Do you buy beaten down names here, in attempt to catch an inflection point that can result in a quick 10-20% return? Or do you pare longs, down at these levels, due to a belief that the market is poised to go much lower?
Instead of going to cash, do old man stocks, like GIS, KMB and CHD, make for a better alternative? Or, will those old man stocks become a “source of funds” for hedge funds in distress?
The truth is, it’s all a guess. If anyone declares to know what the government is cooking, they are dumber than you first suspected. The playing field has never been even and the rules always change. The best thing we can do is live to fight another day. If that means forgoing some kickass inflection point returns, so be it.
During the course of managing money, over 15 years professionally, I’ve seen the worst blow ups turn into disasters when people pressed their bets. Sometimes the best thing to do, pardon the cliche, is to slow the fuck down and trade small when turmoil is in the air.
For some of you, buying calls, instead of having massive equity exposure, is a better bet. For others, dollar cost averaging comes into play now, providing you have cash reserves.
In summary, we’re not done going lower, unless of course we are. Stocks go up until they don’t and they knife lower until they reverse higher. The one thing you can control is the level of risk and losses you are willing to endure. Let that be your guide when deciding an investment thesis.
This can very well be 2008, with all of its trimmings and disastrous results. To hedge against that, keep a short leash and be skeptical.
http://www.youtube.com/watch?v=wBfKXHoSvDM
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Well said Le Fly! I am sticking to options for a while!
So did you sell out of YELP completely? If so, nice job doing it today without killing the price too much.
Still in it. Sold some calls.
Good Post Dr. Fly.
What did $NUGT print today…my God.
Lot of Pain in FX Commodities– VIX is still low.
Did I just see Gary Shilling call for 800 Spy.
Yup. I thought Krudlow was going to have a coronary. Shilling got the hook real quick like.
Any government intervention will be short lived until the debt issue is resolved.
This could take years.
It’s going on three years already. But one thing has been proven, those fuck-ups in Europe haven’t learned a damn thing.
Hey, Fly, I heard you were dead!
I had a similar conversation last week with a guy who’s trying to get me to invest in some what appear to be bullshit bond etfs and some other shit.
Your post makes me wish I’d said, “No thanks, PAL,” instead of just, “No thanks.”
Hell no he didn’t sell out of Yelp, did you? I bought June 22 calls this AM. No way this market gets out of control while the truest example of American entrepreneurism in decades goes public, underwritten by the biggest HFT shops on the planet. I think YELP/ZNGA might be the best way to play it. To all traders that know their shit, please hedge with EEM/EFA/EWG/FXE Sep/Aug puts. NO Brainer. If your longs explode and your puts fall away then you are good and vice versa. For the ultimate daring fellows I have been buying puts on JPM like their is no tomorrow. The premium’s are almost mistakenly LOW. If I am wrong so be it but my biotech/IMAX/RGR and AAPL will make up for it right?
I wish every time someone mentions Facebook I could whip out the chart that plots the 20 largest IPO’s against the S&P, but sadly the chart has been lost in the internets.
Some topped ticked it perfectly (Blackstone in 2007 and AT&T in 2000). Others happened in the depths of recession (Kraft in 2001) and the largest happened in the midst of panic selling (Visa in 2008).
The correlation isn’t what people assume it is.
For a bit of nostalgia, BP had to postpone their IPO due to unforseen circumstances. Said “circumstances” you ask? Black Monday 1987 when the Dow lost +20% in a single day.
That probably would not have been a good day to release your IPO.
Other than jumping in and out of social media names, I think everything else is suspect right now until we see lower prices.
I think the biggest difference between this year and last is a few safe havens/sources of liquidity have been taken off the table. Gold, Swiss francs and a lot of the high growth names have been taken off the table.
Of course there are still a lot of areas people can draw liquidity from and hide in if shit hits the fan. Treasuries, Bunds, Gilts, Swiss bonds, Yen, utilities, old man stocks.
But overall it has much more of a dollar vs the world feel to it than last year did.
The dollar is too strong. That’s why things are fucked up. The Fed and the Treasury has to print hand over fist, increasing the money supply and getting some inflation going.
