A lot of you small plebs are young and bearish. You hate the world, mainly because of your lack of personal success. As you know, success comes in many different forms. Some of you are upset because you can’t land a hot chick/wife, make some kids, and/or get rich. Without poking fun at you, as I burn $100 dollar bills by the fireside (yes, Le Fly sits fireside in the summer, even in the fucking Caribbean), I am going to teach you what you need to be told.
First of all, there is no long term strategy with the 3x asshole ETF’s. There is too much decay and they will blow your faces off in a NY minute. Trade the 3x ETF’s, holding them no longer than a week. I prefer to trade the options. Buy some TZA calls, at the money or slightly out of the money, current month, and throw some fucking dice. Yesterday, I bought the TZA Sept 47 calls and sold them today for an 80% rip. Did I sell because I thought the market is going higher tomorrow?
Fuck no.
I sold because I never look a gift horse in the face without kissing it on its big stupid nose.
If you believe we are entering a long protracted sell off, short the insurance firms. Fuckers like HIG, MET, AFL, LFC, and others, have massive exposure to the equities markets. You can also target custodians like TROW or BK. The obvious choices are industrial related names, like CLF, JOYG, TEX and CAT. I’d be careful with retail because they are crafty fuckers who find ways to steal your money.
Should credit markets seize up, then we have a whole new ballgame. In The PPT, I created a ratio using net cash per share/price. If a stock is trading with a 0.5 ratio, that means half of its market cap is cash, a sign of financial stability. On the other hand, there are scores of companies that have horrendous balance sheets that will literally go bankrupt if the equity and credit markets seize up. Back in ’08, both FTK and WNR were on the verge of bankruptcy due to this exact scenario.
After you find a company with negative cash flow and loads of debt, find out how it is structured. If the debt is coming due soon, you know they have issues that need to be addressed. You can trade ahead of dilutive offerings and bank easy coin.
As far as multiple contraction is concerned, it’s a moving target. If we delve into economic collapse, none of the current numbers are worth anything. To effectively price the market, you need to consider the worst case scenario numbers, then reduce them again by 25%. So, if you believe we are cheap here at 13X, consider the possibility that the “E” on “PE” is false. Discount it.
Finally, the whole purpose of being a bear is to eventually buy cheap stock. There is no such thing as long term bear, for mankind is always advancing. To bet against mankind is sheer stupidity. Hell, I guarantee you people living in Germany or Japan, circa 1945, thought things would never get better, considering the carnage around them. Everything you see here is fixable because everything is bendable. The snap back rallies will be fierce and they will make a spectacle out of you for staying short. The rallies will materialize out of nowhere, based on rumors and intra-day leaks. Don’t be a jackass and trade with your heart. Always take the high probability trade.
As investors, that’s all we’re supposed to do.
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My asshole is still bleeding from the damage today.
Take a break from what you’ve been doing for money and try trading instead.
My dick is covered in the blood of your asshole from today. Go go gadget TZA rapemachine!
Not very gentleman like
“I sold because I never look a gift horse in the face without kissing it on its big stupid nose. ”
Hilarious, Fly. Great post.
Thankyou for this excellent and thought-provoking education by the fireside!
awaiting moderation?
This post is like a truffle, in a heath bar, ensconced in a chocolate eclair, for an internet leech like me. I am saving this post in my trading files – for ever. Thank you, senor Fly.
No problem. I have lots of experience to draw from. Even if you disagree with my current plan, I am more than willing to offer advice on the scenarios you see playing out.
Serious Q – you sure we’re in a bear market here? Not saying you’ve said we are … just curious if that premise is underlying your recommendations here or, alternatively, you just see it as probable.
If you look at my predictions from 2011, I felt we’d be down 15% in 2011 and the best trade of the year would be VIX.
We will know we are in a bear market, after the fact. I am simply laying the ground work for the possibility.
Thanks – appreciate it.
Thanks for the PPT algo Fly, it has given me an edge to navigate the pops and drops.
Today the Matador’s are eating rocky mountain oysters but soon they will be running from the bulls.
Disclaimer: Long (Life)
Well done.
Trends always change. Being a Permabear or permabull is the fastest way to the poor house. “Buy adn hold” is offically over forever.
I look forward to buying stocks at much lower valuations.
So, now we are investors as opposed to traders. I see. Be flexible, go with the flow, have the contrarian clinkers to snatch victory from defeat, don’t give up to snatch, seize the moment when half exposed. Life lessons from guess who.
you’re a deviant pervert.
Nice try steering us toward looking seriously at the fundamentals of companies while you are scalping your ass off while watching bikini babes in Bimini.
We could easily be in a short Bear trend– one that will last only as long as it takes the Tea Partiers to turn from angry to scared and to get down on their knees and kiss Bernanke’s feet and beg for QE 3.
awesome post……. and a good day to you sir.
