Thank you for reading my first post “How I started my initial trading strategy” where I highlighted how I interpret price movements based on charts alone. That provides the building block of my trading strategy. Accepting the fact that price can be interpreted in a repetitive manner with respect to the mean is crucial to proceed with the trading strategy. Do read my first post again to gain clarity of what I mean. This is very important: http://mutis.co.uk/2011/11/10/the-way-i-started-and-my-initial-trading-strategy/. In this post I will illustrate the ‘mean reversion’ from my perspective in a short trade I recently placed.

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When I started trying to tackle the markets 2 years ago, I found myself bewildered by the vast amounts of information. I dwelled into technical analysis and devoured all the information I can. Within 6 months, like many wannabe traders who read up on technical analysis, I knew all sorts of chart patterns on the back of my hand. These patterns, though good to know, did not bring stability. My frustration grew worse, and I became desperate realising that my time spent on education was not paying off despite Google’s AdSense flooding me with loads of Forex advertisements such as ‘Make 1000 pips in 2 hours with this one weird tip!’.

Later, I moved onto webinars, seminars and courses. I attended webinars by many traders but to no avail. I bought a course and went for a weekend class which fooled me into thinking that the systems sold would actually work! They did not work, and it was miserable for another few months. I continued to lose virtual money, and later, real money. After a while, I began to ask myself what I was really missing and my entire perspective of trading changed with this one (weird) tip!
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It came to our attention that people find it difficult to find the precise list of investment banks and financial services firms that offer career related opportunities at various undergraduate levels. MUTIS therefore decided to publish a list of investment banks and trading firms that summarises opportunities (Spring Weeks, Summer Internships and Graduate Opportunities) offered by each company and provides a convenient way get your applications started. If there are any companies that you think are missing, feel free to comment underneath and we will be more than happy to add them to the list.

Dear Members

From its relatively recent inception, MUTIS has quickly established itself as one of the largest and most prestigious societies at the University of Manchester. We are proud to provide our members a hands-on experience to investing by organizing a wide variety of events, ranging from trading competitions, high-profile speaker events, educational seminars and CV workshops, all through the society’s extensive alumni network and our expanding corporate relations. It goes without saying that the support from our sponsors has been integral in this development and I would like to take this opportunity to sincerely thank all of them.

We would also like to thank the previous committees for their tireless and committed work in setting up valuable links and affiliations with the Manchester Business School and the University Careers’ Service. To acknowledge these efforts, MUTIS has been awarded the “UMSU Gold Award 2011”, the most respectable society award on campus.

At MUTIS, our goal is to bring together students with a common interest in and enthusiasm for the financial markets. We provide a platform for the sharing, discussion and analysis of thoughts and ideas relating to the financial markets.  As the global economy is recovering from what has been one of the most severe economic impasses, the current MUTIS committee is determined to seize this opportunity to further invest into the most valuable asset – our members.

From the committee as a whole, we look forward to meeting you during one of our weekly meetings.

Emily Bunting                                                                                     Jan Klincker

President                                                                                           Chairman

To learn more about our sponsors, please click here.

The Careers Discussion forum is intended for all MUTIS members and non members alike to interact, discuss and share their opinions and questions about anything careers-related, ie. Applications, Assessment Centres, Numerical Tests etc.)

MUTIS Committee

Micro-breweries are outfits of small size and personnel but their product is of increasing significance in British consumer tastes. Consumers have begun to move away from the mass marketed products (such as your Stella Artois and Budweisers) in favour of local names that offer a more distinctive tasting beverage.

Around 600 microbreweries exist around the UK, an increase of over 70 since last year, supplying local pubs across the country and gaining ground against big names that have seen declines in sales worldwide. Small producers benefited from legislation that ended the ability of brewing giants to stronghold pubs and which allowed for guest ale pumps to appear Additionally the introduction of Progressive Beer Duties shrank the tax liabilities of the outfits producing less than 60,000 hectolitres of alcohol a year. With the aid of the national Campaign for Real Ale and positive legislation, the average sales of microbrews is growing 3-7% percent a year, clutching onto a considerable shift in the drinking habits of the population.

