Have a quick look at the graph on this site. I haven’t audited any of the numbers, but if the author has done his homework, it fortells fairly clearly what oil longs have to expect.
For the moment, all of my short exposure is being pesteringly resilient; most probably because I am counting on those positions to even out my account. So of course, oil is holding up here, the euro is trying to push higher, and TSLA recovered a $3 move.
There’s no reason for any of those things other than that they hurt Cain Hammond Thaler. The market is trying to harm me, because that is the only consolation anyone in these positions will ultimately have…if they can shake me out.
But I have the patience of sheet rock. You will not win.
Current positions by size (greatest to least)
Cash – 27%
CCJ – 18%
CLP – 8%
AEC – 8%
SCO – 8%
EUO – 8%
Silver – 8%
BAS – 7%
RGR – 7%
January 2014 TSLA 35 Puts – 1-2%
If we think interest rates will go up but the market will resume strongly and government debt is at risk but there will be a shift into private equities, what are the ramifications for corporate debt etfs and preferred shares etf?
Will they remain insulated from a 1980s style interest rate hike on falling commodities and rising real estate and stocks scenario?
No idea. One to many orders for me.
Any ideas yourself?
I don’t have a lot of conviction either way right now. I own some senior loan ETFs such as NSL. When I bought them (years ago) I believed they would have less volatility than typical income/bond ETFs since the loans in their portfolio are often fairly short term. Pretty sure I am wrong, and these things will sell off really bad if we have a credit crunch. If the broad market continues higher they will probably underperform in a rising rate environment. I can assure you I lost a lot of money on convertible/preferreds – it only takes one bad apple (like GM) in a fund to kill it.
Did you see Peter Brandt’s post on oil? He sees it hitting $65.
I read that piece. Oil can certaintly trade that low at least as a temporary anomaly – in theory. I made a similar call about two years ago but it never panned out.
I’m inclined to think that oil markets are being closely monitored right now and it won’t happen again for a long time.