc.
If you shop at big box stores in the United States you may have no awareness of the following product.
Look a bit closer at that image & you'll see it wasn't LEGO, but rather LEBQ.
Sales for Le Bao Quan are not sales for the core LEGO brand, the consumer gets acclimated to an artificially low price point, and imagine what sort of a traumatic impact it might have for a child if their first LEGO-like toy looks like a pig fresh from the butcher's shop.
The key difference between that sort of stuff and gray areas monetized by the big online platforms is you may have to go to third world to find the sketchy physical products in the real world; whereas the big online platforms all have some number of sketchy globally accessible offers at any point in time. Here are just a few examples:
At the core, all these platform plays are both brands unto themselves & places where third party brands get monetized.
The start up costs to have leverage to work with brands in an official partnership can be quite significant. Just look at how much Jet.com has raised and how much hustle they've used to get in the game, even with their massive burn rate.
Part of why Apple has such strong margins is their brand is so strong they can dictate terms and control the supply chain. Others are willing to give them the majority of the profits because carrying them completes the catalog and helps the retailers sell other, weaker goods where the retailers have higher profit margins.
Luckily when fake products use spammy titles on Amazon the reviewers will quickly highlight if they are of inferior quality. But if they look authentic & work, it can be hard for the brands to know unless they proactively track everything. And as that demand gets filled, if there is a negative experience it may lead to customer complaints about the brand, whereas if there are no complaints & the product works it still leaves less money for the brand which is being arbitraged.
"The Internet doesn't change everything. It doesn't change supply and demand." - Andy Grove
Some companies die slowly, as accountants drive strategy & they outsource their key points of differentiation and become unremarkable. When Yahoo! turned their verticals into thin "me too" outsourced plays they made it easy for Google to offer something of a similar quality, which in turn left the Yahoo! vertical properties without much distribution.
As Yahoo! struggles, some investors want to buy the core Yahoo! business so Yahoo! can exit the web business while being a holding company for Alibaba and Yahoo! Japan stock.
Some retailers have symbiotic relations with brands they sell, while other platforms may compete more aggressively with those whose products they sell. The same is true with affiliates. Affiliates can genuinely add value & drive new distribution for brands, or they can engage in lower value arbitrage, where they push the brand to pay for what was already owned by it through shady techniques like cookie stuffing.
One of the most one-sided and biased hate-filled perspectives I've ever seen about affiliates is Lori Weiman's guest columns at Search Engine Land.
Just the same, some merchants treat affiliates honestly and fairly, while other merchants have a pattern of scamming their affiliates through lead shaving, adjusting revenue share without telling the affiliates, and a host of other sketchy behaviors.
Monetizing Brand (Search Engine)
Search engines allow competitors or resellers to bid on branded keywords, which creates an auction bidding environment for many branded terms. Typically Google offers the official site / brand clicks at a significant discount for these terms in order to encourage them to compete in the ad marketplace & to help shift some of the organic click mix over to paid clicks.
Google has also tried a number of other initiatives to boost their monetization of branded keywords. A partial list of such efforts includes:
a test of banner ads from brands which were merged with organic listings (though this effort was quickly dumped due to lack of driving revenues as it didn't allow for auction dynamics to drive prices upward - similar to the reason Google Advisor was shut down)
adding other distracting eye candy to mobile results including the knowledge graph and "also searched for" links pointing at competing businesses
allowing syndicated search partners to use harder to notice ad labeling
allowing syndicated search partners to use more ads above their organic search results
Sophisticated vs Unsophisticated SEM
Many poorly managed AdWords accounts managed by large ad agency ultimately end up far more damaging to brands than the efforts from "shady" affiliates. The set up (which is far more common than most would care to believe) revolves around the ad agency arbitraging the client's existing brand, falsely claiming the revenue generated by that spend to be completely incremental & then get a percent of spend management fee on that spend. The phantom profits which are generated from those efforts are further applied to bidding irrationally high on other terms, to once again pick up more percent of spend management fees.
Both eBay and Google have done studies on the incrementality of paid search clicks.
eBay being a large brand found they didn't see much incrementality [PDF]. Search Google for eBay and they won't run AdWords ads. eBay still participates in product listing ads / shopping search for other products they carry.
