The Important Matter of Making a Fortune

In 50 years from now young children will run up to me asking “good Sir, how did you make such an immense fortune? How were you able to amass such wealth in your lifetime?”

With top hat and cane in hand, whilst smoking on my pipe, I will tell these chaps the following.

“Back in the summer of 2012, see, I was losing money in VXX for the 4th time in so many years. I was obsessed, mind you (puffs on pipe), with it because it had taxed me for millions of dollars and I wanted revenge. It would torment me, see, on down days, as well as up, okay? I’d cry foul and wave my tightly clenched fists in the air, demanding the CEO of VXX, or whoever the fuck made it, was thrown inside of a prison cell, shared by a famished crocodile. I’d go on the internets and lament over my losses, all the while offsetting them with unprecedented winshippery in other venues of course. I was a man with numerous financial interests, always keen to smell out the next hot stock or future insolvency (vigorously puffs on pipe).

Then it hit me. I had a vision that I’d end up being a very powerful and rich man. I had to put this vision into action, and do so at once (puts pipe down on world map). I’d be able to own islands and drown Bentleys into carp infested lakes, that I own. I would own aircraft carriers, accompanied by attack submarines, armed with lasers. The works.

(the children will interrupt to ask: good Sir, please, I beg of you, tell us what you did”?)

Very well, listen to me very quietly (picks up pipe and smokes it intently): this is what I did.

Every morning, during my ritualistic cup of Early Gray tea (honey with milk, never sugar), I’d open the portal to my brokerage account– and when the market opened– I’d sell short shares of VXX. I did this every day until I was 47.5 years old and made billions of dollars doing it. That, small plebs from the sewer pipe, is how “The Fly” made the fortune that you see so gallantly and deliciously displayed before your eyes (no homo) today.

Good day.”

Previous Posts by The Fly
NOTHINGS OVER
36 comments
IT'S OVER
47 comments

86 Responses to The Important Matter of Making a Fortune

James says:

Stupid….thy name is KCG IT Dept…

damn…. i can’t even believe they had a bug in their code that cost them 440 mil plus….who is running that bucket shop anyway??

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ottnott says:

If it is code, it has bugs. And if code is used to skim very tiny amounts of profit from very large transaction amounts, there will be spectacular blowups.

Thus it shall continue until code is powerful enough that, when reality fails to conform to what code expects to see, code alters reality.

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xxxHuggieBearxxx says:

What are you going to do about VXX?

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republicat says:

I own some VXX; Of course I’m down, but I like the insurance for the next few months.

Good confidence that it will be needed or profitable (maybe only a smidge) between now and October.

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xxxHuggieBearxxx says:

You can’t hold it for that long. Inevitably and invariably its path is down. Its only decent as a short term acute hedge. And i’m not certain about that, although i did see it pay off grotesquely for Fly once.

Once.

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Bullish says:

I recall having this same argument with you in 2010. I believe you told me to %&^$ OFF, when I suggested it was a poor long-term hedge.

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xxxHuggieBearxxx says:

I doubt it. Find me the post.

I’ve always known what it was made of.

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Bullish says:

LIES!

Stay tuned.

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Bullish says:

Bullish wrote: 9/10/2010
8:05 PM
@ $18.51
Edit | Delete
“I’m just starting to get the feeling the VXX is just like many other Wall St experimental products. They make the creator of such products loads of money and it never does what the end user expects it to do. I’m just stating my observation – no harm meant, I know it’s a widely owned instrument around here.”

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Bullish says:

xxxHuggieBearxxx wrote: 9/10/2010
9:23 PM
@ $18.51

“What do you expect it to do? I expect it to protect against unexpected extraordinary financial events. I don’t expect it to protect me when the market is down 1%. And when an unexpected fear-inducing event does occur, you take your damn profits (to offset your long losses). And if no fear-inducing event ever occurs, then your longs should be doing pretty well and your VXX position only acting as a drag. The bottom line is it offers outlandish protection against major unforeseen fear inducing events, it suddenly becomes leverage magic. For the daily doldrums, not so much. I’m learning the key is to make sure you have the right amount in your portfolio (primarily, not too much). And for shore take your profits when the event happens.”

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Bullish says:

xxxHuggieBearxxx wrote: 9/10/2010
9:43 PM
@ $18.51

“I am holding it as about 10% of assets. From these levels, it could return 30%-50% return on even a minor panic (with no real “event”), so it would offset about a 5% portfolio loss. I am using other hedges and outright shorts, at the right times, to hedge general market downside risk. I think a blend of volatility hedges (VXX) and inverse market hedges, properly mixed, makes for a powerful concoction. At times, VXX is a relatively cheap hedge to hold where you would get killed on inverses or shorts…”

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republicat says:

By the way I don’t recommend just holding the thing, it’s for when you expect VIX to spike to the mid 20′ or more.

Which I think can happen if we go back to 1320 or less.

xxxHuggieBearxxx says:

Touche Bullish, Touche…..good memory.

Although it does not appear I told you to !@$# OFF ;)

I have changed my tune on VXX, it is mostly a death trap. It shoudl work the way i described, and it would in a real outlier event, but in the meantime it offers crushing losses. Not worth it in my opinion (now i just need to unload mine).

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republicat says:

This is not true. I held VXX for about 3 months and XIV last year for about 6 months and it turned out great.

