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Message
re: They say to never time the market... but it looks like it's time to go short
Posted on 1/10/16 at 7:03 pm to Doc Fenton
Posted on 1/10/16 at 7:03 pm to Doc Fenton
So for a little update on these two items:
As of Friday, according to Yahoo ( LINK), Goldman Sachs has now reduced their EPS projections for the S&P 500 for $3 for each year for 2015, 2016, and 2017. Now the first thing you might think is, "wow, that sounds really arbitrary and made up." Correct, and I think it's likely that they will make more downward revisions in the future. Second, however, comes the interesting part, which is how what happened in 2015, compares with the "GMO Thesis" or "Grantham Thesis" that Jeremy Grantham made in November 2014. The Yahoo article stated the following:
What was it that Grantham said?
“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.” -- Jeremy Grantham, Barron’s
Immediately, there were two good articles written in response, one pro and one con.
Pro: " Why Jeremy Grantham is Right about Corporate Profit Margins," by Baijnath Ramraika & Prashant Trivedi (Nov. 11, 2014)
Con: " Where Jeremy Grantham Goes Wrong On Corporate Profits And Reversion To The Mean," by Tim Worstall (Nov. 12, 2014)
What was Worstall's main criticism of Grantham's thesis? It was that profit margins for U.S. stocks should naturally drift higher, because the profits earned were increasingly globalized and coming from emerging markets:
So this is why global recessionary forces are something deserving of serious attention in terms of their effects on U.S. equity prices. Many of the arguments in favor of justifying the higher ratios of the past several years have basically boiled down to TINA, and I certainly get that argument in terms of why other asset classes are priced worse in relative terms. Nonetheless, with all the deflation taking place with oil and Chinese stocks ( LINK), and the concordant U.S. dollar appreciation, this would seem to make U.S. equities less of an island of stability in a sea of chaos. Admittedly, the big problem in expecting a drop is still that the money has nowhere else (good) to go; but maybe more people will start finding portfolio allocations in cash and puts more attractive than they did previously.
P.S. -- Anyway, grab your popcorn. The Chinese markets open in less than 30 minutes to kickoff the new week.
quote:
#2. Mean reversion of corporate profit ratios, which are also too high. (Note the big story about Jeremy Grantham's comments from November 2014.)
#3. Falling earnings projections that have already taken place have not yet led to commensurate changes in stock market valuations. (See recent S&P 500 earnings. Goldman Sachs has analysts still calling for $120 earnings in 2016.)
As of Friday, according to Yahoo ( LINK), Goldman Sachs has now reduced their EPS projections for the S&P 500 for $3 for each year for 2015, 2016, and 2017. Now the first thing you might think is, "wow, that sounds really arbitrary and made up." Correct, and I think it's likely that they will make more downward revisions in the future. Second, however, comes the interesting part, which is how what happened in 2015, compares with the "GMO Thesis" or "Grantham Thesis" that Jeremy Grantham made in November 2014. The Yahoo article stated the following:
quote:
Goldman's U.S. equity team, led by chief U.S. equity strategist David Kostin, said in a note late on Thursday that it was lowering its S&P 500 earnings per share (EPS) forecast by $3 to $106, $117, and $126 for 2015, 2016, and 2017.
The revision reflected annual EPS growth of -7 percent in 2015, +11 percent in 2016 and +8 percent in 2018, the note stated, with the strategists expecting that 2015 was "the worst year for S&P 500 earnings since 2008."
What was it that Grantham said?
“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.” -- Jeremy Grantham, Barron’s
Immediately, there were two good articles written in response, one pro and one con.
