I drank one swig of Kool Aid, found out it was laced with arsenic. Off to detox...
S&P 774 as I type, remember a break below 770 is bad... very bad. Didn't we just do this game yesterday with 840? On the plus side, only 770 more points to go before the bottom is in...
3 PM remains the witching hour ... we'll gather back the short exposure we let go earlier in the day if (edit: as) this breakdown continues. I can't imagine a positive start to the day tomorrow with this action unless they take Citigroup (C) out back and shoot it... aka our new tax payer owned entity. It's too big for anyone to be forced to buy it, so we're gonna be part owners. Congrats partners...
Next target? Looks like we have to go back to the 1990s... 680/690 on S&P I guess? Amazing era. Just amazing. Thankfully it's not like we're Japan or anything ...
I'm reading Paulson spoke this afternoon on TV and the market started crumbling - great. The lack of leadership in this country is astounding.
Back to the foxhole.
EDIT 4:30 PM: We did the unthinkable today - we bought stocks. A sinister act. We went from a 40% cash/38% long/22% short allocation to 43% cash/48% long/9% short exposure in this morning's dip... the market was down 15% versus the high Friday... and we hit our target of "2002 lows" (S&P 770). Obviously here in the last 30 minutes we got back much of that short exposure - there is something wrong in a market you can buy Ultrashorts up 40% in 2 days and still make an additional 5-8% in the last 30 minutes.
We've gone to a "muted" strategy here the last month; high cash and offset long with short exposure in quite equal amounts (you know, like a hedge fund - expect we don't lose 40% in a month). This would mean we miss out on some large upside moves as our upside would be muted but the same on the downside. It's been working like a charm the past 3 weeks or so, in fact we were up versus the S&P by double digits last week, and are doing so again this week.
Here are today's results, not quite so nice compared to yesterday since we again dared to buy stocks and promptly lost money by doing so.
Yesterday
So the S&P is down 12.8% and we're down about 1.1% in the past 2 sessions; I can live with that considering our mandates. I'm sure it's outdoing 99.9% of equity mutual funds.Can't say much about this market anymore - sentiment horrific, selling non stop aside from casino like moves to the upside (10% up sessions) - news flow terrible. Usually these conditions would set us up for a counter trend rally, but it's like the bottomless abyss. We've had these episodes in back to back months. Down 12.8% in 2 sessions is now old hat; I suppose to really stand out we can go for the down 20% in 3 sessions which is much more elusive.
Our cash position is lower than it's been most of the past month and we're more long; although still just under 50%. The deeper we fall the more we have to begin to layering in on the long side. Obviously a knee jerk reversal will happen at some point and smash the short side - it's just too easy being short but it's the only side making money so you have to keep exposure there and realize you're going to take a hit on that side at some point.
Frankly, I was thinking we'd get to S&P 600s sometime in summer 2009 (as an "ultimate bottom" from which we'd rally) but everything about this market is in lightning speed so we only stand 50 points from the top of that range. The 2000s upside is now officially erased and we now work on 1990s.
Remember these days, weeks, months - people of much younger age will be asking you about them in the decades to come. No adjectives to describe it anymore - it's basically now a bubble in reverse - instead of bulls feeling bulletproof, now the bears are.
10 comments:
yeah..Carl Marx never thought of socialism would come this way.
What did Paulson say that was so drastic anyway? I am reading his speech, it's just empty waffle...
Yea I "caught" that 2hr rally this morning, only in marketocracy account though not real money thankfully....
Yes, wrong orifice - you don't want to catch things there.
I think the problem from what I'm reading is he said effectively nothing.
it seems they've punted everything to Obama which means the market is stuck to its own devices for 2 months. The horror :)
The only positive I am drawing is no market in the next 30 years aka the time I should be employed in this industry will shape up to this. I can scoff at any downturn in the future and chuckle snidely to self when some young buck talks about how tough the 2017 market is. Then I can tell him how I traded uphill, both ways, barefoot.
It is like we are compressing 4-5 years of the 1930s all into 1 year. The full 2000-2002 bear in 3 months, sheesh.
peter Schiff was just on Fast Money... he suggests dumping the dollar, buying commodities and solid beaten down companies. Gold to hit $2000 an oz next year.
Louise Yamada is supposed to be on CNBC next hour (err... I'm guessing after Jim Cramer... ) She's going to tell us what keeps her awake at night.. I'm presuming it isn't a weak bladder... Yamada is also a commodity and gold bull.
jegan
I praise Schiff for the economy calls but to be frank the dump dollar, long commodities trade, go foreign has destroyed people the since July 1.
It's easy to give the sweeping generalizations... I also agree the dollar has a long way to go down, and I love commodities for the long run. Buying into those thesis and sticking with them the past 4-5 months would cost one at least 75% of their money.
Not knocking him, but the market is about timing. What is true in the long run can be completely opposite in the near run. I would love to know how his accounts are doing since Jul 1. Frankly every most major hedge funds was in that trade as well - and we see what that thesis has done to them; many are going out of business.
Let me know what Yamada's downside target is on S&P. I hope it is with a 6 in front of it and not a 5, 4, or 3 (S&P)
Ok.. They said Louise was to come on after.. What they meant was after the commercial break.
I watched Yamada tell the Fast Money crowd that the DOW would drop at least to 10,000 (while it was at about 12,000) and proably fall through that level as well. They were very amused. I have since read her book. Dry but very enlightening.
She came on the show and said that she agreed with Schiff. She also said that the market will not stay at this present level and has further to fall. She suggests the SP500 at 600 and then 400. Further, she states that the market has no support for the normal recovery/safe sectors health and consumer staples..
jegan
Darn, I was afraid she's go there.
I'll check out the clip online; 600 I'm good with. 400 not so much, but unfortunately it is probable.
We're going to lose so many investors who will never come back to the market if the 400 happens. Even more than we already did - most normal people do not play the short side.
This 400 also agrees with Bill's Fibonocci or however you spell it.
I wonder how many bankruptcies will equate to S&P 400. More than even I assumed.
I might turn out to be kool aid drinking bull in a relative sense even with all my dire calls - lol.
TM.. Just logged back into email.. Sorry about the bad news from Yamada.. Unfortunately, he didn't give a timeframe.
And I do agree with your feelings about Schiff and commodities in the same way I feel that you can't blindly follow the statements of Jim Rogers. Well.. At least, I can't afford to...But it will rebound, either from demand or inflation and all three of them will be proven correct I guess I'll be looking at OIH at about $45 now.
TM.. It's Fibonnacci (Kinda like Mississippi.. Too many sequential consonants.. ) Anyway.. My concern is that in this will lead to Main Street problems. We've already had a major auto dealer get shut down and three large (for us) major stores and two restaurants. That's a lot for our little foothill community. I'm guessing that if we pass through 600, Yamada may have to recalculate... Anyway.. Wipe a little smiley-face in the dew on your glass of cool-aid and enjoy the broadcast...
Bye! jegan
It's "Fibonacci" .. single 'n'
Leonardo of Pisa (c. 1170 – c. 1250), also known as Leonardo Pisano, Leonardo Bonacci, Leonardo Fibonacci, or, most commonly, simply Fibonacci, was an Italian mathematician, considered by some "the most talented mathematician of the Middle Ages"
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