Time to short Stocks!

[Zander]

he shorted the market, I'm fully aware of what he bought. That is a wager and a risky wager at that.

A short ETF doesn't carry the same risk that an actual short position does. It's no different than going long on a stock, it just correlates with a drop rather than a gain.

An actual short position IS one of the biggest risks because of the potential for unlimited loss. You mentioned that his move was one of the riskiest, and it seemed pretty clear that's what you were getting at.

The market can go up or down on any given day. All else being equal, a long ETF and a short ETF carry pretty much the same risk on a given day.

I still don't dissagree, and I'm still correct it's a risky wager.

It is slightly more risky than being long an SP500 index fund - due to it's leveraged position. The ETF seeks to double the return of the market. So if the SP500 drops by 5% - the ETF is designed to return 10%. Rarely does it work out exact, but it is close enough.

It is a purely speculative play. I am a buy and hold advocate and rarely engage in market timing. But today I see many technical and fundamental factors aligned that lead me to expect a severe drop in stock prices.

 

[Toro]

I joined Zander today and made a short bet on the market falling. But its just a near-term trade as I think the market will be higher by the end of the year.

 

[Zander]

I joined Zander today and made a short bet on the market falling. But its just a near-term trade as I think the market will be higher by the end of the year.

OH NO!!! I am bailing........


Just kidding!!

 

[Toro]

I joined Zander today and made a short bet on the market falling. But its just a near-term trade as I think the market will be higher by the end of the year.

OH NO!!! I am bailing........


Just kidding!!

That's probably a good idea. I've been on my worst run ever. 14 of my last 15 trades have lost money. However, I still have more money than I did before the run started as that one trade made up for the other 14.

 

[Zander]

I joined Zander today and made a short bet on the market falling. But its just a near-term trade as I think the market will be higher by the end of the year.

OH NO!!! I am bailing........


Just kidding!!

That's probably a good idea. I've been on my worst run ever. 14 of my last 15 trades have lost money. However, I still have more money than I did before the run started as that one trade made up for the other 14.

Don't feel bad, this is a weird market! If you are ahead for the year - that is saying plenty.

When trading, Timing is always the trick.....That is why I've always been a buy and hold investor - no timing, no regrets. Just buy, hold forever, buy more on dips, re-balance once in a while......wash rinse repeat......

At some point I will jump back in with my 60/40 allocation...just don't ask me when!!

 

[Paulie]

A short ETF doesn't carry the same risk that an actual short position does. It's no different than going long on a stock, it just correlates with a drop rather than a gain.

An actual short position IS one of the biggest risks because of the potential for unlimited loss. You mentioned that his move was one of the riskiest, and it seemed pretty clear that's what you were getting at.

The market can go up or down on any given day. All else being equal, a long ETF and a short ETF carry pretty much the same risk on a given day.

I still don't dissagree, and I'm still correct it's a risky wager.

It is slightly more risky than being long an SP500 index fund - due to it's leveraged position. The ETF seeks to double the return of the market. So if the SP500 drops by 5% - the ETF is designed to return 10%. Rarely does it work out exact, but it is close enough.

It is a purely speculative play. I am a buy and hold advocate and rarely engage in market timing. But today I see many technical and fundamental factors aligned that lead me to expect a severe drop in stock prices.

I have to correct myself from earlier on the dispute about risk in this position.

I didn't realize it was a 2X. I agree with topspin that's a very risky position.

I don't like the leveraged ETF's. They're good for a flip, but they're prone to decay.

 

[KissMy]

I bailed on the Gold (GLD), Silver (SLV) & all stocks on Friday at about 11:45 when I posted about heavy gold selling & gold struggled at the $1380 level for days before. I got out at $1375 Gold. Just $12 off its all time high. I have been very busy & did not want to think about the markets over the weekend. One day Bernanke says he is going to ease & the next thing Geithner says that the United States would not devalue the dollar for export advantage. Then China jacks interest rates to drive up the yuan. These fuckers are playing games. I haven't been the loop today & did not have the balls to short this today. They are telling their buddies to front run their policy statements & making them rich. There might be a couple more good shorting days left. I have just been to busy to look at all the news & data since Friday.

