Let’s assume that I am wrong about the coming correction. The September surprise never comes and we gingerly trade up until the New Year. All of the high beta stuff continues onward, trading up to 20, 25, even 30x sales. No one gives a shit, total honey badger market, and everyone gets rich– or dies trying (extra 50 cent).
But what if I’m right? How much downside does a stock trading 20x sales have in this market?
Well, I will have you know, CSCO was trading 22-25x sales at the peak of the market in 2000. Do you know where CSCO trades today?
2.5x sales.
Do you know where it traded in 2001?
5.5x sales.
Just imagine the downside pin action of that stock price and the people who got caught flat footed. I was one of these people, unfortunate and young, rich and careless: utterly retarded.
In September of 2000, the correction, in earnest, began. The market had gone up from the May lows and everyone was doing 100k in monthly gross commissions–until the party ended. CSCO dropped by 20% that month and went down the sewer drain ever since. I am not suggesting the market will endure that sort of pullback. However, it would be unworldly of you to not acknowledge that the drop in March-May was ‘special’ and not ordinary. It was bid less and no one believed we’d rebound.
Well here we are, living to tell the story, at new highs. I haven’t quite recovered from my losses yet, because I’ve been taking a methodical approach. Even still, I cut my losses from -37% to -13%, which isn’t too bad when considering the dire straights I was in.
Here is the reason for the post.
Back in 2000, had you shorted stocks in September, you made a mint. But there was another way to make a mint, without having to accept the idiot nature of being a short seller and the risks associated with such blackguardly actions.
Buy utilities.
I have a long list of utes that I am eying and will discuss in The PPT over the next few days. However, the XLU can suffice and did so in September of 2000, netting a 14% return amidst the agony and pain of once proud and brave stock brokers, like myself, then lined up for execution.
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Great post. {Tips top hat}
Your by-line says “I win a lot,” yet in your post you say you haven’t quite recovered from your losses.
Just wondering…
don’t you know the fly is winning even when he is losing?
Jesus Christ I wish I was able to kill you.
I WAS UP 70% LAST YEAR. DOES THAT COUNT FOR ANYTHING YOU TROLLOP?
yea but everyone was up big last year…..ya boy joe terranova is up 23% ytd and you are down 23%…..
Can you read? Where does it say I was down 23%
And not everyone was up 70% last year
By the way, you are the same guy, same asshole, with the same IP address that keeps flooding the comments section with idiotic remarks. Why don’t you fuck off.
Here is the listed IP. I hope no one melts down your computer.
161.150.240.1
Trolling without a dynamic IP is kindergarten shit.
I have hitmen in Cleveland Ohio… Sleep tight Gare..
garry duncan ??
Senior Vice President-Market Director, PNC Institutional Asset Management & Managing Director, PNC Capital Advisors
http://www.linkedin.com/in/garryduncan1
Lol
Reach him at (215) 585-6334 or [email protected]
i believe the internet term from back in 2003 is “owned.”
Troll gets OWNED lmao good work Frogg
This is the funniest shit I’ve read all month.
im not just a pretty face
ps. do you think gary and his whole office want some pizzas ?
just means on the 37% you were down this year it was from a huge asset base. up 70% then down 37% equals up 7% over the two years which is bad for the vol not even taking into account the cap gains you most likely locked in last year for you investors so this is best case. granted you’re up from the lows but just giving it max impact. so making a shitload and then losing big on it just creates a lot of volatility and realized taxes for your investors and most likely a lower asset base going forward. wtf wants or can live with up 70 down 37?
Hook
Did you just tell me anything that I didn’t already know or is that your thing? You like to talk.
I didn’t want to get crushed in 2014, but it happened and I am dealing with it best I can.
simply saying up 70 means nothing if you follow up with down 37. i believe you wrote up 70 last year should count for something and i’m explaining for others here that it’s actually worse to have two years like that than say an up 8% followed by up 10% type. I think an honest discourse on volatility of returns and realized taxes and compounded interest and the possibility of losing clients is warranted.sorry to upset you didn’t mean to pile on. i thought you were past it
Mr. Dr. Fly, when you say you win a lot, what IS a lot, what is you’re career sharpe ratio? How, bout for just this year? I notice you are down this year, perhaps you aren’t winning this year, but the last two years if you had no new inflows you would be up around 50% from jan 1 2013. I mean, are you some kind of Bernard Lawrence Madoff. What defines a win, in your heart, do you have some kind of commissions your pay per share traded? Are you Charlie sheen? Are you ed helms? Are you Paul Rudd? Are you Wayne Gretzky? Do you watch Seinfeld? (That’s actually a real question)
I am Jerry Seinfeld
hmmm. why not just short the naz?
Because there is far more risk to that.
The best part about the Fly is that he tells it like it is. Yea, just like Howard Coselll. He’s optimistic but realistic.
here comes the homo hammer
thankyou, have a great weekend.
I believe the Nasdaq peaked on March 10, 2000
Great idea Fly, GOAT financial blogger.
I don’t believe anyone’s winship unless they also divulge there loseship. Kudos for that admission. It’s amazing how nobody ever loses in the stock market on blogs.
their not there
utilities were crushed in the ndx bubble collapse. besides that it’s a great trade idea
Hook
The Utes fell after Enron. They did well during the initial fall
you are correct
of course I am
Le Fly, RSH? or is that just full-retard?
btw, thanks for TLT…
Barring any “war” or fucktarded asshat type shit on behalf of Russia and some of those other countries over there that I can’t find on a map… I am calling we rip hard next week to the upside. That is all.
Hi Fly
I think the correction in 2000 was brought about by the Fed tightening and guiding to higher rates.
Those days are over. This Fed is NOT going to guide the market by implying a recession.
After the mid-term election in ’98………..between the Discount Rate and the Fed Funds, I count 6 rate hikes…and i believe a Y2K stimulus package..pre S&P 500 ’00 top…
Another great post Fly.
Merci
I’d rather be in cash over utilities, except for maybe 1 or 2. 4-5pct dividend with 3pct dividend growth and trading at all time expensive multiples is recipe for disaster IMO
BUY NUGT right here! 9/11 event coming
You are such a laughable idiot.
Another reason I don’t see the coming
correction happening.Everyone seems to be on that side of the trade.Corrections mostly catch people off guard..This feels like the Y2000 bullshit
DUK, SRE, EIX.
Where else on the stock blogs can you find a trader being honest about his losses? Trolling does not make up for your undersize appendages.
Low risk is for sissies.
While it’s true the XLU did rally from Sept. thru Nov. 2000,when the market started down for good, it collapsed over 50% (35-15~)…hard to see this as a “low risk way to play the correction”…maybe a good short term flip.
What about GDX or GDXJ as a hedge?
Yeah on a relative basis utilities performed better vs. the NDAQ or S&P during the carnage of 2000-01. From 9/1/00-12/30/00 the S&P Utility index was +12.5% vs. S&P 500 -12.8% and NDAQ -41.6%. Eventually, utilities caught up with the market, but it was a slow train compared to the NDAQ. From 9/1/00-12/28/01 Utils were -21.5%, S&P -22%, and NDAQ -52.8%. From 9/1/00-12/27/02 Utes -45%, S&P -40.5%, NDAQ -67.9%.
So eventually the Utes will catch up with the market, but in the short-mid term people flee to them for safety. Eventually the lower quality utes that heavily rely on capital markets start to blow up, and that takes the sector with them.
The 10 year was also around 5% back then but who cares right!
Rates are heading up soon as Yellen tries to bring the economy back to normal functioning. Holding utilities then won’t be much fun.
This is a terrific post Fly