I am not going to lecture during this post. Instead, I will take a different approach and ask you to think for yourself. The whole concept behind iBankCoin and The PPT is to give you the tools to fish. Once you know how to fish and want to step up your game, go over to 12631 and be fed.
What sectors do you feel are most correlated to the S&P and why?
What currencies weaken during melt ups and what currencies go down during panic?
Why do people invest in US treasuries?
Why is oil expensive and natural gas so cheap?
Wouldn’t cheaper oil benefit the US economy? Would it be better if oil was cheap or would that portend to a slowing economy aka harbinger of doom?
How does gold trade versus the S&P and does silver correlate to gold?
Is gold a safe haven or a hedge against inflation or both?
What is going on with the Yen and how does that affect Japanese trade?
Is coal a highly levered way to play the energy sector? Is solar?
Do food and beverage stocks outperform the market during times of duress?
Finally, from a social standpoint, when is the best time to buy stocks, during euphoria or panic?
Everything that I do is based upon correlations, whether is be seasonality or levered plays in OVERSOLD and OVERBOUGHT cycles. The very essence of The PPT algorithm is to identify these trends and run with it.
Note: I already have the answers. Do you?
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Excellent.
I bet talking up your fully margined shares of Radio America Corp in early 1929 could get you many friends and lots of chicks too.
Radio Corporation of America.
A – game.
I just eavesdrop near the shadows of my favorite urinal screen.
But the PPT helps when the shadows are MIA.
“Is gold a safe haven or a hedge against inflation or both?”
This has confused me to no end this year. In the spring things were easy. It was a hedge against inflation, just not as good as silver. Then it made a perfect transformation to safe haven and just continued higher. I think the double top during the summer’s panic selling was pretty straight forward, but for a while there I don’t think people really knew what gold was going to represent.
I’d say it’s starting to become a hedge against inflation again. I think the summer showed that king dollar will reign supreme if we enter vapor lock mode. It just amazes me how an asset can be correlated in lock step with something else, then all of a sudden the light switch is flipped and it all changes. It’s like the people on the teevee going “risk on, risk off,” depending on the day. Correlation on, correlation off.
CHF
I know all the answers…but it took me a long time to put all the pieces together. Heck, I had to teach myself so much, I wish someone would have just told me the relationships.
Still learning how to fish. I cannot answer most of these questions.
Great post. Love the Socratic Method.
As a paying member of the PPT I DEMAND answers to these questions. Or just ask very nicely…whichever works better
Mr. Partridge knew the answers to all of these questions, and, has pointed out almost every one of these correlations to me in past years. I’ve never met anyone who can trade precious metals, oil and natty, better than he can. Then sometimes, he will say, “Just buy CAD between 94 and 96 if it gets there.” Or, stick to covered call for now, divvy is awesome. He’s the best.
Thank you, the scary thing is Dr. Fly is so much like me in market analysis it scares me…not sure why lol… ok nothing can really scare me,…
I know what I don’t know… it includes some correlations… and it makes me strong 🙂
MARKETS WILL ALWAYS SURPRISE YOU, THAT IS WHY I LOVE THEM
Who is Mr. Partridge? Is he inside PPT?
no, he is on stocktwits. i follow his comments as well.
before you follow you should read The Book…
if you did, bravo!
Pure awesome.
Fly, you are awesome.
FACT: No matter what, and especially when shit sucks people get FUCKED UP -> $BUD
FACT: Panic produces the best deals.
Gold rides a thin line between both, and it depends on who’s printing. Also depends on what time of year, right now people are lazy. Historically during the holidays precious metals spike. Who the fuck knows with this tape.
Fuck Coal(=AM Radio) and Fuck Solar(=electric exploding cars)
I like lower oil cost as a benefit to refiners, but with the shit storm brewing in Iran, I will most likely be going long oil.
I like Natty gas but unfortunately the dumbass masses don’t like change and neither do the oil companies or their friends in congress.
People invest in US treasuries because they don’t want to do the hard work of analysis. If they are buying large amounts, this is because they are most likely rich ass fuckers who just want to sip aged cognac and not have to worry about pulling their hair out every time the market dips. These are the fine gentleman I look up to.
