ManMythLegend Wrote: ------------------------------------------------------- > bchadwick Wrote: > -------------------------------------------------- > ----- > > I got out of the market, essentially, on July > > 29th, and added to my gold positions late last > > week. I’ve been relieved that those proved to > be > > very good decisions, but it’s hard to be happy > as > > you are watching millions of people losing > their > > shirt. > > It’s not that hard to watch. I don’t have any > sympathy for people who are fully invested and > think the market will go up into perpetuity. I > understand people have 401k’s and the options are > limited but there is always cash if you feel a > sell-off is imminent. For the average person (and average fund manager, for that matter), trying to time the market is not the correct decision. If you’re saying you can accurately time the market, then yes, more actively allocating your funds is the correct thing to do.
jcole21 Wrote: ------------------------------------------------------- > ManMythLegend Wrote: > -------------------------------------------------- > ----- > > bchadwick Wrote: > > > -------------------------------------------------- > > > ----- > > > I got out of the market, essentially, on July > > > 29th, and added to my gold positions late > last > > > week. I’ve been relieved that those proved > to > > be > > > very good decisions, but it’s hard to be > happy > > as > > > you are watching millions of people losing > > their > > > shirt. > > > > It’s not that hard to watch. I don’t have any > > sympathy for people who are fully invested and > > think the market will go up into perpetuity. I > > understand people have 401k’s and the options > are > > limited but there is always cash if you feel a > > sell-off is imminent. > > For the average person (and average fund manager, > for that matter), trying to time the market is not > the correct decision. > > If you’re saying you can accurately time the > market, then yes, more actively allocating your > funds is the correct thing to do. Really? It’s actually become quite easy and predictable to time the market. Exit longs when Dow hits 12,500+. Then wait patiently for re-entry.
ManMythLegend Wrote: ------------------------------------------------------- > jcole21 Wrote: > -------------------------------------------------- > ----- > > ManMythLegend Wrote: > > > -------------------------------------------------- > > > ----- > > > bchadwick Wrote: > > > > > > -------------------------------------------------- > > > > > > ----- > > > > I got out of the market, essentially, on > July > > > > 29th, and added to my gold positions late > > last > > > > week. I’ve been relieved that those proved > > to > > > be > > > > very good decisions, but it’s hard to be > > happy > > > as > > > > you are watching millions of people losing > > > their > > > > shirt. > > > > > > It’s not that hard to watch. I don’t have > any > > > sympathy for people who are fully invested > and > > > think the market will go up into perpetuity. > I > > > understand people have 401k’s and the options > > are > > > limited but there is always cash if you feel > a > > > sell-off is imminent. > > > > For the average person (and average fund > manager, > > for that matter), trying to time the market is > not > > the correct decision. > > > > If you’re saying you can accurately time the > > market, then yes, more actively allocating your > > funds is the correct thing to do. > > Really? It’s actually become quite easy and > predictable to time the market. Exit longs when > Dow hits 12,500+. Then wait patiently for > re-entry. When is re-entry?
jcole21 Wrote: ------------------------------------------------------- > ManMythLegend Wrote: > -------------------------------------------------- > ----- > > jcole21 Wrote: > > > -------------------------------------------------- > > > ----- > > > ManMythLegend Wrote: > > > > > > -------------------------------------------------- > > > > > > ----- > > > > bchadwick Wrote: > > > > > > > > > > -------------------------------------------------- > > > > > > > > > > ----- > > > > > I got out of the market, essentially, on > > July > > > > > 29th, and added to my gold positions late > > > last > > > > > week. I’ve been relieved that those > proved > > > to > > > > be > > > > > very good decisions, but it’s hard to be > > > happy > > > > as > > > > > you are watching millions of people > losing > > > > their > > > > > shirt. > > > > > > > > It’s not that hard to watch. I don’t have > > any > > > > sympathy for people who are fully invested > > and > > > > think the market will go up into perpetuity. > > > I > > > > understand people have 401k’s and the > options > > > are > > > > limited but there is always cash if you > feel > > a > > > > sell-off is imminent. > > > > > > For the average person (and average fund > > manager, > > > for that matter), trying to time the market > is > > not > > > the correct decision. > > > > > > If you’re saying you can accurately time the > > > market, then yes, more actively allocating > your > > > funds is the correct thing to do. > > > > Really? It’s actually become quite easy and > > predictable to time the market. Exit longs > when > > Dow hits 12,500+. Then wait patiently for > > re-entry. > > > When is re-entry? Re-entry can be anywhere below where you sold. I’ll be entering a few longs tomorrow.
I already bought some call options today. Diiirt cheap, valid till 2013.
I did even better. I put 60% of my funds into cash around the beginning of July before the debt ceiling was thrown into the spot light. I sold at around the top, so lucky. I was not sure at that time how the market would react to such a momentous event. My initial market prediction was completely wrong, though, as I wasn’t expecting the market to tank in response to the debt ceiling being raise. About 20% of my remaining funds are mostly uncorrelated to the market, so only about 20% have fallen with the market in a big way.
