Even with my SOXS position, my portfolio took a ~4% drawdown today. Most of my holdings were at or near my stops, so I had no choice but to sell.
The obvious questions now arise.
Are you afraid of missing the rally?
No, because I don’t deserve to enjoy a rally. I bought too early; therefore, I am out.
Why not hold and hope for higher prices?
I am past the point of hoping. My losses, although terrible at 4%, could double if markets really knife lower. The risk reward isn’t there for me right now.
Will you short or buy more gold or bonds?
No. Gold and bonds are barely up and not showing bullish signs. It’s still up, but not enough to warrant more purchases. Too late to short, especially into Thanksgiving.
Plus, let’s not forget, 75% of my money is in a quant fund, which is down — but not nearly as bad as high beta tech. I will reassess the quant fund at the end of November.
Bottom line: Cash is a position and this set up is equal to gambling. I lost the initiative by being so long into this meltdown and have lost the privilege of being able to take a high risk position.
Give me your fucking stocks, I’m throwing them away. Unfortunately, I was out this morning and could not opine on this lovely market. I had a few hedges, one in SOXS because of white candles that never fail. I just sold it for a 5% gain.
Aside from NUGT and TMF — everything is directly in the shitter.
It just so happens, I was 95% long heading into today. I know that sounds wild and crazy, but I had some hedges and I really didn’t think the market would crash. I WAS WRONG. So now my options are simple: sell everything and wait, or wait and risk burning in the fires.
Tech is getting hit the hardest, down more than 5% today.
FAANG itself is lower by more than 4%.
Since I just was able to sit down and asses the situation, I’m gonna have a nice look at things for 30mins over some coffee, chill the fuck out, and then react.
See you in about an hour, or much sooner in Exodus.
I am so god damned busy today I can’t even see straight. Years ago I was so lazy and spent my days in complete leisure, spare time to watch cinema, afternoon faggot sessions of reading books, cavorting online with animals in a fleeting effort to make them better investors. Now that I’m older, grizzled, and wholly odious — bald head, weather beaten face — I am so busy I sometimes prefer to be dead. Don’t worry, I’d never commit suicide — because that’s a waste of a perfectly good death. If I ever wanted to die, I’d do so in a comedic manner, such as hostilely takeover a Chicago drug corner in the manner of an investment banker — producing documents to said kingpins of my intent and the new leasing conditions set forth for their continued pharmaceutical enterprise. Or maybe I’ll venture off to Syria and walk around with an Israeli flag, planting it into the center of holy muslim sites, or vice versa.
There are lots of hysterically heroic ways to die. Maybe I might decide to be a vigilante. Who knows?
At any rate, I realize I am fighting an uphill battle here. With a decade long bull market, many of you have developed bad habits. You’re permanently bullish and therefore stupid. You attribute blind luck to skill and lack discipline and focus. This is where The Capstone Programme comes into play. I will call you up on the god damned phone, or via web based communication service, and force strong and good habits into your investment lives.
The service should be launching by Black Friday and it will be on a first come, first serve basis. Since each session is a personalized mentoring, educational experience, I can only accept so many members per month, maybe 100. If you show up late and lament over missing the opportunity to buy 1 hour’s worth of my time, do not fear — for you’ll be placed on a waiting list and I’ll get around to you. At the moment, Jeff Macke, Ragin Cajun, and RAUL will also be available to help, with Macke specializing in retail (his father invented the modern day Target), Ragin for technicals, and RAUL for futures.
The purpose of the service is as aspirational as it is ambitious: transfer our knowledge and expertise to you in order to hasten your journey into becoming a better investor/trader.
Courtesy of Exodus, here is my current Quant fund — +1.5% over the past two weeks, versus a SPY which is flat. I win again.
You need this talk — because greed causes people to do funny things. At the end of this blog is a mea culpa of the owner of OptionSellers, who just got blown the fuck out and turned into dust. I’m indifferent about his experience because he’s old and should’ve known better. Blow ups are for younger men, creatures of finance with chemical imbalances and small dick syndrome. If you’ve been doing this long enough, minimum of 10 years, you know blow ups happen all the time, even to the so called ‘smartest fuckers in the room.’
