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12 comments:
great comments Rodger. I've been going through some of the the same ideas this week thinking about using an options collar on a couple of positions in a taxable account or even using an index put. I've used QID and SDS before as a hedge but not sure which is as better way, the index put or double short. Maybe just raising more cash by selling some mutual funds. We'll it will keep me up all weekend.
Other than the Nasdaq, the indexes are showing a classic 2B (trader Vic's) trend-reversal pattern.
IWM looks the weakest by far, as such I would suggest playing the TWM as a defensive play if you believe a bear market is starting.
The small caps will die faster and harder than the big caps.
I am glad that my portfolio is in non-USD investments. Up nicely on the year. You are right Roger.
This sure feels like the long anticipated bear market. It will interesting to see how things play out.
I believe the U.S. has been in a secular bear market over the past 8 years. This is one reason why my TAA strategy has an intermediate term orientation. You can make a lot of money on the long side during secular bears as we've witnessed over the past 5 years.
If we're at the start of a new cyclical bear, this theory will have been confirmed imo. This chart of the S&P 500 pretty much tells the story:
http://tinyurl.com/2wzsfq
Treading water.
John Hussman is even more bearish this weekend: US recession directly ahead
tom k, when your models show 0% long, do you sit in cash and wait? or do you go short?
tnx.
"According to the latest FDIC banking profile, FDIC insured institutions currently hold a notional value of $153.8 trillion in credit derivatives. That's not a typo – though GDP itself is only about $13 trillion, the high notional value emerges because for each derivative that connects two true “end users” (one long, one short), there is a whole chain of intermediaries who are long with one intermediary and short with another, hoping to earn a tiny profit on the spread. For example, I buy a derivative from Andy, who goes short to me, so he buys one from Barry who is short to Andy, hopefully for a tiny spread, and covers the risk by buying a derivative from Charlene, and so on, until someone finds a true “end user” who actually wants to carry a pure short position in that derivative. Unfortunately, this also exposes banks to as-yet-unknown “counterparty” risk. If one link in the chain snaps, the links surrounding that chain have to bridge the gap. This is not a material risk in exchange traded derivatives, but can be a problem in “over-the-counter” derivatives traded between banks, where “know thy counterparty” currently ought to be chiseled into every marble surface."
The above quote is from Hussman not some permabear. Kinda glad I have a lot of cash.
I am reading Hussman right now. I had no idea he posted on the weekend, LOL.
For gawd's sake, buy a shirt!
Hello Mr. Nusbaum,
I am a student at the University of Toronto who is writing a report about financial data availability within frontier markets. I know that you have written a number of articles/blog posts on the subject of frontier markets, and was wondering whether you might be able to answer a few questions regarding the matter. Any and all help would be immensely appreciated! If at all interested, please leave me an e-mail at justus@raepple.com.
Many thanks,
Justus Raepple
I think that Stocks continue to look more unsteady. With slower growth on the horizen I think a steady move lower is in the cards. I walk from the train to my office daily (in Manhattan) and I see many store fronts empty now. This is not a good sign. Technicals are ok but Fundamentals drive a market. The economy is looking shacky to me.
jag,
Yes, I go to cash. I never go net short. Occasionally I will use small positions in double inverse funds to hedge long positions when the market gets frothy.
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