Our Life’s Purpose

Today’s (Monday) blog is a little late. The trip to and from Shenzen proved more taxing than I expected. Looking back I can say, the event went well, judging from the post presentation reactions.

The event itself was probably one of the most taxing in recent memory; whatever could go wrong did. And for those of you that give presentations, the audience in China is unlike any other. By Western standards, they can be quite rude and aggressive. As an example, take one of the ‘crises’ that happened to me. The electrical source gave out, as did my battery, despite all efforts by the organisers to prevent the crash.

So you had all these staff, in full view of the 1000-strong audience, scurrying around trying to get power back to my notebook. In the meantime, I took questions from the audience. One participant asked:”Is this a news conference or a lecture? Why don’t you get your computer fixed and take questions later?!”

Imagine the situation, I am stressed out thinking of ways I can show chart patterns without a computer in a room where a flip chart won’t work and this xxxxx berates me for not fixing the computer!

Later that night I wondered what had allowed me to keep my cool – especially since it was merely another problem on top of many. Sure experience had a lot to do with it but as I thought about it, I realized that experience was only a small part of the answer.

The answer lies in what the Greeks called: “Our Highest Purpose”. That’s not the only handle by which it has been known. The most recent description is Jim Loehr’s “The Premise of Your Story, The Purpose of Your Life”.

However you describe it, identifying your purpose, ensuring that it’s consistent with your core values is the key to your motivation when times get tough. To identify our PURPOSE, we use the eulogy method:

“If you were present at your funeral, what would you like to hear?”

Jim suggests other questions (Power of Story, 2007, Free Press):

  • How do you want to be remembered?
  • What is the legacy you want to leave?
  • What makes my life worth living?
  • What is worth dying for?

The questions require ‘big’ answers. “Because I want a new $5M house” just doesn’t cut it.

In my case, my life purpose is clear: “I want my life to touch others – to have made a difference to as many as possible”. Trading success, as much as I love it, is but a by-product that allows me to better achieve my life’s purpose.

In a sense, our Life’s Purpose is the standard by which we measure our actions. Actions that lead to the Purpose are to be followed; actions that lead away or detract from our Purpose, we abstain or curtail.

Having a conscious Life Purpose provides us with the incentive to do whatever it takes to succeed. The key word here is ‘conscious’. An unconscious purpose means we are living someone else’s. To quote Jim Loehr (page 88): “The manipulations in our lives are numerous…..But whether external influences on us are intentional or accidental, malicious or well-meaning…simply cannot happen unless we let them happen.”

So the choice is not whether we live by a Life Purpose but whether ours is consciously chosen.

Setup, Entries and Initial Exit Strategies II

Today I am going to consider my approach to exits and to do that, I need to explain my approach to setups and entries.

Whenever I think I found a robust setup (i.e. a setup that is likely to produce predictable results in the future), I ask myself two questions:

  • Under what circumstances did the setup make money (work)?
  • Under what circumstances did the setup lose money (fail)?

My aim in doing this is to see if I can define a set of parameters that will be followed by a setup that works. For example in the Nature of Trends, I describe a number of setups I call Negative Development. The principle behind Negative Development is straight forward enough: they are setups that have shown a robustness in the past i.e. they work (head and shoulders top, for example). But on this occasion, after triggering the trade, the market instead of following through, resumes its original trend.

For example: we have an 18-day H&S topping pattern triggered by a close below its neckline. But instead of heading South, the market closes above the neckline and resumes the uptrend. Now imagine the situation. You have a ton of people that will have gone short on the close below the neckline. Their stops will be above the neckline. What happens when those stops are triggered? They provide profit for the traders who took the Negative Development Trade.

The next question I ask myself is under what conditions do these false signals generally occur? They tend to occur when the first higher timeframe is trending and corrects. The correction causes the next lower timeframe to attempt to change its trend but when the correction is complete, the higher timeframe resumes its trend and in so doing commences a new trend in the lower timeframe.

So, in the example above, the 18-day H&S is triggered when the 13-week corrects and the 18-day pattern fails when the 13-week resumes the uptrend.

Taking all these factors into consideration for uptrends we can say that in the appropriate circumstances:

  • If the First Higher Timeframe is trending and then corrects,
  • And if the next lower timeframe provides a breach of support but then turns up, we have a Negative Development buy signal.
  • And because this Negative Development Pattern counts on election of stops stimulating the market to move in our direction, I can set a time limit for the market to move ‘x’ points after entry or else I exit the trade.