Google (of course) found much more incrementality with paid search ads. While they conducted their internal study and suggested it would be too hard or expensive for most advertisers to conduct such a study, they also failed to mention that the reason it would be expensive for an advertiser to perform such a test is because Google intentionally & explicitly decided against offering those features inside the AdWords platform. It is the same reason Google shut down Google Advisor / Google Compare - offering it doesn't provide Google a guaranteed positive yield when compared against not offering it.
One thing Google did note about seeing higher rates of incremental clicks in their study was when there was increased space between the listings there tended to be a higher rate of incremental ad clicks. This is part of why we see AdWords ads getting larger with more extensions & there being so many features in mobile which push the organic results below the fold.
The same Lori Weiman who hates affiliates is currently running (literally) an 8-part series on why you should bid on your brand keywords.
If anyone other than a search engine monetizes brand that might be bad, but if the search engines do it then going along with the game is always the right call.
Owning the Supply Chain
"The true victory (the true 'negation of the negation') occurs when the enemy talks your language." - Slavoj Zizek
The opposite is also true. If you are a brand who is being dictionary attacked by an ad network, the brand quickly shifts from an asset to a liability.
"The only thing that I'd rather own than Windows is English, because then I could charge you two hundred and forty-nine dollars for the right to speak it." - Scott McNealy
Google owns English and Spanish and German and ...
Is your control over the supply chain strong enough that you can afford to be below the fold for your own brand?
While you think about that, other pieces of the supply chain are merging in key verticals to better combat the strength of search ad networks.
Expedia, Travelocity & Orbitz
Zillow & Trulia
Staples, OfficeMax & OfficeDepot
How much are you willing to pay Google for each click for a brand you already own?
When does that stop being worth it?
During the next recession many advertisers will find out.
Added: Within days of writing the above post Google was once again found running ads promoting phishing campaigns, even though the ads arbitrage Google's branded keyword terms.
Convicted fraudster and self-confessed criminal Christopher Angus is kicking off a confidence series, providing free video tutorials on how to defraud investors. This first video is 13:55 & was shared on Monday, March 14, 2016. The criminal who shot these videos delivered over a 99% investment loss, as he simply stole the money and integrated it into other investment scams abroad. https://www.dailymail.com/news/article-8047311/Businessman-told-friend-hed-quadrupled-2-3m-investment-fortune-actually-blew-1-18.html
UK Crown Police never followed the money trail.
highlights how positions are hedged & runs tight money management. hedges are a cost that act like insurance.
at 11:30 he talks about how he would dread the day of reporting a loss because it would be totally unnecessary because it would be caused by mental error.
00:00 Christopher Angus: Okay, so just a quick video on why I'm just holding my nerve, so to speak, and not wanting to initiate a trade. This chart shows two things, the blue line is the S&P it's actually the SPY, but that's a mirror image of the S&P, the correlation is one, so it's identical, and then the pink line is volatility. As you can see, there is basically a 100% inverse correlation of one, inverse correlation. As the S&P drops, volatility goes up, and as the S&P goes up, volatility drops. So based on previous history, you can see here this is from 1998, the volatility is very close to the bottom. It's only really been down around, let's say, 11.85 when the markets were super, super high; sort of breaking record highs. Let me just put that there. So you can see when the markets were breaking record highs at every point that's when volatility was at its very bottom.
01:15 Christopher Angus: Now, the S&P's very far from actually breaking a new record high, over 100 points. So, volatility is basically at the bottom; you can see that dotty line there. I can't... If I move that up just a wee bit. It's way, way below its historic average. So, that means we're gonna take a very formulaic strategy of, buy low and sell high. There's only one thing we can do, and this is part of the strategy, and that is... Let me expand this out. It doesn't work that well there. We can't short the VIX now or sell it and then buy it back when it's lower because it's near the bottom. So there's basically nothing, no downside potential; there's no downside opportunity. So when you're obviously trading anything, you can only buy or sell, and if you short, you're obviously making when it goes down, when you buy, you're making when it goes up, obviously, as you know.