Since the shocking scenes in Japan last week, investors have been looking to companies who will benefit from Japan’s huge rebuilding efforts.

With early reconstruction costs estimated to be at $180bn, companies in the sector have proved a target for investors following expectations that the earthquake will boost construction demand. This has further intensified following the Japanese Prime Minister vow to “rebuild from scratch” following the devastation.

Over the past week Japanese construction company Kajima Corp, which since the tragedy has already witnessed its biggest surge in two years, has risen by a further 6.3% and Nishimatsu Construction Co. Ltd. by 12.4%

Steel providers have also been attracting attention. Nippon Steel, the nations biggest steel provider has made gains in the last week as has Japan’s second largest steel provider JFE Holdings that has gained over 11%.

It is worth monitoring the performance of any company that provides technologies and materials likely to be in demand as a result of the rebuilding process; especially manufacturing companies that specialise in earthquake related technologies such as Taylor Devices Inc which operates in Japan.

Please consider donating a portion of any investment profits to the Japanese Tsunami Appeal: www.redcross.org.uk

The shocking images of the devastation in Japan on Friday 11^th March spread quickly, with many world leaders quickly extending their condolences and assistance to the country. President Obama went so far as to say that he was personally “heartbroken” to see the destruction caused by the earthquake and subsequent 10 metre high tsunami.

As the death toll from the tragedy climbs, with some predictions estimating up to 10,000 casualties, the human cost from the most powerful earthquake Japan has experienced in recent times is almost incomprehensible. Japanese Prime Minister Naoto Kan was quoted as saying that this was Japan’s “worst crisis since the end of World War II.” When the staggering human cost is combined with the economic damage caused by the destruction, it is likely that his statement will not be too wide of the mark.

The effects of the damage were felt quickly in Japanese industry, with internationally recognised names such as Sony, Toyota, Nissan, and Honda all being forced to close their factories due to the damage. Indeed, the worst hit area of the country, Tohoku, has with a thriving industrial sector encompassing everything from car plants to breweries, and accounts for around 8% of the country’s GDP.

Markets were also adversely affected following the disaster, with indices such as the Nikkei slumping in value when they re-opened. The Nikkei 225 index suffered its largest drop in 2 years, with the government intervening to inject 15 trillion Yen ($182bn) to prop up the markets. But it is not just the immediate problems from the quake, which threaten the Japanese economy.

The enormous public debt of Japan, around three times that of the country’s GDP, is a serious worry for the economy. The negative outlook imposed by Moody’s rating service on 22^nd February can only add to the worries of financial markets, as concerns over how the government will fund the rebuilding of the affected region no doubt spread. Moody’s may have actually helped to calm matters here, by pushing the absorptive capacity of the government and of private insurance as a safeguard against the sovereign rating of the nation.

To the world economy, the problems Japan now faces puts into question how this will affect the growth of world GDP. Japan is the world’s third biggest economy, and in 2010 provided 8.7% of world GDP, at $5.4tr. Analysts will now be attempting to see how damage done will alter the IMF prediction of 4.4% growth in world GDP this year, and the 4.5% predicted to occur in 2012.

Interestingly, the long-term nature of any significant damage to the Japanese economy is highly questionable. Leading analysts predict that although the disaster will obviously have negative growth implications in the short run, growth could have returned to positive levels within 12 months, as a Keynesian style reconstruction package boosts long term growth prospects in the region. Indeed it is possible that the rebuilding of the North Japan area could reignite growth in the region. However, distasteful it may seem to suggest this, it remains that there will be excellent investment opportunities from the reconstruction projects in the coming months. Implications for the IMF therefore point to potential damage to growth forecasts this year, possibly offset by renewed growth in 2012.