Great post and may the holidays find you in good cheer Mr. Fly.
important correlation for conservative investors: average US teen weight increase YOY to MCD EBIDA 🙂 this one is constant and more stable than others
You left out taxes.
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and Death!
“I already have the answers. Do you?”
Haha.
You wish Fly.
Your algo is good. The problem is the correlations aren’t consistent because these robots are batshit crazy.
Gold moved higher identically with stocks until this week. Anyone playing this pair trade got blown up this week.
The correlations change like the wind now and when you add tha macro risks it makes it almost impossible for your PPT math geeks to setup an algo that works .
The market is basically psychotic at this point, and I believe very few are consistently making money in this casino.
Gold only moved along with stocks for the month of November, then decoupled in the last week. Just like it was the risk off trade while QE was going on, and when expectations for more QE were being priced in, it shot up. The algo’s aren’t batshit crazy, market conditions change, which can change correlations. Remember Gold trades AGAINST currencies, so if the dollar or euro is dropping (Or expected to drop, as in QE or interest rate drops, gold will rise, and vice a versa). It will also trade along with equities during a liquidity crisis (see what happened during financial crisis, dropped 35% in a matter of months).
So you just need to be willing to change your views when the market conditions change!
Jared
I hear ys.
Maybe I should say the market is batshit crazy.
I miss the old times of fundemental investing based on real earnings.
Watching the market trade based on currencies, bailouts, and rumors is just plain insanity to me.
I risk 20% of my assets at most to this BS. IMO the market is a sham and insolvent.
I would love to see an algo for this country that would make our banks and country solvent.
I cannot allocate real capital into this market until I believe this country is solvent and heading in the right direction.
You need to know the correlations and the dependence of the correlations, and then use your analog brain to posit departures from those relationships and hope you get it right more often than wrong
I might also add which is the better store of value P, GRPN, or LNKD?
Thanks a lot Fly, great post
What is the difference between The PPT and 12631?
From what I understand, they are 2 different services. Will I get both for the price of 29.99?
No. The 12631 is a blow by blow day and swing trading service. It’s Chess and RC’s trades throughout the day.
There is an additional fee.
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So first you have to get the PPT, and then you sign up for the 12631?
yes. they need a video sample tutorial for 12631 like they have at the PPT (Learn More) link.
Do PPT members get to see Fly’s answers?
Dr. Fly,
But seriously, when have you ever contemplated these questions individually? Each separate answer by itself will confuse you more. You have to contemplate them all, digest, and then shove your hand into the heart of it (Indiana Jones style) and pick a direction. Winning in the market is a grand sum of experience and intelligence; it cannot be broken down into a few simple questions some econ major could answer. Bob Ross. TV. Art. Talent. Brain is too muddled to connect these, but you get the idea.
But on another note, as a reader who has made many thousands off of your stock picks, what do you prefer as a pay-it-forward? A specific charity?
E-Mini makes new high for this leg up:
http://www.cmegroup.com/popup/mdq2.html?code=ESZ1&title=December_2011_E_mini_S_P_500_%28Dollar%29&type=p#link=60min
I’ll take the question “why do people buy US treasuries?”
It’s because they like to do the mother-fucking Hugh.
The best time to buy stocks is when a Democrat takes the WH from the GOP … FACT
Speaking of the WH … Game on!
http://www.thenation.com/blog/164996/osawatomie-obama-embraces-new-populist-moment
Ba-bye Bush Tax Cuts, it’s all over …
My answer to all your questions is….
Yes.
And, to be Primus and answer many questions with a question.
What happens when a correlation is no longer relevant?
LOFL, you’re gonna confuse the sheeple who wander in here looking for free advise [sic].
doesnt anyone use the unemployment/interest rate correlation. it seems that that one has slipped by somehow.used to be that every market player went by those two,now, who cares,and is there still some relevance?
it’s completely different now from what it was 30 years ago. (int rate:unemployment rate)
Finally… The Rock has come back to IBC.
Time to unload…That is if you smell what The Rock is cooking.
lol.Good one