If the VIX futures don’t go the way you want, then it sucks.

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Bullish says:

I think Fly’s sprinkler head broke while he was writing this post.

He’ll be back soon as he gets the yard under control. STAY TUNED

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Dr Funk says:

Good swing trade on UVXY

bot yesterday Afoc (at four o clock)
sold at high Bo (before open)
repeat Coftn (come on feel the noise)

ABC?

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Smerdyakov says:

VXX at 14.00 tomorrow. Laugh mortals, laugh, but europe is going to be bright red tomorrow and we’re not as decoupled as we think.

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Oh us Bears, we are so weak, Ugg, Cough, Ugg, Cough…now that the Bulls can have the market with no clam action we must all panic..Ugg, cough……bulls think they have a win/win with NFP, it either blows away numbers and they are great or it blows up and the Clam saves the day at the hole…us poor bears ugg, cough..all we can hope for is a inline number.

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OEW Daily Recap:

“The entire pullback, from monday’s SPX 1392 high, is now 38 points. This follows the 63 point rally from SPX 1329 a week ago tuesday. Nearly a perfect 61.8% pullback.”

“The market could resume the uptrend from today’s low, or spend the next day or so consolidating. Keep in mind, SPX 1344 is still an important level. Should the market break below it, that could be the start of new downtrend.”

“Short term support is now at the 1363 pivot and SPX 1342/47, with resistance at the 1372 and 1386 pivots. Short term momentum rebounded from an extremely oversold level. The short term OEW charts turned negative at the open and ended that way, with the swing point now around SPX 1369. “

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AJBaker says:

A lot of words to say nothing. It could go up or it could go down.

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If you could read the sign posts you’d know that he said the correction for the current uptrend was over unless we were to breach 1344 then the trend would be broken … as you can see, he was absolutely correct … Behold, we did INDEED rally … Up 218!!!

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AJBaker says:

I can read the signposts. What he said is the market could go up, it could consolidate, or it could go down. Behold!!! it did one of the three.

Let me predict Mondays market for you: It could go up, it could consolidate or it could go down.

I removed my bookmark for that site because he was too vague and never really said anything of value. Glad it works for you, must have made a fortune for you already, being able to see in advance which way the market was going.

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Mr. President says:

Your new top bar hates iPhones trying to leave comments, btw

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Smerdyakov says:

And when the children ask how the Great Leader acquired the funds to simultaneously to purchase every banking institution on earth, they will learn in the textbooks that this was done by a single purchase block UVXY 7 dollar puts and going long AOL in mid 2012 against all reason and logic.

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Nefarious Rapscallion says:

and every nite the elders gathered the young around to tell the story of the great cities before the “pockylypse” took them all down.(no thunderdome)

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Cascadian says:

Once you are +47.5 nobody cares what you think. Unless you are Uncle Warren, or maybe George Soros, and a darling of the liberal lefties.

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ottnott says:

If you avoided absolutely all market news with the exception of the price of VXX, you would draw the conclusion that volatility was relentlessly draining from the markets.

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Nefarious Rapscallion says:

BEWARE those who use “Beware” in their posts, for they are the ones hawking fear for fears sake. They have no skin in the game, they are on eternal bummers.

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Nefarious Rapscallion says:

and yet once again… though one would think 20 times was enough.. the Bears rise up on their haunches..only to have Draghi cut off their nuts..(yes. of course no homo)

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Clock says:

Dr. Fly says:
“With top hat and cane in hand, whilst smoking on my pipe”…

Clock says:
“hear hear” (he says, whilst gingerly tapping his own gold capped cane on his 1890′s Wenge floor.)

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Frog says:

Fly, you must just be letting off your frustrations about VXX in this interesting post. Because if you literally believed what you said above, you would have sold your long position already.

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Patrick says:

The bulls will take back the market tomorrow. The nat gas stocks look vulnerable to further weakness next week. Pretty amazing USA markets have held up while world markets declined substantially …I guess the domestic market will continue to defy gravity.

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republicat says:

Just threw some VXX into the fire.

The real lesson of this is:
The Fly is not God.
He is a prophet.

I am still seated on the front row eagerly awaiting the next sermon.

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Cheesefries says:

The Fly voted for 0bama in 2008.

Fucking brilliant

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riggedgame says:

Sure was brilliant! Our stocks have DOUBLED in 3 1/2 years!

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republicat says:

Tell Obama to campaign on this!!!!!

If the man would have embraced Wall Street and said he wants Americans to become rich, he would be looking at a Reagan’Esque re-election.

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riggedgame says:

We don’t want Americans to be rich. The top 1% averages $1.9 million a year each. If they would settle for $700,000 and allocate the rest to the sixty MILLION lowest paid workers, those workers would get a $20,000 annual raise – EACH!

And then what would happen to our economy?

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riggedgame says:

So Smerdyakov says VXX is going to 14 today. Nice call, Dipstick.

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Smerdyakov says:

I said based on if european markets were down–they were shockingly green, so I shorted accordingly. Reading comprehension of if/then statements is a good idea.

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riggedgame says:

You said THIS, Dipstick:

“VXX at 14.00 tomorrow. Laugh mortals, laugh, but europe is going to be bright red tomorrow and we’re not as decoupled as we think.”

And you were wrong on BOTH counts!

Reply

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