Once upon a time, 18 years ago, I had a blow up. Back then I was untrained and in my early 20s and literally didn’t know what the fuck to do once the party ended.
Let’s make a few things clear now.
The recent trends are lower. Ergo, your short term bias should be for lower prices. Given the fact stocks, over time, almost always go higher, you should temper any bearish positions and implement some 2nd and 3rd order thinking.
What the fuck do I speak of?
Stress test your portfolio. Dissect it and build worst case scenario models.
What are your position sizes? Greater than 10-15%? You’re an idiot. Is your entire account being traded? You’re an idiot. Is your long term account being tended to, reassessed to conform with the times? If not, you’re an idiot. Are you diversified? How do you know and what is your benchmark? Is your trading account using margin? Are you using stops losses to contain losses? Are you trading just for the sake of trading?
The present tape is really hard. It’s a non-stop ball game with Nolan Ryan on the mound, spitting out 105mph peas. Why not wait for a new pitcher?
Eventually, the market trends will improve and easy money could be made again. Chill the fuck out and quit churning yourselves into oblivion.
Look at this asshole below now, crying and shit because he sold naked calls against natural gas and got himself and his ‘family’ members eradicated from the field. When you get a six sigma event — your models mean nothing. If you have a strategy that has outlier risk and could blow up during a black swan event, simply avoid said schemes and focus your efforts on compounding returns over the next 30 years.
Iatrogenics comes to mind when viewing today’s tape. Last night, in a hurried panic, I sold SOXL in the after-hours, alongside NVDA — thinking both would trade lower. I ended up correct about NVDA — but SOXL made up much of its losses and rallied hard into the close. When referring to iatrogenics, it is the process of doing something just for the sake of doing it — thinking it’d be beneficial — when in fact it hurts you, or the patient.
Sometimes the best thing to do is nothing. But please observe my overall position so you can make a better assessment. I am repeatedly telling you this — because my hyperbole often gets in the way of my overall investment philosophy.
My trading account is 25% of my overall investable money. The balance is in my quant fund, which was up 32bps today and +1.26% for the week.
So my SOXL mishap was 5% of an account that was 25% of my total. These details make the difference between a winning strategy and a losing.
In the close, I had 15% cash in my trading account, with one hedge: SOXS. My other defensive positions, TMF and NUGT, seem to be doing well even with equity reflation. All in all, I consider my position to be good and I should make money if the market rallies next week.
If we head lower, which, admittedly, is my hunch, I’ll quickly sell some longs and add to my shorts.
Pay attention to the market very carefully. Like I said earlier, the bulls have two magic bullets in the chamber left.
1. Trump-China deal.
2. Fed pause
Aside from that, the market will run up or lower on earnings.
Here’s Trump trying to defy the laws of nature that say “MARKETS DO NOT BOTTOM ON FRIDAY’S” talking nonsense about a Chinese trade deal. This, my friends, was done on purpose to move markets.
“China wants to make a deal,” Trump said, adding that the tarrifs the United States imposed on a range of Chinese products have put pressure on that country to agree to a trade pact.
“I think we’ll have a deal. We’ll find out very soon,” he said.
Eventually, he has to make a deal. These press releases are going to be faded soon and markets will get tired of the talk and actually punish stocks whenever the President talks. That’s what happened in 2008.
If you sense frustration in my tone, you’d be correct. About 5 mins before that statement, I bought SOXS — based on several factors, one of which is white candles and how they lead to more white candles.
Observe.
Without an outlier news event, SOXS should trade sharply higher next week.
Bear in mind, the economy is the issue here — not this other stuff. It’s noise. Pay attention to what Cramer and Faber say in the clip below. Really listen to it and understand that you might be early if you’re bearish on markets now — but you might be correct if we’re heading towards a very fast slowdown.
Both the Dow and the SPY look fine. The Nasdaq is weak, mostly semis related. My best position is NUGT and it was my highest conviction trade. I don’t have many high conviction trades now — but that’s one of them.
I suppose this is constructive action, all things considered. Big up day yesterday, followed by a milquetoast decline. It could’ve been a lot worse.