02:21 Christopher Angus: Now, since there's hardly any way to go down, because we're so close to the bottom, there's basically very, very limited opportunity. And there's obviously a much larger risk that if the VIX spikes and we are short, that could be kind of bad, so we'd have to run a hedge and hedges run a cost, and it just would be really, really stupid to short the VIX now. So that leaves us with one option and that's to buy. And because we're very close to the bottom, I'm waiting for a bottom to come in. I've got my orders ready and I'm waiting patiently and I'm very reactive, as I've said before, I'm not proactive because I don't know. I used to have a huge sign above my desk that I printed out in big letters that said, "You don't know." And it was just a reminder to me to say that anything can happen, basically.
03:14 Christopher Angus: So, what I'm hoping for and expecting to see is that the VIX will come to bottom around 16 or at, very close to 17 now, and we're actually got close. What was the bottom here today on the VIX? It doesn't say. I might have to get rid of that chart, I think. But the bottom of the VIX today was around 16 and a half, I think. So, we're waiting for something in the region of 16, maybe a little higher, maybe a lower before we go, before we start to go along. Now, this is a very good opportunity because it doesn't happen that often. It was a bit funky in November, but you can see that about once a month or so it kind of tries to bottom out and then you buy it and you sell it much higher. So that didn't actually happen in the last couple of months either, which makes it an even nicer opportunity, because when it gets down here, we buy it and we buy it hard. In the last month, you can see what we're actually doing is shorting the VIX and we're running upside hedges.
04:28 Christopher Angus: Thankfully we didn't have the hedge any other time, but if you do short the VIX and it rockets up 2-3 points, and you hit a hedge, the hedge has a cost then you're gotta unwind that hedge and you never make a full amount of profit. So the reason I'm pretty excited about this but also I'd like to see it happen, is that we don't need to run a hedge now. We're so close to the bottom no matter what happens, we'll be fine. And so if we've gotta wait a couple of days, it'll be fine. And also, we'll be able to really take a larger position, not like this where you've gotta run very, very tight money management, because the VIX has unlimited upside potential. So if you short the VIX, and it hits a hedge and you gotta unwind the hedge then you gotta re-hedge, it can get very, very complicated and costly, and it requires a lot of discipline and patience. And obviously, like I said, when you hedge things, hedge is an insurance, it carries a cost, and so you just start chopping away at the profits in a trade.
05:33 Christopher Angus: So I can't really articulate my happiness, that we're actually down here and we'll have a straightforward trade. Now its been a slow couple of days, I know, but that's because I have had no choice. The market's grinding up, the VIX grinds down, that's the way it is, and there's no more downside potential. Like here, we're making loads and you can see those but we had a few massive days. We're making like 2, 3%, or close to 3%, because the VIX was just a steamship down and we'll sell high and buy low or buy low and sell high. It's the straightforward market mechanics. Once it starts getting into these very kind of funky ranges like this, wasn't an easy time to trade over here, because it becomes a knife edge. Are you high or are you low? The VIX is at like 20, 21, 22; you don't know. So you have to look at other market data which is coming at you to work out what's going on at the market. Like some of the other stuff, like gold and the T-notes, which I pay very, very close attention to, because the T-notes, like volatility, usually give you a leading indication of what's gonna happen.
06:50 Christopher Angus: Of course, we are also on upside hedges all the time, and when we're short in the market if we're going up. But right now, there's no choice, we can only go up. I cannot go short the market and try and catch like, one point. It would be absolutely ridiculous. Why take risk going down when I can wait a little bit and catch a really; there is a opportunity to catch a really, really big move up? So on average, maybe we'll make nothing tomorrow either. You just gotta bear that in mind. But if we catch like a three or four point pop and we will be bigger than all because there's no, hardly anymore, downside to go and basically there's no risk, absolutely zero, zero, zero, zero, zero risk of actually hurting ourselves in any way. We may, if it does keep, if we buy at 16 and it goes to 15, we carry it overnight. It's not gonna be a big deal. However, I wanna wait. I'd rather catch it at 16 than catch it at 17 and watch it go to 15.50. I'd rather be buying it at 16 and then buying it at 15.50 again, and then catching it all the way back up to 20, 'cause it'll be a really spectacular day and week. It'll make the week, if not the month.