Pro: " Why Jeremy Grantham is Right about Corporate Profit Margins," by Baijnath Ramraika & Prashant Trivedi (Nov. 11, 2014)
Con: " Where Jeremy Grantham Goes Wrong On Corporate Profits And Reversion To The Mean," by Tim Worstall (Nov. 12, 2014)
What was Worstall's main criticism of Grantham's thesis? It was that profit margins for U.S. stocks should naturally drift higher, because the profits earned were increasingly globalized and coming from emerging markets:
quote:
But this opens up an interesting possibility. As globalisation marches forward there’s more foreign companies doing business in the US and making profits there. That’s fine, the activity is in GNP and the profits are part of the US corporate profit share. But as globalisation marches forward we also have more US companies making profits elsewhere. Which means that those profits are counted as part of the US corporate profit share. But the general economic activity which is making those profits is not being included as part of US GNP. Thus, as globalisation proceeds we would expect to see an increase in the US corporate profit share. Simply because we’re counting those global profits but only counting the domestic economic activity.
So this is why global recessionary forces are something deserving of serious attention in terms of their effects on U.S. equity prices. Many of the arguments in favor of justifying the higher ratios of the past several years have basically boiled down to TINA, and I certainly get that argument in terms of why other asset classes are priced worse in relative terms. Nonetheless, with all the deflation taking place with oil and Chinese stocks ( LINK), and the concordant U.S. dollar appreciation, this would seem to make U.S. equities less of an island of stability in a sea of chaos. Admittedly, the big problem in expecting a drop is still that the money has nowhere else (good) to go; but maybe more people will start finding portfolio allocations in cash and puts more attractive than they did previously.
P.S. -- Anyway, grab your popcorn. The Chinese markets open in less than 30 minutes to kickoff the new week.
This post was edited on 1/10/16 at 7:08 pm
1
Posted on 1/10/16 at 8:04 pm to Doc Fenton
Death cross on the SPX Daily tomorrow.
Posted on 1/17/16 at 3:11 pm to LSU1NSEC
From the $200/barrel oil price prediction, to Jan Hatzius continually touting Keynesian stimulus, to the $120 EPS projections, and now this recent statement from Abby Joseph Cohen, Goldman Sachs just keeps looking worse and worse. They are slipping.
MarketWatch (Jan. 14, 2016): " Sell everything? Goldman’s Abby Joseph Cohen says stocks are best place to be"
Wow.
FiveThirtyEight did a pretty good article on Friday, " Are We Headed for Recession?", trying to debunk some of the more extreme recession predictions in light of the radically bearish statements that have been made recently by Larry Summers, Robert Samuelson, Alan Murray, and investment researchers at RBS. However, (A) it's just a quick post rather than a real analysis, (B) it doesn't really address the issue of inflated asset prices as opposed to the health of the underlying economy, and (C) it seems to be too dismissive of alarming global commodity and manufacturing signals.
I can't say that I know what the economy will do this year, but I do think it was pretty obvious that equities were at very expensive prices last year, and that even if the economy does somehow manage to eek out 2% real GDP growth this year, that would still be pretty mediocre.
MarketWatch (Jan. 14, 2016): " Sell everything? Goldman’s Abby Joseph Cohen says stocks are best place to be"
quote:
Wall Street investors who helped push U.S. stocks to their lowest level in three months Wednesday are being overly “emotional,” says Goldman Sachs veteran Abby Joseph Cohen.
President of the Goldman’s global markets institute, Cohen told Bloomberg during an interview on Thursday that the bearishness that has swept across global market, sparked by concerns about a global economic slowdown, may be irrational and ignores what appears to be an otherwise vibrant U.S. economy.
“What’s happening really is very much an emotional response,” Cohen said. “I understand that investors always have the idea of what could some of the alternative scenarios be. But at the end of the day what we need to do as professional investors is to think about the most likely case as opposed to the most awful case we can conjure up,” she said.
Cohen is forecasting that the S&P 500, which was enjoying a rally in afternoon trading Thursday, may finish the year at 2,100.
Wow.