In this way a setup and entry strategy defines the conditions I will stay in a trade; it also defines the conditions under which I will exit a trade before my initial stop is hit. The stops I place in every trade are stops beyond the swing extremes (with an allowance for a filter).

I find that this approach provides the safety I need with the flexibility that leads to increasing the difference between the ‘avg$win’ and ‘avg$loss’.

Setup, Entries and Initial Exit Strategies

Last Thursday a student said to me: “It’s (the ES) in the zone! Why have a setup? If it goes up buy it!”

She makes sense, doesn’t she? Yet setups are an important part of my approach; and, unless I have one, I’ll bypass the trade. In this post, I’ll look at why I use setups as part of my ‘low risk entry’ requirements. I’ll start by defining what I mean by setups, then consider the reasons for a trade and finally why I consider setups essential to a ‘low risk entry’.

For a buyer of dips in uptrends, setups are chart patterns that say a zone is likely to hold.

To understand why I consider them essential, I first need to consider the nature of trading. Trading is a probability game that begins when we initiate a trade and ends when we end the trade. All the market does is provide a constant stream of opportunities in different timeframes; in so doing it gives us an opportunity to make a profitable, a losing or scratch trade. Our job is to decide when the probabilities favour us (our entry) and when the probabilities no longer do so (our exit).

The Expectancy Formula [(avg$ win x win rate) – (avg$loss x loss rate)] shows that the line of least resistance to profitability is to increase the difference between the win and loss side of the equation. The easiest way of doing  this to have a large difference between the avg$win and avg$loss.

The traditional method of managing risk is to place a stop loss at a price point which if reached:

  1. Says the analysis is wrong (technical stop) or
  2. At a price that represents a dollar loss beyond which the trader is not prepared to accept (money stop).

There is a vast difference between these two ideas but there is little said in the literature. More important while generally any stop is better than no stop, both methods are an inferior way of defining your stop loss levels.

The money stop is the worst of the choices because the basis of your decision fails to take the market’s nature into consideration. One of Pete Steidlmayer’s early ideas was to describe the function of markets as being one that facilitates trade. In short the market will find a level that will promote the greatest amount of trading. If we place our stops ‘too close’ to the market’s activity, if we fail to provide our trade with a margin of safety, if we need precision to profit, then the probability is we’ll lose money even if the market does eventually move in our direction. The market doesn’t care what our loss constraints are; it will move according to its nature. Thus in a sideways or congestion market, placing our stops within congestion, especially if they are closer than an ATR’s range, means we need to very good or very lucky for our stops not to be hit.

The other method is to place technical stops, usually with some sort of price filter, and not exit a trade until and unless the stops are hit. The rational is since we can’t forecast the future, it’s best to place the initial stop and not move it unless the market moves in our favour.

While this is better than placing our stops according to our loss tolerance, it is rigid and in its very inflexibility lies the seeds of our large losses when we are in drawdown mode.

I could never see the sense of taking care to enter a trade and not exercising care to exit the trade. Pete’s method was to consider the reasons for taking a trade and not exiting until they were no longer present. His approach is echoed by the one taken by the Phantom of the Pits (http://www.webtrading.com/phantom/preface.htm).

The Phantom takes the view that we are in a trade, the trade is wrong until the market proves it correct. The corollary of this idea is that ‘unless the market proves the positions correct’ we will exit or reduce positions.

Today I have considered why I believe that the traditional ideas to trade management are inadequate. In tomorrow’s post, I’ll consider the solutions.

The Anatomy of a Bubble

I have just completed reading a good book by James Montier, “Behavioural Investing, a practitioner’s guide to applying behavioural finance”

One of the more interest chapters was ‘The Anatomy of a Bubble’. James postulates that bubbles tend to move through 5 stages:

  1. displacement
  2. credit creation
  3. euphoria
  4. financial distress
  5. revulsion

The author suggests that displacement is usually an external event that creates opportunities in one sector that are greater than the opportunities lost by the event. In the US, the most recent bubble was caused by the internet.

