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.
86 Responses to The Important Matter of Making a Fortune
YOU KNOW ITTT
TNA and TZA will go to 0 as well
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??
The moral of the story is, don’t delegate your core business to a toaster.
by far..one of my fave post..
at first I thought I read ‘COASTER’..
very great ..
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.
What are you going to do about VXX?
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.
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.
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.
I doubt it. Find me the post.
I’ve always known what it was made of.
Bullish wrote: 9/10/2010
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.”
xxxHuggieBearxxx wrote: 9/10/2010
“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.”
xxxHuggieBearxxx wrote: 9/10/2010
“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…”
Mind you this was just prior to the VXX Halloween.
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.
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).
Bullish vs. HuggieBear = Good times.
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.
KCG under 2
KCGQ my friend
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
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)
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.
Starting to add some tech here …
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.
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. “
A lot of words to say nothing. It could go up or it could go down.
This comment is for the OEW daily recap. Not directed at Fly’s post
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!!!
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.
Keeps me in or get me out in a timely fashion …
Best post of 2012
Your new top bar hates iPhones trying to leave comments, btw
Yea iPhone comments are tough, zoom out then back in and stay in portrait orientation.
I heard A few KCG IT guy are looking for work.
Retarded plebs with iPhones from the Internet:
Go download the Ibankcoin app. Problem solved!
Yes, we have an android app too.
To hell with your app, good sir.
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.
Logic did not exist in the summer of 2012 (no NBC)
vxx is a bottle of poison.
Wow. A little VXX talk really brings em out.
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)
Got my ass waxed in BMY ouch
The one legged stool old man stocks are next. Beware the dividend paying stocks they have been sold to you.
VXX The widow maker
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.
Another great story writing here! It was a great read! Thanks!
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.
But, kind sir, honey has more carbs than sugar.
Honey IS sugar (fructose and glucose).
Indeud. The Fly must offer a suitable rebuttal
Honey is the result of a natural process, which I only consume raw, whilst sugar is REFINED and poisonous for you.
Go read a book and leave me alone.
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.
If you do not know how the VIX futures curve affects the VXX, please go and pull an Ophelia.
Just go eat some leaves off a tree and leaf [sic] me alone.
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)
I must concur. This is your best work this year IMO.
I get that a lot, almost every single day.
lol. Fucker. Trust me.
Dr. Fly says:
“With top hat and cane in hand, whilst smoking on my pipe”…
“hear hear” (he says, whilst gingerly tapping his own gold capped cane on his 1890′s Wenge floor.)
“Whilst” a great word not used enough
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.
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.
If you shorted 1 share of FAZ in 2008 you would be up ~ $10,000…
That was the best post I have EVER read on this site yet. EPIC LOL. Funny ass shit!!!
I saw a guy wearing a T-Shirt that had a big VXX on the front. I always wondered what that meant.
The pipe smoking interludes took this post from a 9 to a 10.0.
I will use Alf’s skull as a paint can!!
The V.King has blogged…Check it out
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.
The Fly voted for 0bama in 2008.
Sure was brilliant! Our stocks have DOUBLED in 3 1/2 years!
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.
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?
So Smerdyakov says VXX is going to 14 today. Nice call, Dipstick.
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.
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!
(Larry King requests you two to his Harlem offices)
Too bad all your money went to double gas prices, 40% higher food prices, and taxes on capital and income.
Spoken like a true peasant.
VXX down again, even on today’s upward tape -4.22% as of this writing…