Great article, definitely keeping this for the long haul. Thanks Fly!
Good stuff. I have to believe Ben has something big given the circumstances. What are the chances he does something that changes the whole landscape. He is creative ya know.
If that don’t happen. Time to change my name for the time being.
I blame this by the way on Fox News and rest of the media. They have turned many Americans into negative nancys and self fulfilled their own prophesies via repeated reminders of how bad it is.
Yeah, but how are you supposed to trade a bear market with an IRA that doesn’t allow options trading? No shorting and no put buying. Only choice is inverse ETFs.
You can own UUP, TLT and trade T+3 on those inverses.
You nailed it – all I want is a hot chick!!!
Sometimes Plutonium Petey throws gold doubloons between the slices of hot pizza.
Nice post.
Really good post Fly. Lots of value here for free.
I am well aware those etfs are good for day-to day trading,and not long term holds. I may be young,dumb,and full of cum, but I am not foolish enough to just put an etf on and see whats crackalackin a month later. I am keeping my composure, managaging my risk as best I can. Told myslef I was sticking to cash after I got to even last week, obviously my addiction; and sitting in front of a screen all day led to my leap into the abyss(hopefully just a glimpse) tion
*And I drag around more ass than continental airlines,* you old egomaniac geezers. I’m sure your life is better and more wonderful than all of us “plebs.” I know you are angry with the mkt as are we all, but We Can Choose To Be Less Hostile.
and great write up fyi
and shorting insurance firms may be a brillant idea, as the tropics are very active and I fear a major metropolition area will get demolished adding to the ecomnoic calamity. Seems someone is do for a Cain or 2 and it may not be at the best timing, as mkt condtions are very precarious as it is.
nce post, Fly !!!
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Tip of the hat !!!
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Nevertheless … shouldn’t you be HEDGED ?!?!?
I mean REALLY !!!
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uhhh … “nice” …
sorry !
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alf:
I put up with your inane avatar. I will NOT withstand your barrage of financial advice for another second. You will catch a full ban upon another piece of sagely advice.
Won’t be the first time, being banned for Alf.
fwiw … never been banned !!!
.
Are you sure? Not even 2 years ago, or so? Maybe you just quit posting for awhile?
…never been banned…
And dare I say … I have NEVER … posted ANYTHING … worthy of a “ban” !!!
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PAH-LEEZE !!!
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you peeps crack me up !!!
Whatever !!!
.
Are you Rip Taylor, King of Confetti?
If credit dries up, MGM goes to zero.
and so does LVS
That bitch is mine.
shorted that year
havent looked at TED or LIBOR in abit, but dont think its blowing out yet
keep watching that EUR, when it goes it will be unreal
This ZH post supports the “tank the market to support QE” thesis:
http://www.zerohedge.com/contributed/fed-bombed-market-i-ask-why
This WSJ piece might answer the previous question of why the market tanked, and based on political timing I can see the markets staying low key until Jackson Hole on the 26th. The only reason one would risk trillions in market value is if “we” had a good handle on setting price (round tripping / algo quotes moving direction). If markets can be moved down quickly they can also be moved up quickly.
For example, keep oil prices at $100/barrel for most of the year and then when you want more QE just drop it down briefly so it appears inflation is not an issue. If the market drop is only temporary and can be made up by month end statements and the three day labor day weekend we are OK. This is probably even more important for September at quarter end, as companies will need to add cash to underfunded pensions (instead of using cash to add capital and jobs).
Thanks, Fly. Your insights have prompted me to become a Piker.
What will happen as I keep staring into the abyss? It seems foreboding from the distance, yet more inviting the longer I look…
Man I wish I had that fucking 200k to buy some TZA.
The fucking bag ripped open on the descent, and the bills spilled all over the mountain.
I’ll just show up at my janitor’s position tomorrow and mop the floor, thinking why the
fuck I didn’t ask for at least a million.
“Finally, the whole purpose of being a bear is to eventually buy cheap stock. There is no such thing as long term bear, for mankind is always advancing. To bet against mankind is sheer stupidity.”
Dayum Flyseph, those are golden words, there. Those who are bears to be bears (Tim Knight) are perpetual losers.
Indeud, your entire final paragraph is sage advice.
Here is the result of buying today’s environment. Not good for the bears who don’t know how to buy cheap stock:
Volatility Is Screaming Buy!!!
Don’t forget your constant faithful guide in your trip to Bearsville. You cannot have golden honey without Goose-steppin’ Gold!
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US national security is not well served by global economic collapse. There are scary smart people on the case, evolution works.
As far as I am concerned, one of your finest posts, Senor Fly. Thanks!