One of the most significant economic impacts from the earthquake comes in the form of the damage to the Hitachi owned Fukushima nuclear power plant, and the crisis this may create for the nuclear energy industry as a whole. Whilst at the time of writing a large leak from the reactor is deemed only a small possibility, how the situation progresses will no doubt have a great effect on current and future global demand for nuclear energy. All eyes will be on Japan over the coming weeks.

There’s a recent buzz about Africa in media lately. With an article in the Financial Times on Africa as the next frontier and further BBC coverage, the continents important resources and potentials have been highlighted. The Economist reports that over the last ten years, no less than six of the world’s ten fastest‐growing economies were in sub‐Saharan Africa. The western media tends to portray Africa as all wildlife, Comic Relief and the AIDS crisis‐the other side of Africa Remains
hidden, no one says equity, profit or opportunity. As an African, I always knew of our great potential: Africa now boasts of the fastest growing and most profitable companies in the world. Zambia with its copper, Nigeria oil, Tanzania Timber,
Congo diamonds and South Africa with platinum and Gold to mention a few, are what superpowers such as China and America are in heavy need of. China and African trade are now in excess of $55.5 billion a year. Most investors seemly see
only the political corruption, uncertainty and poor infrastructure in the continent and fail to see the opportunity; the best investment opportunity lies where perception differs from reality. Over the past decade sub‐Saharan Africa’s real GDP
growth rate jumped to an annual 5.7% beating Latin America’s 3.3% and close to emerging Asia’s 7.9%. Looking ahead, Standard Chartered forecasts Africa’s economy to grow at an average annual rate of 7% over the next 20 years, slightly
faster than China’s. There are huge opportunities in many different sectors including Telecoms, Insurance, and Infrastructure. With the rising price of oil and gold, a growing middle class and debt forgiveness and an influx of investment the next decade looks extremely promising for Africa. Nigeria’s stock market capitalization is over $45 billion doubling over the years, with bold reforms in the banking, power and oil industries, annual growth is expected to grow faster than South Africa’s 3.5%.(currently Africa’s biggest economy). Kenya’s stock market has rallied 46 per cent over the past ten years and equities in Morocco, Uganda and Botswana are up over 60 per cent. So I leave you with this riddle: which continent during the last Give years has been home to the world’s top performing stock markets, has the least expensive stock prices, has given birth to the most new stock markets in the last decade, Has over 2,000 publicly traded securities and is the world’s second largest continuous land mass? The answer is, of course, Africa, the new lion economy. So next time you’re out or thinking of stocks to invest in, look up an African country or go buy the new Nigerian bonds being issued. You might just end up a millionaire.

Since June 2010, the Dow Jones has rallied 22%, one of the longest straight bull legs in decades. However, this market rally now seems way overextended.

Ben Bernanke’s reckless money printing has propped up asset prices all over the world and leads to a desperate crave for higher-yielding assets among investors. This has led to a shift of money flows from fixed-income securities to US and European equities.

The Dow Jones is now trading 1,400 points away from its 200-day moving average (13%).  The DAX, the main German Stock Index, is 950 points  (or 16%) away from the same moving average, which corresponds to the highest deviation since October 2009.

What is more, the S&P 500 Volatility Index (Chicago Options: ^VIX) is near a 3 year low. So what does all of this imply? Don’t be surprised to see higher volatility levels in the coming weeks combined with a significant drop in global equity markets into the first half of the year. The end of QEII in June 2011 will also have a downward pressure on general asset classes and should lead to decreases in bonds, commodities and eventually equity markets.

With the uneducated financial press increasingly blowing the “Buy” whistle again lately and increased uncertainty in the Middle East, it now definitely appears to be about time to hop on a plane and take your beloved ones for a skiing trip to the Swiss mountains.

Whether I am right or wrong, only Ben Graham’s Mr. Market will show. Like always, supply and demand (or Mr. Bernanke’s adventurous monetary policy) will eventually resolve all price disputes.