08:06 S1: So it just requires a lot of patience. Sometimes it can get frustrating. You don't earn for a couple of days. That's just the way it is, and when it gets low like this, it really becomes a money printing press for a very short amount of time, because you catch it low, there's no downside, it's like someone giving you an insider tip saying, "You know, this stock is going up because some of the rating agencies, on an insider tip has... " And if this was a credible, as the markets are bent like that with hedge funds, if there was an insider tip, as soon as those insider tips, those rating agencies say, "Buy." Or, "Out perform." Or whatever they say, the stocks rocket. They go up like 10-20%, and that's kind of the position we are in now, is that we're just waiting for this to happen and then we're gonna jump on and it's going to be big, it really is. It'll be the best day that we've seen, with no downside. So just be a little more patient because with the Fed announcing something on Wednesday, probably warming the market up for a rate cut in June, that's why the market's kind of doing this kind of choppy, grind, chop grind grind grind grind chop chop chop grind grind chop.
09:32 Christopher Angus: And also, there's two futures contracts, which we trade. The March contract which is expiring on Wednesday. We can't trade that. Now, the downside is not being able to trade that because it expires on Wednesday, we have to wait for that one to go away, and for then for April and May to come in, is that March follows the VIX cash very closely. Like it's almost one to one. It is a little bit more benign. So say, the VIX was at 16.50, the cash would be at 17. Sorry, the cash was at 17, the March contract will be at 16.50, and then say so the cash goes up 4%, the first VIX, the front month, the March VIX month of March, would go up 3%. Now then the April one might go up like 1.5%. So the movements are much more benign and lazy in terms of actual making proper moves. So we're not able to really trade any instruments which are moving with any vigor because we can't trade the March future now. It's two days, basically one day, 'cause we're at the end of play, oh I think we've closed already actually, because we're an hour early, because we'll catch up at the end of the week, but there's one day left to trade with the March contract and we can't, because if we run a small loss, say 2000-3000 loss because we buy it at 17 and it goes to 16 or something.
11:15 Christopher Angus: And at the close of play, halfway through Wednesday, lunchtime Wednesday, that contract rolls over, or it goes away, expires, we would absorb that entire loss. And, we try not to make any losses here. I dread the day when I have to report one, because I think it would be a mistake and I would have made a mistake and be unnecessary. But I would have had some brain fuck up, that would have happened because they're totally unnecessary. So, for those reasons, the market's grinding higher, the VIX is grinding low, I can only buy. So, I'm waiting to buy better. Two; the Fed is making the markets go in higher and choppy and it's up and down, up and down. I think on Friday the S&P was caught in a seven point range. And number three; I can't trade the March contract. I would have to trade the April contract because March is expiring on Wednesday and April hardly moves until March expires then April attaches itself to the VIX's cash more, which makes it a little more correlated. And then the May one comes into play, but it's a lot more benign. I hope I'm articulating myself correctly. But those are the three main reasons, the grind higher and there's no more downside for the VIX, I can only go up. So, I have to buy, but I'm waiting for a good spot.
12:33 Christopher Angus: The Fed, and then that's what everyone's waiting for. That's a painful grind higher. And number three, the VIX contract expiring on a Wednesday. So, those are the three reasons I'm basically stuck until Wednesday. I will trade the April contract, which won't roll over, or expire, if we get a major pop. But the mark, we're done for the day. And there was fuck all at what happened. So, Wednesday's the day. And I have to say, just be patient. And I'm sorry to not make any money today, but it's... I'd rather buy better on Wednesday and have a 10-15% day and week, because these things hardly ever come along. It's to catch it right at the right time, not to be in a position so you can actually put some size on. We're in a very fortunate position at the moment. And I think tomorrow's gonna be... It may be okay, but I'm really banking on Wednesday being a good day. So, I hope that explains where I'm at at the moment, just waiting for a good set up to make, to hopefully end, or start the middle of the week, having a very, very strong middle of the week. That's it for now. I'll catch you on Skype. Cheers. Bye.