So the market crashes, and the world is now coming to an end…
Back in the 1860’s America was going through a Civil War, the years before and after the civil war was certainly no picnic. The majority was not in that great of shape during the industrial age after that. Then the 19teens’s-30 we had WW1 then the great depression, I wouldn’t consider those times the “good old days”.
America wasn’t considered a super power in the 1930’s-early 1940’s while the world was dealing with Hitler taking over the world, I don’t think those were the good old days either.
1950’s-1960’s we were building bomb shelters in our back yards and teaching children how to hide under their school desk to protect them from a nuclear attack. The 1970’s were…. lets just skip that decade.
The 1980’s America was worried about a “Red Dawn” attack from Russia.
1990’s we were worried about Y2K, and again building bomb shelters and hoarding canned goods for survival.
Yet mankind for the most part advances positively through all of this.
Humanity has it’s faults, but I agree that betting against it long term is a terribly stupid thing to do.
If you are a new trader ready to short the hell out of the market because the world is collapsing, enjoy your short lived career in trading. Even if we are entering (or have been in for the past few months) a sustained bear market, most bears will blow up their account rather quickly anyway. Bear markets destroy bears as much as bulls, that’s the nature of the markets.
While I agree with your conclusion, I must say you have an extremely simplistic view of recent history.
50’s & 60’s – A few people built bomb shelters the overwhelming majority (99.999%) did not and did not spend their time worrying about it. Nope, they lived their lives, built homes, raised families – in other words they spent money and created demand that drove growth.
80’s – A few might have worried about a “Red Dawn” but once again not the majority. Most depending on their age were trying to get laid, trying to pay their mortgage, starting to build a retirement fund, etc.
90’s – You summarized the 90’s as being about the Y2K nonsense, really?
Now, as always growth will be spurred by demand for more, demand for different, demand for better and so on. Human wants and desires drive growth.
Still not shook out.
Fuck those shitass Europeans.
Fly. Fuck. I told u about gold. You are sounding gay dude. Ease up on the pins coladas amero
I am back from my mini vacation…lol, Clam can’t give us cocaine with that CPI figure. I knew I had his spine ala Mortal Kombat in my hand.
500 more S&P points and you’re back to even.
Congrats.
No, lol, only about 300 points…which should come soon.
Not investing advice, just my perspective that might be useful for others.
I found peace of mind by rejecting a one dimensional view of the market looking for balance in the duality of being both a bull and a bear towards different asset classes and time lines – A (B)ull ear.
“Don’t just do something, stand there” is a good saying when you need to hold over a longer time period.
Liquidity floats or sinks all boats causing inflation and deflation in the price of assets including booms and busts. 90% of all returns on average are based on asset allocation, but recently with high equity asset correlations assets were going up and down at a similar rate – that might suggest government support buying across the entire market. Because of this, I have simplified on short term moves and typically stick with SPY, TLT, DGP, TZA, TNA, AGQ, and related options using the PPT for timing only when strong overbought or oversold along with political pressures. TLT hit 110 last year at this time and dropped quickly once the fear factor abated. It’s looking like a good put buy soon after the 1st when the dividend is paid, things stabilize, financial stimulus is announced, and people realize there is little yield with a rating downgrade.
Easing or no easing and the size is the biggest question that will impact returns this year. If they juiced the market when the economy was stable and don’t when the economy has now essentially gone into a recession, it will look like a systemic pump and dump suggesting poor planning and lack of bullets. When you have the reserve currency, game theory would suggest printing more. If that happens and gold drops a bit, money will come out of bonds, cash, and metals and back into equities.
The futures are not guaranteed, and the past history is no guarantee of future performance, there is only spot (now). That is why it’s called the present.
Seriously. this shit looks like crash Friday. Europe looks like it is about to implode.
Credit Suisse came out with a prediction about Greece. Their GDP could fall 7% this year. Given that their tax receipts mean they their deficit of around 7% is expected to head back to 10% of GDP. They raised the question of whether they can take anymore pain. I don’t think they can. This is what happens in a fixed currency regime where the central bank refuses to act even with moderate intelligence and don’t offer any monetary stimulus.
Look out below i reckon.
j – Agreed, looks as ugly as I’ve seen it in quite some time.
” I burn $100 dollar bills by the fireside”
Counterfeit ones? Stupid idiot.
confederate, he got from his great grandpa pa.
excellent post !!
gold smokin today
greese is a slick country, the first eggs were fried in greese
Are you taking 2 weeks off Fly or 6 months like Alpha?
That post is both eloquent and hugely generous. Thank you.
I agree with the others that this post by Fly is most excellent.
Commentary:
Is it correct to say that so far the ECB is not inclined to provide enough stimulus or action to address events in Europe? This sounds like what some in the USA would like the Fed to do. That would be nothing, let things play themselves out and “take our medicine”. How is this working out for Europe? They are likely to have major social unrest and further economic havoc, followed by a new map.
