I have been blogging for almost a year. For those who have been following me know that I Have been stalking the top of the US equity market and in that time the SPX is up about 9.6%. About a minute before the close on Thursday I increased my short exposure to 175% from 100%. This is the most exposure I have had since beginning this journey. I do not not advocate shorting this market if you are not a professional. Shorting is not for the faint of heart. I think it is time to spread the word and save our relatives from pain. I advocate increasing cash positions. I will post more this weekend about why I have such high confidence in my stance. Happy Easter to my Christian Brethren!
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Damn!!! I only bought 2 SPX put contracts yesterday.
I only bought puts on $ESPR out of a hate for statins(and a bet on it rejecting a declining trend line), at open. Kind of wish I had done more, but we’ll see.
Put options you won’t be able to exercise…? How are you short more than 150%?
Monday will be one more test of the confidence game. How rigged is it? With the “deal” floating. Glitches could go full game of thrones. Happy Easter.
Blue what sort of index options puts would you consider?
“Foresight is bought at the price of anxiety, and when overused it destroys all its own advantages.” – Allen W
Alan watts is the man thanks for sharing last week
I am with ya, Bluestar. I was a little early as I went to cash 2 weeks ago but ready to jump in on the short side. Looking forward to hearing more from you soon. Happy Easter.
I have hear that lemmings don’t
actually follow each other over
a cliff .This is urban legend.Apparently
that certain T.V show we all saw
those lemming jump off a cliff,was
in fact lemmings being thrown from
said cliff. This leads me to today.
So much of today is fake and nothing
more than promises and imagery.
Follow free and unneeded cash flow.
It is only thing I believe in today.
100% to 175%; that’s conviction.
What’s your take 3 days later?
What would make go 175% back to 100%?
He is risen!
another kick save and a beauty
the day of reckoning has been put off, yet again
Is Blue alive today????
Blue has die, and will rise again in three days.
In the meantime, he has gone bankrupt.
I’m trying to understand.Jobs(my fav)
got weaker,retail missed ( I don’t
know where online shopping fits in) and
the market is higher.I know this means
Yellen might delay but really.
I am short cash index.
I have conviction and more will be revealed.
I am alive. Moore will be revealed.
Hardly bankrupt. I have balls of steel
I am not short because of payroll number. I had no idea when I shorted Thursday what the number would be. I will be proven right or wrong very soon. tight stops.
Like the tight stops. Something I
need to work on
my stops have not been hit yet.
I was holding a bag full o’ biotech dicks so I feel ya. Still about ~3% from highs in early / mid March.
If I had to take a wild guess I would suspect stops are in the 2090-2111. With 2111 being some serious gun slinging.
Good luck on this trade Blue, the fade in the afternoon didn’t look good even after some Fed jaw boning. Bonds told the tale after a weak start,
OUCH. 175% short as of last week??!!!!
Blue what do you make of the market fades last cpl of days
So this is the thing.Around 2006
investers were shorting like crazy and
blowing their brains out.In 2007 Paulson
got it right.But if you have tight stops
and minimize your losses you might
starve to death but you won’t blow up
and you might just the vortex.
The problem with the logic gorby is that the compounding losses of those tight stops, along with the obvious opportunity loss from missing out on an extended rally can crush you’re P&L in a market like this. This doesnt even take into account the transaction cost associated with this, or the fact that we arent discussing the other side of this risk management equation (i.e Blue says he has tight stop losses, but when does he cover in the event that he’s right?). Even though you will eventually catch some semblance of a sell-off if you’re consistently net short and keep tight stop losses, the net gain from that trade is really not worth it from a risk/reward perspective, UNLESS you perfectly time the massive leg down that the market doesn’t recover from (i.e a 08-09 situation). But even in those types of market environments (extremely rare), the volatiltiy gets so extreme that the bounce backs (rally backs whatever you want to call it) will stop you out on you’re “tight stop losses”. By being 175% short, you’re making a massive directional bet (I’d never be 175% long even though I’m generally bullish for what its worth). Because whats the point of putting on that directional bet, with leverage, if you’re just going to keep getting stopped out. IF you have so much conviction that you can time the market that you put on 175% bets, then why have tight stops?
