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Trader – Timothy LuCarelli

Investment Experience – Mr. LuCarelli holds a degree in Finance from DePaul University in Chicago – his defense of the thesis “Risk and Money Management of Investments” won the school award in his graduating year.  He started trading stocks under the tutelage of his father in 1980 and then learned stock options trading from books and seminars.  In the late 1980’s he teamed up with an older Swiss gentleman that taught him how to trade currencies after which he spent a year on the floor of the Chicago Board of Trade.  Taking that knowledge Mr. LuCarelli went on to become very proficient in currencies, interest rates and economic analysis.  He wrote the popular newsletter “The Futures Advisor” in the 1990’s and early 2000’s that was translated into several languages and distributed globally.  In addition Mr. LuCarelli has written many articles, papers and books as well as given lectures on economics and the markets.  In the last 15 years Mr. LuCarelli, through his consulting company using his economic analytic knowledge, worked with some of the largest real estate developers in the Southwestern US completing financing and M&A deals for several projects in excess of $100 million.

Investment Philosophy – I don’t want to cloud my trading ability therefore I have no political leanings, no industry affiliations, and no economic requirements.  I am like a Eunuch monk, no feelings, no bias.  I believe no one and trust no one.  I am one with the social structure of the markets – at arm’s length. Why?  You may ask young Padawan; because, my goal is to make money. (period) — If I have no emotions, no biases and no attachments, I can’t make mistakes!  Bullshit – I can still make mistakes, but I can admit to those mistakes faster, correcting my wrong sooner – I never want to be stubborn stupid.

Time frames are very important and therefore I will not invest past a reliable projection.  Measuring the risk projection of various investments or economics further out in time becomes less accurate and therefore less profitable.  I manage investments to the following time frames to maximize optimal return:

  • Individual Stocks – up to 2 years
  • Stock Indices – up to 4 months
  • Interest Rates – up to 3 years
  • Currencies – up to 3 years
  • Metals – up to 2 years
  • Energies – up to 18 months
  • Real Estate – up to 5 years

I look to make at least 3 times my money on any trade within these times frames.  If the technicals and fundamentals do not support that return I do not invest.

Technical vs. Fundamental – I believe charts reflect all market participants’ opinions and economic events, therefore technicals are the best predictor of future events.  However, fundamental events can change market momentum creating a causal effect of technicals.  I rate my analysis at 90% technical and 10% fundamental.

Investing vs. Trading – Everyone seems to have a different opinion as to what is trading and what is investing, mostly that investing is long term and trading is short term; however, everyone’s idea of what time frame constitutes long term or short term is all over the map.  My definition is somewhat more defined and probably best described in an example.

Back in the 90’s I was invested in Eurodollars.  Over the course of 3 years I knew that interest rates were going to drop.  I would buy 1, 2, 5 or 10 Eurodollar futures contracts at a time in various expiration months.  At certain times, depending on my overall position, I’d assess my risk based on technical and fundamental   events and either sell part of my position or buy to add to my overall position.  In this way I managed my money, my risk and obtained the best risk/reward ratio.  I was invested in Eurodollars but I traded them for optimum overall risk/return.

WARNING – I do not hold back, I say it like it is, so sometimes I may use colorful language or call out particular people, groups or companies.  If you are easily offended, then these videos are not for you.

            If you wish to ask me questions about market related investments or events, please post a comment.  I will try to address it in the next video.