The boom thus produced is given a mighty boost by monetary expansion. This idea is in line with the Austrian economic theory of what causes the business cycle – but more on that another day. James argues that in 1998 because of the LTCM and Y2K crises, the Feds cut the Fed Fund rates to protect the financial system. But the Feds overdid it and as a resultant liquidity surge moved into financial assets.

James defines ‘euphoria’ as the stage when speculation for price increases is added to investment and sales. He takes the view that between 1991 and 2002, the US experience fitted this description.

Financial distress follows an environment he calls the ‘critical stage’; he says the two – critical stage and financial distress tend to move hand in glove. The critical stage is marked by insider selling as was the case in2000/1. James believes that the US passed such a stage between 2000 to 2002.

The final stage of the bubble cycle is the ‘capitulation stage’ – a stage where people are so badly scarred by their experience that they no longer wish to participate in the markets. The US still has to see this stage. Certainly it was not present in 2002 – if two measures that James uses are any guide. Firstly, the strategists remained bullish. Secondly volume remained high. James takes the same view as many technical analysts that market bottoms are usually marked with collapse in volume. This has yet to happen.

What sort of valuation decreases need to occur to mark a possible bottom? The author suggests at the very least a 30% decline from the highs.

Next week the market will be down to what I have been calling the minimum buy zone. If the 13-w (quarterly trend) uptrend is to hold, then the low at 1370.60 basis cash S&P needs to hold. Breach of that low will mean that whatever we have in the 13-w, we no longer have an uptrend (the sequence of higher highs and higher lows will be broken). I have argued that the massive injection of funds by the Feds since August 2007 will keep the bears away until the Feds are forced to raise rates in 2008 – when the liquidity finds its way into the inflation numbers. For this reason I believe that the probabilities favour the 13-w low holding. That is the low risk idea.

But an idea needs to measured against present tense information and so far there has been little sign of slowing downside momentum as the market approaches the buy zone. This is a tell-tale sign that the zone will hold. If momentum continues to build into the core zone, 1393 to 1370, this will be a warning that the zone will give way.

If that occurs, then, we may be seeing the start of the down leg that will culminate in James’ revulsion stage. By the way, a point James makes and one that accords with my experience: in the revulsion stage, the negative correlation between stocks and interest rates will no longer apply.

That’s not the way I would describe it but the result is the same. In my jargon, we are in a phase of the business cycle where once a bear market starts, the Feds will be unable to limit the damage to the economy by lowering rates.

I am looking forward to next week; it should provide interesting opportunities.

Thanksgiving

It’s Thanksgiving in the US. This means I have a holiday and time to reflect. As a trader, I get caught up with the markets (especially with the volatility of late) as well as the other hurley burley events in my life. It’s good to take time out to smell the flowers; to take time out to pause and be grateful for the wonderful people and things in my life.

I have a lot to be grateful for. The markets have been good to me. Oh sure, there have been down years; but overall I have not only achieved my goals but also more than I even dared to dream. It was not always that way: if you had asked me 7 years into my trading career: “Hey Ray! Are you going to make it?”

I’d have answered: “Sure! But you wouldn’t know it from my present results!”

It took me a long time (over 7 years to have the first winning year) and a lot of losses (about A$750,000.00). I succeeded because my wife, Chrisy, stood by me and provided the financial resources to keep going after I had lost our savings. During those tough years, her support was on occasions, the only thing that kept me going.

Chrisy bought me time; Pete Steidlmayer delivered the content that proved the turning point for my trading. He showed me that trading is a probability game and the lessons I learnt in 1980 are still beneficial today.

Those are yesteryear events; events for which I am grateful. Venturing closer to today, I now have friends who provide the bedrock social support and warmth so necessary for life – friends like Stuart Leslie, Anna Wang, Mic Lim and Jeff Tie. Stuart and Ana started off as mentor students and have become close friends. Mic is one of the best traders in Singapore (sorry Mic I know how much you dislike me saying that in public – but mate you are!). Jeff is my first friend in Singapore.

Trading is a tough game. There is no established educational process and the industry is full of hype and empty promises. On the other side of the equation are the newbies whose attitudes are best summarised by the words of an event participant: ” I want a system that is easy, costs no money and time to learn and one that will quickly make me a large fortune from a small starting base” (!!).

