Tuesday, July 7, 2015

Big Comeback in Stocks Today - Is it a Good Sign?

The stock market come back big from being down even bigger.  A lot of talk that this is a positive sign for the market, so I wanted to test it.

The $SPY finished just under 2.% off the lows today, so I ran a sample of days where the index finished 1.8% or better above the low for the day.  You could dice it a lot of ways, but this is the one I chose.

It's happened a lot of the last 15 years,  I looked at what happened the following day or days and didn't really see a major trend.  Some days were up, some down and some barely moved.  In looking at the list, I saw it happening a lot in 2008, a very bad year for stocks.  So, I added up the numbers per year.

2015 3
2014 3
2013 2
2012 6
2011 21
2010 13
2009 40
2008 61
2007 7
2006 2
2005 1
2004 2
2003 23
2002 49
2001 40
2000 37
1999 20
1998 27
1997 24
1996 10
1995 2
1994 3

As you can see, the worst years are bear market years, 2008-9 and 2000-2002.  Having a lot of these is a sign of volatility and a bad thing. I can't say what one day will bring, but a lot of them are not good. 

Best of luck trading. 

Tuesday, April 28, 2015

Why I am short gold today

I sold off all of my money in equities today. Not that I am particularly bearish going into tomorrow’s Fed meeting, just that I don’t have a good feel for what may come out of the meeting.  I expect I will be buying back in after a few days, once things settle down.

The one thing I did keep is a short position in the Miners, Junior Miners and in Silver, via the 3x ETFs.  The reasoning, such as it is, is that the general consensus is that the Fed will be dovish when it announces tomorrow.  I judge this on the fact that gold and silver have exploded to the upside this week.

The strategy is no matter what the Fed announces, good things happen.

·         If they are dovish as expected, then nothing much will happen.  I should get the benefit of those ETFs going down through the daily rebalancing, or through a small selloff.
·         If they are a bit more hawkish, I expect Gold will sell off big time, dragging the miners down with it.

I see it as a win/win, or at least a win/not lose.  It’s the concept of going against a crowded trade. 

I’ll know tomorrow if it works.  If I don’t get shaken out before that.

Monday, January 19, 2015

Where are the Customers on the Forbes’ Billionaires List?

The Forbes list of billionaires is out for 2015 and Michelle Celarier @mcelarier tweeted that there were 38 hedge fund managers on the list, led by Ray Dalio at $15.2 million. 

I posed a question to Michelle, “Where are the Customers on the list?” and she responded that, indeed they were on there, as many billionaires would be clients of the hedge funds.

And I suppose that’s true.

But, the hedge fund managers had achieved the list because they ran hedge funds.  The customers made it because they earned or inherited the money from other endeavors, not because they invested their money in hedge funds.  

I just wonder how many customers made the list in spite of investing with the hedgies rather than because of them.