It’s party time on Wall Street.
YOUR problem is that Wall Streeters just booked their sweet gains in the form of bonuses and you are chasing momentum.
The market is thick with breakouts and the price momentum is beautiful. There is no reason for 99 percent of investors to fight the tape.
BUT, you don’t chase wildly. You should not confuse this great tape with your intelligence.
The elastic band has been stretched pretty far in historical terms. Take a look at the ROLLING ONE-YEAR RETURN for the S&P . Of course we could keep going, but historically we are in some relatively uncharted waters.
There IS risk despite the risk free trade available to banks and the smart folks willing to borrow to their eyeballs with cheap money.
If I knew what it was and when it would happen, I would share it.
The housing bubble was predicted by EVERYBODY, yet Michael Lewis says maybe 20 people made money off it. That’s pretty insane seeing that almost 2 trillion was lost.
Enjoy the tape and the easy money, but know it will end extremely bad for most.
Why not the ’33 experience? Not that I’d put money on it, just wonderin’
I think its a huge possibility even bigger but historically the odds suck merthinjks. Its just ONE indicator
Why not the '33 experience? Not that I'd put money on it, just wonderin'
I think its a huge possibility even bigger but historically the odds suck merthinjks. Its just ONE indicator
very possible…it's happening :)
why? relative to the rest of the world; we’ve been stagnant for over a decade! we think smart money from the BRICs comes to the US markets and that this puppy will move much higher….
in the mean time, please visit our yahoo page and have coffee with us… http://www.youtube.com/financebabes
very possible…it’s happening :)
See Vitaliy Katsenelson’s thesis on the secular range-bound markets (i.e., what most would call secular bear markets). We appear to have been in one since 2000 and it could continue for another 6-10 years.
why? relative to the rest of the world; we've been stagnant for over a decade! we think smart money from the BRICs comes to the US markets and that this puppy will move much higher….
in the mean time, please visit our yahoo page and have coffee with us… http://www.youtube.com/financebabes
“Enjoy the tape and the easy money, but know it will end extremely bad for most.”
Checking [redacted].com, the cost of hedging against a greater-than-20% drop in SPY now is pretty cheap: about 1.3% for six months of protection.
you know, i’m watching this video ( http://www.youtube.com/watch?v=RtvTOJISXKg ) – it’s an interview with Charlie Munger (yes, *that* Charlie Munger), and around 12 min in, he mentions something about how interest rate swaps are dangerous.
and, i saw this article (http://www.ft.com/cms/s/0/23386870-309c-11df-a24b-00144feabdc0.html?nclick_check=1) on ft.com regarding a distortion between swap rates and bond yields all along the yield curve.
the article got me thinking. according to the article, lots of pension funds are using these swaps as a synthetic way to match assets to liabilities given the perceived risk (perceived by the pension funds) of a “sharp rise” in bond yields.
okay….so, here we have a market that where participants are so overweighted in one bet (they’re short bond prices, long bond rates) that they’re using a leveraged instrument to make the bet as a “more efficient” use of capital. they’re so overweighted, in fact, that it’s distorting historical trends and pushing the swap spread in the wrong direction.
now….what happens if, for whatever reason, we get another round of crappy housing starts, unemployment starts to move back up, and one of the market makers in the swap market blows up (a la Lehman). people shit, bond yields go negative again, and now you have a pension system sitting on a leveraged loss.
meltdown, anyone? thoughts? i just wanted to put this out there as food for discussion – i have no idea if something like this is possible or likely, but when you get distortions like this in a market as large as our debt markets, that *can’t* be a good thing, can it?
(posting as guest,
stephen)
“Enjoy the tape and the easy money, but know it will end extremely bad for most.”
Checking [redacted].com, the cost of hedging against a greater-than-20% drop in SPY now is pretty cheap: about 1.3% for six months of protection.
See Vitaliy Katsenelson's thesis on the secular range-bound markets (i.e., what most would call secular bear markets). We appear to have been in one since 2000 and it could continue for another 6-10 years.
you know, i'm watching this video (
) – it's an interview with Charlie Munger (yes, *that* Charlie Munger), and around 12 min in, he mentions something about how interest rate swaps are dangerous.
and, i saw this article (http://www.ft.com/cms/s/0/23386870-309c-11df-a2…) on ft.com regarding a distortion between swap rates and bond yields all along the yield curve.
the article got me thinking. according to the article, lots of pension funds are using these swaps as a synthetic way to match assets to liabilities given the perceived risk (perceived by the pension funds) of a “sharp rise” in bond yields.
okay….so, here we have a market that where participants are so overweighted in one bet (they're short bond prices, long bond rates) that they're using a leveraged instrument to make the bet as a “more efficient” use of capital. they're so overweighted, in fact, that it's distorting historical trends and pushing the swap spread in the wrong direction.
now….what happens if, for whatever reason, we get another round of crappy housing starts, unemployment starts to move back up, and one of the market makers in the swap market blows up (a la Lehman). people shit, bond yields go negative again, and now you have a pension system sitting on a leveraged loss.
meltdown, anyone? thoughts? i just wanted to put this out there as food for discussion – i have no idea if something like this is possible or likely, but when you get distortions like this in a market as large as our debt markets, that *can't* be a good thing, can it?
(posting as guest,
stephen)