For those that know that trading success will take time, effort and money, take heart. Unlike when I first started, today you have access to genuine (and sometimes free) assistance. There are coaches like Brett Steenbarger, Denise Schull, Jim Kane & others…who each in their own ways provide an excellent service to the struggling newbie. So, no matter how you are trading and no matter what challenges you face, take a moment to enjoy the view that life is providing.

Happy Thanksgiving!

A Review of My Approach

Success in the markets requires a plan with an edge. But no matter how profitable our plan, we need to consistently execute it. And, we are more likely to consistently execute our plan if it fits our personality. Accordingly, because I am predominantly visual, my plan tends to focus on the visual aspects of trading. In this post, I am going to review my approach to the markets.My methods have their foundation in the Tubbs Model. It is a model that is widely followed by technical traders. At the end of a downtrend, the market accumulates; at some point it breaks up and starts the markup phase. In that phase the market experiences consolidations and corrections but as long as the market forms higher highs and higher lows, the uptrend remains intact. In turn, at some point, distribution takes place and is followed by a breakdown. The mark down phase begins and so the cycle continues.

tubbs-roadmap.jpg

The Tubbs Model

The practical problem with the model is that the market is fractal. You have the model rippling through different time frames making it difficult to define the trend of your timeframe. To isolate the trend of a time frame, I use the Barros Swing. So, I define an uptrend as higher swing highs and higher swing lows; a downtrend I define as lower swing highs and lower swing lows, and a sideways trend about equal swing highs and swing lows. The advantage of this definition is that we always know at what price a trend for a specific timeframe will end.Take the S&P, for example. In the 13-week swing (quarterly trend), we have had higher swing highs and higher swing lows since Oct 11 2002. The current swing low is 1370.60. If the market breaches that low, then whatever you have in the 13-week it is not an uptrend (we would no longer have higher swing highs and higher swing lows).The swing charts also help in defining the trend of the next higher time frame. By doing so we can form an opinion on whether the lower timeframe trend is likely to resume. For example, the 12-month swing (yearly trend) on S&P shows a possible Upthrust sell signal. Because of this, a breach of 1370.60 in the 13-week would likely signal a 13-week bear market. On the other hand, had the 12-month showed that a turn down was only a 12-month correction in an ongoing bull market, the 13-week would likely continue a new uptrend (once the 12-month correction completes).

The Barros Swings then define the trend of a timeframe.

The first port of call of my analysis is to pose the core questions: what is the trend of the timeframe I am trading and is that trend likely to continue or change? To provide the answers I look at the First and Second Higher Timeframes using the Barros Swings (Nature of Trend material), Ray Wave and the Market Profile. I also use a number of price projection tools, and Sentiment Indicators. The answers to the core questions provide my strategy.Once I have a strategy, I look for a support or resistance zone to implement it. As a responsive trader, I buy corrections in an uptrend and sell corrections in a downtrend. The same tools that I use to define the probable zones where a trend may end help identify where corrections are likely to end. Unless a market reaches my zone, I pass on the trade. Once in a zone, I look for setups and entry patterns. This approach of using context and zones to filter my setups is a distinguishing feature of my style of trading. The setups I use aren’t all that unique. But my insistence that the market must first reach my zones allows me the luxury of being able to exit some trades that are ‘wrong’ without loss. These trades Pete Steidlmayer called ‘free exposure’ trades. It is the knowing (over a large sample size) of how a trade ought to behave after entry that provides me with my edge. Once I am in a trade, I ask the three questions:

  1. What does the market have to look like for me to remain in a trade?
  2. What does the market have to look like for me to exit immediately?
  3. What does the market have to look like for me to stop and reverse? In this case, the stop out would tell me something about the trend of my time frame.

I also have a hard stop in the market at a technical level; the stop is set at a price beyond which I am not prepared to continue losing money – irrespective of my interpretation of market activity. When I am trading well, I don’t get stopped out: way before the stop is hit, I have recognized that I have made a mistake and I have exited the trade. Once the market starts to move my way, I employ the Rule of 3: this ‘rule’ smoothes out my equity curve. I’ll write on this in another post.

