3:00 PM Today $19.40
That folks is how you lose a boatload of money shorting... they are almost outperforming American Express (AXP) on AXP's beat.
I was forced to cut back some as the pain is too great; an inglorious defeat - the 100 day moving average is just over $20 and since valuation means nothing (remember they are estimated to make $0.09 not this year, but in 2010) why not $30?
I've now lost 5% on the entire portfolio since 3PM yesterday - thats a rare skill set indeed. 5 more hours like this and I can be down for the year.
Short Capital One Financial in fund; no personal position
20 comments:
Sweet jesus, Commercial REIT shorts are a disaster.
Got killed in SRS twice..:(
I got killed also, wiped out my 5% gain on the year yesterday......this makes no sense.....
on SRS that is....
Each day I think, today will be the day I should expunge shorts and just go long
Then I think if I do that it will mark the top
So I don't
Then by 4 pm I wish I had ;)
It is amazing how literally 1 day can ruin your year.
Mark,
What is your take on Gld? look like reversing..
Well, I finally cried uncle and covered all my commercial REIT shorts about 10 minutes ago for huge losses across the board. This market is just steam-rolling over all shorts. Sad thing is, I've in fact managed to lose a bit of money since this rally began despite being "hedged" at 60% long, 40% short. I've had enough, and so today I couldn't think of anything else to do but to sell all my longs and cover all my shorts and take some time away to reassess things.
very frustrating market for Shorts.
Dear cry uncle,
I have been anywhere from 4:1 to 3:1 to 2:1 long v short for the past 4 weeks and gotten steamrolled
when your shorts go up 30% in 1 day, there is nothing your long portfolio can do
In the old days stocks used to go down much faster than they go up
Now they go in both directions the same
This is a whole new world, and not something I am used to.
Casino Royale.
it is boggling to see gold coincide with equities unless (a) inflation is really about to burst or (b) this China news is the trigger
http://www.bloomberg.com/apps/news?pid=20601087&sid=azu2GgdtzJqQ&refer=home
hi tradermark .. am just wondering if its better to just set up a position shorting cof as a long term investment .. and look at it in a couple months... rather than considering it as a trade and getting stopped out of it every other day
It is a long term short for me
I am not stopped out, just stopped out partially
if it runs to $25 I cannot suffer that sort of loss with a full 4-5% stake. So I am trading around a core position similar to what I do on the long side
Only problem is the shorts are moving much more rapidly than the longs... so in 3 hours you can be down 15%. COF will be lucky to have a penny of profit in 2010 not to mention 2009. So whatever the 'value' is right now is franchise value and a lot of hope. Hence trying to find the right 'price' to short is difficult... and seemingly random ... momentum rules right now.
I am wondering whether a contrarian strategy works better in this environment... here one is never fully invested to begin with but you keep building (scaling) your position against the trend...
In this case, one can short (for e.g.) 1% of the portfolio for every $2 move up in COF stock, i.e. dollar cost averaging.
Althought, the returns on this strategy may be less (since you are never fully invested), we wont have to worry about being stopped out and would instead love seeing the stupid stock rally..since it allows us to dollar cost average it a bit more :-)
I really hate being stopped out from a position which i think is going to be profitable in the long run.. hence i sometimes use the above....
My Condolences mark,
I still think you are a great fund manager.
A lot of people I read are getting caught the same way. I think if you're not a prop desk trader there's a 70% chance you're getting shafted these days. I especially identify with your statement about deciding to remain short then wishing you didn't by the end of the day. I'm getting clobbered. I have confidence that the positions will work out eventually, but it's disappointing to miss out on the profits and opportunities in the meantime. I'm enough of a small fry that it's easy to say that though.
That commercial real estate is doomed isn't really a question. What the price action will be, on the other hand....
Think back to the housing bubble times. We all knew the shoe had to drop. We all knew that it couldn't last. And yet it was painful watching properties flip for 200% gains and to sit on the sidelines nay-saying. It was painfully obvious in 2006 that the bubble was on it's last fumes. And yet betting against it would have been extremely painful until a year later.
What's perplexing is the price velocity as you mentioned and also that this time around there's not even the kind of conviction behind it that the bubble times had. A large number of people who are raking in profits on the long side don't even believe in this rally. They're just painting the roses red. Like all of us they think they know better. They think they will be able to see the signs and get out when the getting is good.