I’ve been in 100% cash since Egypt broke out…
i am up 100000% since march
bchadwick Wrote: ------------------------------------------------------- > I got out of the market, essentially, on July > 29th, and added to my gold positions late last > week. I’ve been relieved that those proved to be > very good decisions, but it’s hard to be happy as > you are watching millions of people losing their > shirt. > > It reminds me of how the Nobel Prize winner > Amartya Sen said that in the last 150 years, there > has never been a famine in a country with a > reasonably free press. Someone comes up to him > and says “So you must be really happy about the > famines in North Korea and Cuba.” He says > (something along the lines of): “I may be correct > in my analysis, but that doesn’t mean I’m happy > about the famines.” > > We are all interconnected. We shouldn’t be too > happy about the fact that lots of people are > getting slaughtered out there. You may be a great > portfolio manager, but if no one has any money to > invest with you, you may starve along with them. So did I, about that time, but i still had about 20% invested in Junk/preferred. Now i started scaling in… but i think way too early, bought stuff on fri/mon… probably we will go down another 15% from here
Uhmm Crude is not suppose to trade like this overnight…are you serious Asia?
adehbone Wrote: ------------------------------------------------------- > Uhmm Crude is not suppose to trade like this > overnight…are you serious Asia? Fine with me. Gives me a chance to load up on some ERX calls.
I haven’t seen it, but someone told there is a price on an S&P put with strike price of 0. That is indeed whack.
Anybody else think this market feels more like the “flash crash” or 10/19/1987 than a normally functioning stock market? There seem to be structural issues at play. Typically the market does not just remain massively oversold and bust through technical levels without pauses. Some folks have been talking about some big hedge fund margin calls like Paulson/Renaissance, and the fact that Soros is liquidating to return to investors. Who’s got the market pulse?
Dwight Wrote: ------------------------------------------------------- > Anybody else think this market feels more like the > “flash crash” or 10/19/1987 than a normally > functioning stock market? There seem to be > structural issues at play. Typically the market > does not just remain massively oversold and bust > through technical levels without pauses. > > Some folks have been talking about some big hedge > fund margin calls like Paulson/Renaissance, and > the fact that Soros is liquidating to return to > investors. > > Who’s got the market pulse? Absolutely. Long overdue correction. I look for Dow to stabilize around 9500.
I think the challenge is that now that USTs have been declared “officially risky,” people want to derisk, but they don’t know by how much, and they don’t really know how to de-risk without a risk free asset. There are just too many variables in play that the market can’t come up with a price, and so people are selling everything. The key variables are: 1) Where do you put your low risk or risk free assets (answer: eventually people will figure out that AA+ USTs are about the only option, plus a little gold, CHF, SGD, HKD, and maybe AUD and CAD, of which there isn’t really enough supply). So when this settles, the long end of the yield curve may have steepened 20 bps. 2) How much return to demand for taking risk. As people get scared, they demand more compensation for bearing risk, and as this rises, stock prices will go down. So how much will the equity risk premium rise. 3) How much will the destruction of wealth that’s going on depress future earnings. Even if the risk premium hadn’t gone up, the reduction in asset wealth we’ve seen over the past few days means that people will be feeling poorer and having less to spend, so earnings will go down. Part of the challenge is that 2 and 3 are part of a nonlinear feedback loop, and therefore chaotic and therefore highly unpredictable. In circumstances like these, technical support levels are likely to be the best guesses. They will be the places where people try to jump in and stem the fall. So we need to figure out 1) what the likely increase in the ERP is right now… maybe 1.3x normal?? 2) what the likely effect of asset wealth destruction is on forward earnings. maybe -5%. 3) what is the S&P level that is consistent with that. 4) where is the nearest technical level above that point.
bchadwick Wrote: ------------------------------------------------------- > So we need to figure out > > 1) what the likely increase in the ERP is right > now… maybe 1.3x normal?? > 2) what the likely effect of asset wealth > destruction is on forward earnings. maybe -5%. > 3) what is the S&P level that is consistent with > that. > 4) where is the nearest technical level above that > point. That analysis makes sense. What’s your answer? 
I can’t give everything away for free… (and I’m still working through the numbers…) Part of the challenge is that really small changes in the ERP (like 4.9% vs 5.0%) make really big differences. But I will say that Jeremy Grantham had a level of around 950 for fair value of the S&P in his Q1 letter (or perhaps it was Q2), and that was based on estimates of free cash flow, IIRC, so if we break 1100, it could well be a ride down to there, barring the Fed jumping in and saying that they are buying absolutely everything on the planet. If 950 breaks, one might go down as far as 700 or even 666. I don’t think it will really be as bad as 700, and 1000 is a reasonable psychological point for people to try to man a defense. Estimates of S&P earnings for next year by David Kostin at Goldman (I have no reason to think I can do better than him on such short notice) are around $100 per share (whatever a share of S&P actually is). So in panics, really low PEs of 6-8 are not unheard of, and that would mean that 600-800 is not out of the question. The Grantham number of 950 really does start to seem like a plausible possibility. I realize that I’m not being very coherent here and picking numbers from all over the place, but I think the basic idea is to try to run about maybe 3 different fundamental models (DDM, Franchise, PE * Earnings Estimate) and then look for technical support and resistance levels that run near those fundamental values.
Read Hussman last 3 months weekly writing. Read Grantham’s Q1 and Q2 letter. Read the other GMO guy on holding cash a value investor. All 3 use the same sort of post-war/pre-war and 10 year return curves. Hussman has been tracking the return on various classes over the last 4 months very well. He actually agrees with Grantham’s 950 call. Hussman though actually explains the math behind it and his model in a couple of his pieces. Here is one of his peices: http://www.hussmanfunds.com/wmc/wmc110509.htm
Yeah, I like Hussman’s stuff a lot. And I remember him agreeing with the 950 call. When two guys I respect come to similar conclusions through different methodologies, I pay attention.
I’ve been getting margin call five times per day lately.