The Quality of Our Decisions Part 2

In ‘Think Better’, author Tim Hurson suggests a business decision-making model that evolves my process. Firstly he suggests that we alternate between right-brain and left-brain activity; secondly within his seven step model, he has some very useful tools. Whenever I brainstorm I use Mind Mapping software called Mind Manager. A free version of a mind mapping software can be found at:

http://freemind.sourceforge.net/wiki/index.php/Download

Let’s consider an example and let’s say we are looking at yesterday’s ESZ7 12-m (yearly trend). We’d start with his first step, the one he calls: “What’s Going On”? Here he aims to use the right-brain to identify the critical factors. In our case we’d be brainstorming to probe for the factors that will affect the probabilities of our trade. A couple of useful questions he uses are:

  1. What’s the Itch? And
  2. What’s the Impact of the Itch?

Once we have a list, he suggests we verify our ideas by asking: “What the Information?” and drawing a distinction between what we know and we interpret. This is a useful distinction. For example:

Yesterday in the ES we had a directional day on lower than mean volume; the Profile showed a 3-i day down. That’s what we know. I’d interpret that by saying that the directional day favoured more downside to come; the lower than mean volume suggested the down move was coming to an end and the 3-i day suggested that in the 1st 90 minutes of trading, if we sold above the value area, we should be able to at least scratch the trade.

One of the questions that immediately arise is: “What does it mean if today we don’t get free exposure?” Another question would be: “What does it mean if today, we fail to make a lower low?” etc. In drawing a distinction between what we know and what we postulate, we are more likely to trade with an open mind: the process stimulates our ideas and reduces the risk of myopia – seeing only what fits our pre-conceptions.

Once we have a list of possibilities, we fine down to one or more critical questions that the Trader’s Timeframe will need to answer (in yesterday’s post the 18-d). The questions are answered by creating scenarios and assigning probabilities. We’d then use Decision Tree software to arrive at a solution. When using the software I like to see the conclusions hold over a range of values. If the Decision Tree software changes its decision over a narrow range, I consider it too close to call.

The attachment is the example I use on the video on the Decision Making Process. In that Tree, a change in the probability of success from 12.5% to 21.4% altered the decision. I would consider that too close to call and would stand aside.

Decision Tree

DECISION TREE

For a free Decision Tree Software go to:

http://www.visionarytools.com/downloads.htm

Tim Hurson’s book is a great read and one I think you’ll find useful – but you will need to adapt some of the ideas to trading.

The Quality of Our Decisions Part 1

As traders, we spend much time in seeking more knowledge on the markets, knowledge that will provide us a distinction, a distinction that will lead to a greater edge.

But there is an area that most of us tend to overlook when looking for that edge; indeed usually when I introduce it in my public talks, I can see the audience glaze over and can almost hear the audience think: “Get over this quickly! I want the good stuff!” Well folks, “this is the good stuff”.

And the topic (drum roll please..): A Better Decision-making Process.

If you reflect on this, you’ll see why this is so important to trading, and to life. The quality of our trading, and life, ultimately depends on our actions and our actions are a by-product of our decisions.

So on what does a more robust decision-making process rest? Behavioural Finance? Logic? Creative Thinking?

None of the above. We need to go beyond Behavioural Finance; it does a great job for identifying the blocks to better decisions but some have taken a view that because we can never totally eliminate our blocks, we are doomed to poor decisions. The question is ‘poor’ compared to what? It’s like saying because we are not champion ‘traders’ we are doomed to being merely ‘good’ traders. So?

I consider myself not particularly talented in the trading arena – not a champion by any means; but that has not stopped me from making a better living than I probably could have made from any other profession and certainly better than one I would have earned from the law.

Similarly even if we never totally eliminate the psychological barriers to robust decision-making, this does not mean we should not try to make the best decision we can in the circumstances. And this implies seeking ways to improve the process.

Luckily for us, in recent years new discoveries have been made that lead us to think better. One discovery: the better decisions come from a synthesis of the right and left brain. Recently a discovery was made that an even process is to alternate between right and left brain activity. Since I read about the theory, I amended my decision-making process to incorporate this idea. It’s too early to report if there has been a bottom-line impact but it certainly feels more comfortable.

My previous decision-making process began with the right brain ‘stream of consciousness’ thinking. I would start with the 12-period monthly swing chart (yearly trend, 12-M) and work down to the 18-period daily swing chart (monthly trend, 18-d). The purpose of this step was to seek the critical question/questions relating to an instrument. For example in the S&P, on Monday November 19, the critical questions for me are:

  1. Whether the low at 1438.53 marks the termination of the correction.
  2. If not whether the end of the Zone marks the end of the correction (For those that have read the Nature of Trends this is the Primary Buy Zone marked by 1555.9 and 1370.6).
  3. Whether the high at 1576.1 identified a 13-w Upthrust Change in Trend Pattern or an Irregular Correction.