I’m flat for the day in my Quant, and still down more than 1% due to my losses in NVDA and SOXL last night. God willing, and I hope that he reads my blog, some of my positions will take the fuck off by the end of the day and I can rest easy tonight knowing all is well.
THIS IS FRIDAY, MOTHERFUCKERS. Don’t expect stocks to bottom.
1. Trump-China trade talks ahead of G20
2. Possibility of Fed pausing
Looks like we might start to hear more of this, neutral policy shit, from the Fed.
“As you move in the range of policy that by some estimates is close to neutral, then with the economy doing well it’s appropriate to sort of shift the emphasis toward being more data dependent,” Clarida said during a “Squawk Box” interview.
He spoke at a time when the markets are watching Fed speakers closely for what happens next with rates. Fed Chairman Jerome Powell helped stoke market volatility in mid-October when he said the central bank remains “a long way” from neutral, an indication that it would be more aggressive with policy than investors had anticipated.
With his comments Friday, Clarida becomes the second central banker in as many days to suggest that neutral isn’t so far away. Atlanta Fed President Raphael Bostic, in a speech delivered in Barcelona, said Thursday that the federal funds rate is “not too far” from neutral.
Clarida noted that the most recent projections from Federal Open Market Committee members indicate that the long-run funds rate projection is 3 percent. The current funds rate target range is 2 percent to 2.25 percent, with markets widely expecting the FOMC to approve another quarter-point increase in December.
“I think being at neutral would make sense,” he said.
These headlines are, arguably, designed to manipulate investor psyche and soften the decline. If in fact the economy is slowing, we will not enjoy a bull market. We’ll get back into the disarray endured in 2014-2016, where selective stocks went up and the earnings season was littered with dead bodies post reporting rancid numbers. If the economy is slowing, mind you, these levels will not hold and we’re likely to fall by another 10% before reassessing.
This is what we don’t want to learn about on a chilled Friday morning, less than a week to national festival.
Cramer says CEOs, in private, are telling him the economy is slowing and the Fed is out of touch with reality.
Fine. But the Fed knows exactly what it’s doing — consolidating banks into the hands of the strong, washing the country of the weak. Opening up the labor pool to our most productive companies by disjointing it and casting aside the marginal players. The only way to do that is to slow the economy and cause unemployment.
Boom, bust cycles, all managed by the Fed.
Shares of NVDA are meeting their maker this morning, after missing a whole lot. They blamed weakness on crypto mining. Oddly enough, when they were smashing numbers, I vividly recall them saying it had nothing to do with cryptos.
Fuck off.
Let us remember, inexorably, markets do not bottom on Friday’s — not now, not ever.
I sold both NVDA and SOXL in the after hour’s last night and hold 10% cash. I also have another 10% in defensive stocks, like NUGT, and TMF. But, like you, I expect to bleed today, nourish the earth with my energy and pain. Hopefully, it’ll be enough to give reason for a Turkey Day respite, although it’s not looking like a promising eventuality.
Last year I got possessed and wrote and published two short stories, one ~60 pages and the other ~160. They were accurate tales of when I got into the business and the shit I endured and the success I enjoyed during the dot com era. Part two was about my complete annihilation — something you might be able to relate to, given the recent foray into hell.
If you like my writing and enjoy the blog, I promise you’ll like these two fucking books. I make like $2 per book — so fuck yourselves.
Great Xmas gifts, believe me. At some point, I’ll write a part three, or maybe something totally different. I have an idea about an Irishman getting cold called by a boiler room broker and he can’t help but stumble upon outrageous returns, all the while hiding it from his very conservative wife. Or maybe I’ll go dark and write about a broker who kills his clients for ACATing on him. We’ll see.
The other thing you should do is start an Exodus free trial. Join the Pelican Room and take in the grandeur of top tier traders acting like degenerates throughout the day.
Lastly, if you’re unable to access the trial, because you’ve already taken one or you’re somewhat retarded and can’t figure out how to do it — access our algorithms whenever you want for free at FreeStockAlgos.com.
You can pass that site onto friends and family for Xmas too. As a matter of fact, you should be barging into the homes of your neighbors and showing them this god damned website.
Ok, enough shilling. I have a gimlet waiting for me.
