A diary of the thought process behind my investment decisions
Smart investors that need to be long (probably under pressure from clients) better risk some option premium versus buying equities. Still, have you seen the SPX Advance-Decline line? Shows the same stretched picture. I bought some longer-term puts.see here: http://www.tradersnarrative.com/sp-500-cumulative-advance-decline-at-new-high-3924.html
Tsachy, they are very meaningful, but we're in a bubble like the 1999-2000 Nasdaq bubble. I was an executive with a venture-funded software company in that period and it was obvious that the markets were simply giving free money to technology entrepreneurs and executives -- millions for little more than a nameplate. And worthless people with worthless companies, but good selling skills, were hoovering up the money. It had to crash, but yet the boom continued 2 years past the point of reason and 6 months past the point where cheats and scam artists were gathering most of the money.Based on that experience, and seeing that our government is in league with this bubble's scam artists and desperate to create an illusion of advance based on stupid Keynesian "animal spirits" theories of the business cycle, I think it's hard to name the day when this ends.But I think it has to be soon, because everything is conspiring against the bulls and the government. The economy will turn down decisively shortly -- not just in the US but globally. This will happen at the same time that housing prices turn down sharply and credit deterioration resumes. When that happens we'll start to see who's swimming naked, because cashflow problems will become increasingly severe.
I think C options has skewed part of the readings but it is still absurdly high. Seems like government manipulation, and I don't say those things lightly.
Second time: Very surprised to such a low CBOE reading. do you think because of inverse ETF's total amount bet on call Options is much less than other instruments (e.g. etfs and futures, which is why market is ignored. Just curious
Near zero percent interest rates equal free money with few options outside the stock market. I believe that these readings are meaningful, but will be stretched.I continue to hold myself back, but will consider pulling the trigger at the end of trading on monday.Praguer
i have been counseling family and friends for last ten years. i called housing bubble (never bought, just rented...still renting) and took massive flak from wife and family as bubble kept getting bigger. for last 3 years i have counseled that market would crash..it did...but this bounce is incredible. that said, my firends and family are starting to get belligerent that "you have been wrong for past twelve months" the market is going to power higher. One family memebr just put 40% of his savings in APPLE at $210/share. I think/guess that we are finally starting to see the individual guys panic back into equities as they have missed a helluva a party and they don't want to miss no more. I have been short since SP500 hit 1165. I am in pain. My friend who does this for a living keeps telling me to be patient that I should at least get my short back in the money by year end.
This market is starting to get ridiculous. We've had 1 down day in the past 2 weeks, and now the market is starting to go parabolic. Its possible we could see a blow off top here pretty soon. It may not be the ultimate top this year, but I would think we would get a sizable correction. By the way, I have been making my living for the past 2 months by simply buying the dips, but lately the dips are beginning to be nonexistant.
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