Or they could buy Euros and sell the shit out of dollars. That would help BOTH sides of the Atlantic.
Throw money at our problems…why hasn’t someone thought of that before!
There is nothing saying that a strong dollar HAS to hurt the economy. It would hurt some industry’s, but it doesn’t have to be a drag on everything. In fact, up until 2002 the exact opposite was true. The dollar was correlated with equities for the entire 20th century and has only been inversely correlated for the past 10 years. The correlation seemed to work out pretty well for the US.
I imagine that right now, you’re feeling a bit like Alice. Hmm? Tumbling down the rabbit hole?
Choices – You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes.
not to beat the horse here . but the russian people arent very fond of there banking system i remember seeing something on cnbc by erin burnett on that matter wonder if the people of greece are seeing what the russians saw .wish i could remember what that was all about
Watched final episode of Deadwood season I. last night, ironically. Best episode of the best show ever conceived. Some moving shit, right there. Al got heart. But he’ll cut your fucking throat in a heartbeat.
Nice post Fly. Times like these separate the men and women from the boys and girls.
that whole califonia thing could be straightened out by legalizing the hootch probably could get what they need real quick and also solve the other problems associated with it
Don’t worry about California, I think they’ve got a few solid ideas to build a future around.
http://www.hark.com/clips/jqyvfdfwny-brilliant-woman-solves-all-of-californias-problems
i see they have that under control.heh heh
personally i’m trimming longs and accumulating cash, still holding on to grandpas that i’d be willing to ride out a long storm in. but like you said, we all just guess and manage risk accordingly. best of luck everyone.
legalizing the hootch in california would create jobs ,since everybody out there has an herb garden , cigarette companys could roll it up, they are supposed to be a safe stock haven during economic crisis creating jobs ,and the candy companys would be boasting outrageous profits all year around due to munchies especially M&Ms
wtf does legalization have to do with the amount of drug use?
put your corn cob pipe down and reread what is there ,nothing has been mentioned about the % of sales ,
What happened to “the trend is your friend”?
The overarching trend is what has been happening for the last three years. Panic sell in the summer and wait for the can kicking to push markets higher.
In that case, the trend is certainly your friend.
if europe is having a problems with creating jobs and all this other shit how does one beleave creating jobs in greece will change the world ..what are they going to do ? export jobs to greece , that should cause some unrest
Lets face it this is a fucking disaster. The market might not bounce for another 10%. Could be worse. Fuck.
Hey Debbie Downer, pull your skirt up and quit whining.
the thing about govt.s is they can wait 200 plus years for things to work out ..id rather not
No they can’t. Ask the Romans, Ottomans, or a whole host of others.
When you look at this little teeball style correction we’ve had over the past 2 months and compare that to the plunge at the end of last july its frightening how much lower we can go. And that’s not even a major league size drop like 2008. Can u imagine how low the valuations will go?
Its too bad so many of my positions are underwater already or else I would sell stuff and raise some cash. Oh well. This will be a learning experience and hopefully toughen me up.
Things seem hopeless, no? Take a snort of this krokodil, friends, and all will be well again.
Has everyone forgot about the election in November?
What about it? That it’s actually happening or that one of two idiots will be elected?
I think people have a pretty good memory of what was happening during the last election.
Except in the last election in 2008 it was happening here in the U.S. This time it’s happening in Europe. So there’s no way we sell off like in 2008. OTOH, a small 15 to 20% correction is not out of the realm of possibility.
That doesn’t make any sense. It’s not possible for a major institution to go under because the problem is in Europe rather than the US?
Remember, I don’t think Bernanke wants to be perceived as someone who “keeps the stock market up”
And he’s made post-qe speeches saying fiscal policy needs to do more. I don’t think he’s wedded to this admin.
Plus how about the day the market actually DOESN’T react upward to a qe-announcement. We know it doesn’t work. Only a question of time
this deleveraging going
have to stop soon
uncle ben needs to
implement more QE
aapl may be the last one
to get beat up
as posted, life,liberty and the persuit of jap-y-ness’