My current thesis for the REIT gravity defiance is the government is doing something smart for a change in its tinkering. Think about the stupefying amounts of derivatives tied into RE. Why dump money into the banks and securities and other loss multiplied entities when you can prop up the prices in the underlying assets. More bang for your buck that way.
I'm not sure I want to be betting against the fed. But if my conviction is still stronger than my fear then there's a reason for it. So I'm going to average in some more RE shorting.
Yes as long as you are in the front or middle end of the move
if you are at the end of the move, then your position size would be so small that by the time the reversal happened the % gain would be good but the effect on the portfolio would be smallish.
If only we had the darn crystal bell ahead of time, making strategy would be far better.
Right now it appears many "logic based" folks are trying to do what I do, jumping back on shorts after huge moves, only to be squeezed back out again on the next batch of move up.
Only when we all give up apparently will these drop and stay down.
I might have to call Uncle soon!
Thank you for pointing out that slightly unintuitive factor of averaging in. I'll have to think on it.
Clarification/confession - I'm mostly working with the Saturday-night-special instrument of SRS since I don't trust myself with a margin account yet. As brutal as SRS is, you can't get squeezed out without choosing to set a stop and your losses are limited by what you put in. And one thing I've observed with the evil ETFs of doom is that they hemmorage money until one day they spike like crazy.
The success I've had with them so far has always been to adopt a "hunting big game" mentality with a 3-5 week timeframe. Take the losses, wait for the panic to hit, pull the ejection lever, then wait for the decay to bring things back down to a realistic number and repeat the cycle. That worked well enough in the past that even with the epic stomping I've gotten over the past 6 weeks I'm just about even.
We may have entered a whole new era in terms of how things work though, and past strategies may no longer hold water. My main counter-theses are that we don't have quite the same kind of forced selling from illiquid hedge fund strategies as we did in October, we have rampant market manipulation, and a withdrawal of the liquidity providers. Things definitely feel murky right now and I suspect what many of us need is a new model which adequately explains what is going on at this point. The analysis at Zero Hedge makes a lot of sense, but is there more going on that we don't see?
The same technicals that said we were oversold are now getting to overbought. My prediction - when the big institutional bears get to capitulation, the big institutional bulls will take their profits leaving the retail buyers and mutual funds holding the bag and setting us up for the next leg down. I believe a good amount of that profit taking is already happening based on the price movements lately. It's just a question of trying to balance being prepared to take advantage of that while not getting obliterated in the meantime. I prefer these risks to those of being caught long with my pants down and not being able to move my money fast enough. Especially because of how a lot of the best movements seem to do at least 50% of their action in after-hours/pre-market. By the time I could have reacted to many of the moves they were mostly over. And if we get a big shocker or major downward event, I believe it will be shockingly fast. If the downturn is slow and steady, well then there'll be plenty of time to adjust strategy for that.
Here's hoping my amateurish ramblings prove somehow useful towards your understanding of what other people out there are doing... :-)
TraderMark, you can now relax. Today I finally cried uncle and covered all my shorts. I even thought of going long, but decided that prudence was the better part of valor.
Now that I am no longer short, you are guaranteed that the market will drop: if I were long it would actually tank until I got short again, at which time it would reverse once more.
at this rate, COF might even hit 25, my target short entry!! oooh man if that happens it will be a glorious day.
agree 100% with peter hollin above
when the last bear is dragged bloody from the field of battle, we will be ready for the next leg down..this is how bear markets play out
smart institutional money (ok, GS) will already be positioned, and retail/mutual funds/pensions will get another round of near-fatal body blows
the comments from the USP call were pretty bleak; i put more weight in whats going on at UPS than what i am seeing in CAKE and COF and SPG and.......
Rumor is that May is the sell off month. Well it wasn't April, yet.
I think it was interesting that with all the things rallying yesterday, and the nosebleed i got in SRS (thinking IYR would hold the $33/sh resistance) I was surprised with the S&P closing only at 866. I was expecting us at least to close above 870.
That makes me suspect that yesterday was some kind of super-huge head-fake. A head-fake within a head-fake - within a head-fake. and this whole rally is also a head-fake.
The market rallied until 2pm when the shorts expected the sell-off to begin (thus morning = headfake)
2pm hit, the sell-off began confirming the morning headfake for the bears. But then it turned around, thus the selloff was the headfake.
The market kept going up until 10 min before the close there was a pretty dramatic selloff before the end, thus the buy-up after the selloff was the headfake.
So my guess is it will fall on monday. Whatever the case, this is very brutal.
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