I have failed to secure a bunker with 40 acres of farmland and a water source in a remote area, and do not have 1,000 ounces of gold coins, etc. So in my selfish view, I would like the can to be kicked down the road with gusto, like a soccer star.
Sure, people “should” pay for their mistakes. But instead paying by death, how about survival and eventual recovery of some sort?
Another great post. Thanks for taking the time.
Markets are screaming for more QE…..Stocks plunge and the Dollar is down? Stocks are begging for it, and the Dollar knows its coming.
I am selling the last of my TZA and FAZ, and buying TNA and FAS this morning.
Market is hitting support, and is due for a rally.
I also am buying GLD puts.
Aren’t you out of money already?
(Starting to think this goof is DD under a new moniker)
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In SMH @ 27.66
And out 27.90.
Got to go mow the lawn now.
Fuuuck, the crack spread is trading over 37 bucks WTF? So the refiners are taking all the profit and the consumer is left high and dry.
LOL @ HPQ down 20+% today. That is another one of John Paulson’s “favorites”. His main fund is getting absolutely killed this year. What a fail he is.
He made the error of thinking he was running a mutual fund and not a hedge fund.
He’s really a one hit wonder I think.
That one hit has made him about 9 billion in the last three years.
I’ll take it.
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eggzellent post Le Fly, were you abducted by aliens had ur brain removed and replaced with a fuking time machine?
Here’s what I’m thinking.
Cronkite had a story that Rosenberg thinks the Greenspan/Bernanke put is dead. I think that’s bullshit. Here’s what i wrote there:
“Bullshit. The put isn’t dead at all. Anyone given it some thought that the Fed may not actually be as worried about economic death as it was back in 09 and therefore thinks this could be at this stage a traditional sort of recession?” and not a balance sheet financial one that is much more frightening?
The Fed will only act if Europe gets into further trouble.”
I am seeing a speck of light at the other end of the tunnel. The speck I’m seeing is is that I finally saw some good news come out of Europe today in the form of the EU council drawing up regulations that will allow the EU itself to float bonds on behalf of the member countries. This to me sounds like we’re on our way to a fiscal union in Europe and if the market draws any hope from this things will quieten down there.
The other issue I think is important is that credit has not seized in the US at the moment, It could if things get serious in Europe but it hasn’t at this stage. Sure the economy could slow and move into a slight recession, but even if it does I don’t think it is anywhere near as worrying as it was in 08/09 (assuming Europe avoid catastrophe)
Now Europe could derail everything and the contagion spreads to the US. However I think some of that is in the process of being discounted and there is risk that no one is actually thinking about the upside of this market even if there is a recession and it becomes a yawn relative to 08/09. Lets not forget that slowdowns and mild recessions occurred all the time and they don’t have to be as steep and as dangerous as 08/09. I recall the 1994/95 slow down funnily enough Italy was also involved as they had bond market problem too then). I recall that the market was panicking that it would be steeper than the 90/91 recession. But it wasn’t.
If Europe gets this bond program up and going and the economic reforms begin in earnest in the south this could really be the start of something seriously interesting for the upside in time…. though not now. and upside in Southern Europe too, particularly Italy.
Just think out aloud.
Thanks for another piece of original thinking, among the many you’ve posted here over time.
thanks, even in ression some companies excell, take hd for exp. i think there growing by taking mkt share from shld,lowe, and others
Why should we give a shit if “credit has seized”? We don’t need no fuckin’ credit
at this time. USA Corporations are sitting on PILES of cash.
“I finally saw some good news come out of Europe today in the form of the EU council drawing up regulations that will allow the EU itself to float bonds on behalf of the member countries. This to me sounds like we’re on our way to a fiscal union in Europe and if the market draws any hope from this things will quieten down there.”
Might be a good short term thing financially, but a lot of Europeans are thinking more like Nigel Farage; desiring sovereignty and national independence.
True and don’t get me wrong I love Nigel Farage. However I don’t think continental Europe wants to go that way. The Euro elites want to create a super state and I think that’s what will happen.
DECK, seems to put non believers to shame,humm
crackspread ripping tits!!!!!! 37.05…I know WNR hedged some at about 28…but shit…they killing it right now…low multiple….I get the market and all that shit but what the fuck??? Companies MAKING money is where my money is going!!! All in on WNR!!!!!
its the debt u have to worry about w/ wnr,? no? i would be catious. we could be in a head fake here
Outstanding post above J, whether I agree w. it or not… great analysis.
I wanted to put this post outside the “Reply” section so people would see it and be able to vote…
Thumbs UP if you think J needs a tabbed blog here.
Thumbs DOWN if you think no.
Thanks.
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that’s fine, Jake.
I’m down with that. j has always been one of my favorite posters.
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