My average is higher than current levels.
this is what i call lift to distribute action. Lift in the morning for retail and day trading muppets. Then the selling late in the day begins. Eventually we get a woosh down.
Don’t worry about me. I am a big boy.
I agree with you in practice but these are not normal times. We are close.
Blue star is as full of s**t as real fly, who was 150% long into the growth crash last march and claims he did not see a 50% draw down even though his portfolio was down 40% before margin….
Cudi the kid,
Are you the blog police? Go read my other posts starting with the one from the last week of February. When I initiated my first short. Then go bother Chess at his site.
I’ve only made one real good call.2011
I felt it was all going to crap.Went all cash.Mutual funds ,the whole deal.I
did not short-no skills for that.Phoned
my number one bud and let him know
what I was doing and begged him to follow.He said,no,no,no.Long story short
I get back in mid 2012 and I’m still living
off it.and my bud is barely even.
You just gotta one big one right and if
you do it can last a long time.
I commend you for the good call, but if you just held you’re portfolio from 2011-mid 2012 you would have made more money than you did, assuming that you just went to cash like you said, considering the market rebounded to it’s April 11′ highs, only four months after the October 11′ bottom.
I dunno, I guess my point is that no one can time the market consistently enough to make money from it. At least trading the way that you have outlined….i.e. selling everything at the top, and waiting until the market recovers. If that was the right strategy then why aren’t their more incredibly wealthy traders? The iconic traders that built fortunes for themselves earned that fortune because of the fee’s their fund was able to generate, not because they went to all cash when they thought the market was toppy. Sure there are stories like Paulsons who made billions from a single trade, but he made the vast majority of his wealth after that trade because of the $10b+ fee’s his fund raked in after the flood of investors threw all of their capital at him.
Unless you’re running a fund earning a fee structure based off accumulating assets, then there is no reason to try to hit it out of the park with this massive portfolio altering directional bets. Just hedge you’re longs if you think the market is topping out. Guaranteed to make more money in the long run by doing something like that.
Haha. Where’s blue???
Love your balls (no homo). Unlike, Forgetalpha, I do believe that at major secular turning points there is a fortune to be made and that the truly talented cad and do time these events (not the exact top or bottom obviously). In regard to your shorts, do you think Emerging markets would participate in a selloff? in other words, would puts on EEM work if we get a selloff in domestic equities? The reason I ask is that Ive been following Raoul Pal (and your) work on the strengthening $ affecting the emerging markets. could short EEM be a dual thesis play so to speak? Thanks for any insight. Love your work BTW.
Really enjoying the back and forth
with real cool dudes on this site.But I
was just thing with so many bulls like
me all sitting with coin in their pocket
waiting for the dip or funnel if you wish,
how is it possible for crash to
Its time for Blues once weekly commentary.
So my son in laws calls last night
and informs me that a sliding 10″
Ryobi compound saw can be had for $150 at home depot..I agree and he delivers and sets it up for me.Which leads me to-how do they make and sell it for that and is that a good thing.
I also got caught short into this slow grind higher. My stops are in place though.
Billie, those truly talented traders, the actual talented ones who make consistent money and not just one time home runs, don’t just put one trade on at a time. They might be short the S&P because they think the index is topping out, but they’ll hedge that with other bets in other asset classes that are (should be) less correlated. Also, does it really make sense to run you’re PA or retirement account like a macro trader? We’re not a hedge fund, no one is going to give you money because you generate uncorrelated returns to market beta.
Doesnt it make more sense to have some long exposure, just in case you’re market call might be wrong for the 10th time in a row? By the way, I’m not bragging or saying that I can call the market better than anyone else, I can’t. But I do raise cash and put on hedges when I think we’re extended, and short specific names for fundamental reasons.
I guess the question is do you want to manage risk or gamble?
You assume I never go long. You would be incorrect. I am biased short with tactical longs every now and then. I am tiring of your negativity and chastising. You seem to have a chip on your shoulder. I am contemplating banning you. Go read another blog.
why do you gloat? karma is real.