Using the various tools at my disposal, I would seek the answers using my Left-brain. The result of this process would be a strategy (buy/sell) and tactics (zone, entry and exit strategies). The final step would be to review the decision against my Behavioual Finance checklist to ensure I was not making some simple error in thinking e.g. anchoring an exit price.

I have just described the previous process. Recently I read “Think Better” by Tim Hurson and have adopted his model. I believe it is superior to the one I am using. I’ll deal with this in tomorrow’s post.

Market Profile and Context

The courses taught today on the traditional Market Profile focus on the bell curve, ‘the Profile’, with little comment on the other aspects.

Peter Steidlmayer taught that there were 5 elements to his traditional approach:

  • Long-term Perspective,
  • Long Term Activity Charts (LTAC),
  • Market Structure,
  • Market Timing and
  • Trade Location.

Each element played its part bringing a trade to a successful conclusion. And although this was not expressly taught, I took the view that Long-Term Perspective and LTAC provided ‘the context’ to Peter’s approach. Nowadays ‘context’ in the Market Profile is provided by the longer-term distributions; but I still find Peter’s way of classifying fundamental events useful.

There are three types of events:

a) Expected events when fundamentals are correctly perceived by the market and as a result, we have range bound markets. In range bound markets we buy the low end of the range (what I call the Primary Buy Zone) and sell the upper end (the Primary Sell Zone)

b) A surprise event which are an ‘act of God’, an event totally unexpected by the market. In such as situation, price moves away from value and then returns to value. Chernobyl (April 26 1986) was such an example. Following a muted response to the disaster on April 28, the S&P fell from 243.55 to 232.25 over 13 trading days. Six days after the low, the S&Ps were trading at 244.75. In such a situation, the strategy is to take a position on the basis that price will return to their original levels.

c) An ‘unexpected event’ where the market fails to recognize a shift in the fundamentals; a shift that signals a move by value away from price. In short, an event that will change the longer-term trend of the market. (In my jargon a change of trend of at least quarterly trend proportions).

I believe that an ‘unexpected’ event occurred in August 2007 when the major Western Central Banks poured liquidity into their respective economies’. We are talking billions of dollars over a very short time. Usually we’ll begin to see reflected in the economy, the effects of excess money reflected within six to nine months time: in this case, say from March 2008 onwards. In other words, inflation figures will start rise. The FEDS will then find themselves between a rock and a hard place (of their own making). The Weekly Leading Indicator published by the Economic Research Institute (http://www.businesscycle.com) shows that the US economy is set to slow down in the months ahead.

So the FEDS will have a climbing inflation with a weak economy and Bernanke is reported to shifting towards an inflation targeting system. Given their charter and stated policy, the probability is the FEDS will have to raise rates. In turn this will have an adverse effect on the US economy and US Stock Market.

Now let’s add another spark to the potential firestorm.

China‘s inflation is said to be running at the highest level in a decade (Financial Times 11-16-2007). So far the half-hearted attempts to stem the rise have done little to alleviate the problem. When the Government starts to take strong measures their stock market will turn down. In addition a slowing US economy will have a severe impact on the Chinese. ‘China‘ central bank estimates that every 1% drop in the US economic growth translates into a 6% fall in Chinese exports (FT 11-16-2007)’. Exports now account for 33% of the Chinese economic growth. So a slump in the US economy will impact the Chinese, and a slowdown in both countries, the rest of S-E Asia.

I see these facts as painting an ‘unexpected event’ portrait for a US stock market downturn. The probability is set to begin from the time the US inflation figures start to rise – this clear and present danger to be present from March 2008 onwards.

Now don’t get me wrong. I am a technical trader and the timing of short entries (if any) will be based on my chart patterns. But my best trades have been when I identified a story not yet heard by other traders e.g. at the ADUS secondary bottom in about September/October 2001.

If this scenario proves correct, we’ll have the usual seasonal strength in 2007 with new highs into March 2008 onwards. From that month onwards, I’ll be looking for evidence of the onset of a downtrend of at least 13-w proportions (i.e. trends in the quarterly time frame).