Do You Believe In Magic

I read Fed officials commentary and am dumbstruck that they want to print more money because unemployment is too high. Since when does printing money cure unemployment? We have been printing money for the past 15 years and unemployment is at Depression levels. What do you call somebody who does the same thing over and over and expects a different outcome?

I don't believe this will end well but the key is not to be too early in fighting it. I am short the SPY 117 Calls expiring next Friday. If they are exercised that would put me in a slightly net short position and I am fine with that. I am starting to see giddiness.

7 comments:

Tsachy Mishal said...

I have not heard from the bearish readers in quite some time? What are your thoughts?

nicasurfer said...

still short in the house of pain although i can't see much more upside here

Anonymous said...

Feels a lot like 2009 (post March). I did not think there were enough shorts out there to move us to new highs but now I am not so sure.

I know you probably think these are hedge funds re-risking but in my experience the vast majority of the money at hedge funds is not in purely directional bets (tons of capital tied up in long/short strategies).

Some of it is definitely coming from under invested real money (mutual/pension/endowment funds). But most of the thrust (if not volume) is coming from short covering if you ask me. I just don't think the real money is *that* under invested (cash levels at mutual funds for example are not high).

Also, the QE will save us meme is getting stronger every day. People are really starting to believe the market can only go up because the Fed will not let it go down. Not necessarily PPT conspiracies but let's face it, people believe the Fed is directly targeting the equity markets with their varied jawboning and activities.

JD

Anonymous said...

I have a long/short strategy, and even though I am net long I am feeling some pain--crappy companies are outperforming in a big way. But I am adding significantly to my short exposure. I don't know if the market is about to roll over, but the economy is certainly stalling, and I hear that wealthy Chinese are starting to really panic and are moving their assets to the U.S. One of the smarter managers I know is long the dollar against the yuan.

Tsachy Mishal said...

Its scary to short, which probably means you are doing the right thing. I have luckily been a little more cautious on the short side recently. I am going to give it a little more room. I have fought too many year end rallies, too early and have the scars to prove it.

Anonymous said...

I am the anonymous person who posted at 3:46. I just had a conversation with one of the smartest and luckiest managers I know-someone with uncanny timing who was up 300% 2007-09, without using leverage. She is net short and feels that China and the U.S. are about to decelerate sharply, in a way the markets will not be able to ignore. Today was not a pleasant day for her, but it reminded her a lot of some other unpleasant days in July and August 2008.

Anonymous said...

Me again. I neglected to mention that the foreclosure fraud crisis is starting to explode, and my LPS short worked beautifully today. The banks rallied, but the mortgage insurers did not.