Upon further reflection & thinking about China's interest rate hike. If they hike rates & slow their consumption then commodity prices fall making the US Dollar stronger with respect to commodities. The US Dollar rises by default. These currencies are linked. Hell under Bush the US Dollar index was driven all the way down to 71 & jobs were still lost. That was much lower than the 76 level Bernanke has managed to get it down to. Maybe they have finally figured out that devaluing the dollar for export advantage is stupid. NAHHHH !!!

 

[topspin]

I've seen some of these kinds of etf's be down when the market is down, and I've seen gold etf's not track gold. VERY RISKY

 

[Toro]

I've seen some of these kinds of etf's be down when the market is down, and I've seen gold etf's not track gold. VERY RISKY

Which gold ETFs? I've invested in a few and they've tracked very closely.

 

[topspin]

I've seen some of these kinds of etf's be down when the market is down, and I've seen gold etf's not track gold. VERY RISKY

Which gold ETFs? I've invested in a few and they've tracked very closely.

I forget the symbol, heard it dicussed that it was oil futures contracts

 

[Toro]

I've seen some of these kinds of etf's be down when the market is down, and I've seen gold etf's not track gold. VERY RISKY

Which gold ETFs? I've invested in a few and they've tracked very closely.

I forget the symbol, heard it dicussed that it was oil futures contracts

The oil and natural gas ETFs are terrible, but I don't know anything about the gold. Gold can be stored easily, so there is no reason for it to deviate from the NAV of the fund. With the energy ETFs, however, they buy futures. With the futures in contango, there is a decay to the NAV of the fund, since when the near-term contract expires, they have to buy a higher priced contract out on the curve. The tickers are USO and UNG. I wouldn't touch either with a 10-foot pole. There are, however, interesting put option strategies which allow you to take advantage of the decay that the market makers haven't figured out.

 

[william the wie]

Which gold ETFs? I've invested in a few and they've tracked very closely.

I forget the symbol, heard it dicussed that it was oil futures contracts

The oil and natural gas ETFs are terrible, but I don't know anything about the gold. Gold can be stored easily, so there is no reason for it to deviate from the NAV of the fund. With the energy ETFs, however, they buy futures. With the futures in contango, there is a decay to the NAV of the fund, since when the near-term contract expires, they have to buy a higher priced contract out on the curve. The tickers are USO and UNG. I wouldn't touch either with a 10-foot pole. There are, however, interesting put option strategies which allow you to take advantage of the decay that the market makers haven't figured out.

Oh no, when you run out of Greek letters are you going to use Kyrillic or Hebrew letters next?

 

[KissMy]

I tried to get back in long the market today but it ran away from me. I put in all limit orders & it just wouldn't hit my buy prices. I gave up chasing them. Maybe I will get lucky in the after hours session.

 

[william the wie]

Personally cash looks real good to me at the moment I have no idea of what's going on with this market.

 

[The Rabbi]

One word.....DEFLATION.

How could we have deflation whe the Fed is all set to "monitize the debt" by printing more money? Seems we'd have inflation instead, as well as a extremely devalued dollar.

So it looks like gold is still the best investment for the time being right?

We have been experiencing deflation for the past year and a half. The Fed's QE efforts have not really stopped the falling prices as much as partially masked it - Just look at the prices of things in "ounces of gold" or the prices of real estate and you'll get the idea. That being said, I think that over the long term, owning some gold (5-10% of your portfolio) is a good idea. I am extremely bearish on stocks right now - and expect to see a sharp move downward over the next weeks and months. If I am right, I will make a great profit, but if I am wrong I only have a small portion of my portfolio in play - I am still 90% in cash and t-bills - so this is purely a speculation on my part. Best of luck!

I disagree.
Companies are sitting on tons of cash. They will not do anything until after the election. If the GOP takes the House, and possibly the Senate, then that wil be a signal to businesses that they no longer have to worry about new anti business legislation. There will be a huge amount of M&A activity, and we have already seen some.
No, the potential for big gains is still there. We might see a correction but no more. And if you'e been in cash for most of this year you have missed one of the big rallies.

 

[Toro]

Much of that cash is overblown, since its sitting outside the United States and won't be repatriated because of the 35% tax rate. Most of the debt that has been raised has been to extend existing debt or lower interest payments or to just take advantage of the lowest rates in a lifetime that will probably be recycled back to shareholders. The change of government will improve moods but the problems in the economy are structural and there is too much capacity. Lowering taxes or being more business friendly won't change that.

 

[topspin]

I'm a stock guy, have been for 25 yrs. Oil stocks look fantastic to me for many reasons, not the least of which is China buys more cars than we do and has to import oil.
Mobil tech looks fantastic

 

[editec]

First let me tell you, I am not invested in gold. I could not care less about it, or the price that people are willing to pay for it. As far as I am concerned, it is little more than a shiny metal with scant few uses beyond jewelry or as as store of "perceived" value for fearful investors. Some people think it is wise to have a portion of your assets in gold - good for them. Personally, I don't own any except for a few pieces of jewelry. And I have no intentions of buying any, now or in the future.

That being said.... When I see the "investor" demand exceed "jewelry" and industry demand for the first time n history - I view that as "irrational". When there are advertisements on every available media touting the "safety" and "security" of GOLD!!! as an investment - I see that as irrational. When I view the actual 30 year return on gold as investment - I see it as a lousy, irrational investment. When I see the current deflationary cycle devastating the prices of every other commodity asset class across the board except precious metals - I see that as irrational. Could I be wrong? Maybe. But since I have ZERO vested interest, I simply do not care.

So now I am asking you...what specifically is "rational" about the rise in price of gold right now?

You know, I agree with that analysis a lot.

But here's the thing...markets aren't entirely moving based on fundamentals. They're also moving (and moving big time... sometimes) based on perception.

And the perception is that there is great risk of hyperinflation.

Yeah, I know, that doesn't make sense given that deflation is the current state of affairs.

But the people buying gold think that the deflation isn't going to last.

They believe that governments spending will initiate hyper inflation and sense that if they're in the right investment (gold and precious metals) they stand to make a lot of money when that hyper-inflation kicks in.

Which then begs the question, if we go into a period of hyperinflation will they then SELL their gold to get those then even more worthless dollars?

I cannot entirely understand why they would, but let's assume that they believe that during a period of hyper-inflation, they think they can TIME their sales of gold so that they sell it at the top of the inflationary cycle, and then enjoy the benefit of having DOLLARS as the specie DEFLATES.

That what they think they're going to do, I suppose.

That or they believe that the dollar is just going to lose all value in which case they'd have better taken POSSESSION of that gold, because, right now, I have absolute confidence that the gold dealers are selling GOLD they don't really have.

You have a misunderstanding of what hyperinflation is.

Do I?

Well I might.

I define hyper inflation as a rapid increase in the aggregate specie which exceeds the increase in real goods and services.

Is that wrong?

 

[editec]

OH NO!!! I am bailing........


Just kidding!!

That's probably a good idea. I've been on my worst run ever. 14 of my last 15 trades have lost money. However, I still have more money than I did before the run started as that one trade made up for the other 14.

Don't feel bad, this is a weird market! If you are ahead for the year - that is saying plenty.

When trading, Timing is always the trick.....That is why I've always been a buy and hold investor - no timing, no regrets. Just buy, hold forever, buy more on dips, re-balance once in a while......wash rinse repeat......

At some point I will jump back in with my 60/40 allocation...just don't ask me when!!

Well that hold 'em for the long run approach works as long as the market doesn't go into true free fall.

But imagine that you'd positioned yourself completely in equities in 1929.

The Dow finally returned to its 1929 values in 1958 (or was it 57? not sure, but mid 50s).

How would your system have worked under those circumstances?

 

[topspin]

so your argument is not to invest in stocks based on pre 1960 financial structure?