FiveThirtyEight did a pretty good article on Friday, " Are We Headed for Recession?", trying to debunk some of the more extreme recession predictions in light of the radically bearish statements that have been made recently by Larry Summers, Robert Samuelson, Alan Murray, and investment researchers at RBS. However, (A) it's just a quick post rather than a real analysis, (B) it doesn't really address the issue of inflated asset prices as opposed to the health of the underlying economy, and (C) it seems to be too dismissive of alarming global commodity and manufacturing signals.
I can't say that I know what the economy will do this year, but I do think it was pretty obvious that equities were at very expensive prices last year, and that even if the economy does somehow manage to eek out 2% real GDP growth this year, that would still be pretty mediocre.
Posted on 1/17/16 at 4:17 pm to Doc Fenton
You called the shite out of this in November, especially China's free fall.
Posted on 1/17/16 at 5:02 pm to Doc Fenton
So did you short?
Posted on 1/18/16 at 8:40 am to 13SaintTiger
No, I wimped out. But I am completely out of the market, and looking for the best re-entry point. I have been a ton of researching this stuff in my spare time lately, and have been thinking about creating an "Active Investment Management Theory" thread, but I'll probably never get around to it.
The 4 guys I like to follow the most are Cliff Asness (at his AQR blog, Cliff's Perspective, for long-term quantitative investment strategies), Bill Gross (who does his monthly Investment Outlook at Janus for the bond market, and calls Soros-like opportunities from time to time), Bill Ackman (just for fun, to follow the PE world), and Robert Shiller (using his Online Data at Yale to do careful historical tracking of U.S. equity & home prices for "bubble watching").
I think I mentioned Cliff's best paper on this board before: " Value and Momentum Everywhere." I am now reading a book written by one of his co-authors, Lasse Pedersen, " Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined."
Basically, the idea is that it takes some time and resources to be able to exploit small arbitrage opportunities in the capital markets, so given that cost, it makes sense for some inefficiencies to exist in markets, until they get big enough for professionals to make profits off them.... thus the amount of remaining inefficiency in the markets will typically stand at a relatively efficient level, from the perspective of the professional investors' profit levels and costs. This idea interests me a lot, because in the b-school courses I took I had EMH drilled into me, and it caused me to miss a lot of the large-scale inefficiencies that can exist in markets from time to time, like what happened in the years leading up to 2008.
I am also reading this book " Active Equity Management" from a couple of MIT professors, but it's sort of a side subject on how short-term algo traders do signal processing and build models to exploit low latency trading, which is really not my main focus. (If you want a more readable article on high frequency stuff, Gomber et al. at some German university wrote a very good article, " High-Frequency Trading.")
But what I am really fascinated by these days is the utter simplicity of this 2013 journal article, " A Quantitative Approach to Tactical Asset Allocation", by Mebane T. Faber. It just constructs a simple investing strategy based on making a decision once a month to invest, based on the current stock market index versus its simple 200-day moving average. Those stats are of course really easy to get (e.g., LINK), and you can see Mebane Faber's Timing Model webpage.
According to this guy, if I don't want to worry too much about following the market, then I can just sit back, wait for the S&P 500 current price to cross its 200-day moving average, and then re-enter the market then. (He didn't invent the strategy, which is common, but he does testing and updates on it that are available to the public.) It does seem to make good common sense... "don't try to catch a falling knife" and all that.
Back last summer, I guesstimated that the AFTY index for Chinese markets might fall to 15.50, but it's gone way below that. I guesstimated that the S&P 500 would fall to maybe a little below 1,800, but who knows when and where the trough will really occur? Nobody does, and yet, the quantitative momentum strategies are real, and really do seem to work whenever they are rigorously backtested with empirical data.
So I will sit, watch, and be waiting patiently for that next crossover of the S&P 500 above the 200-day moving average.
The 4 guys I like to follow the most are Cliff Asness (at his AQR blog, Cliff's Perspective, for long-term quantitative investment strategies), Bill Gross (who does his monthly Investment Outlook at Janus for the bond market, and calls Soros-like opportunities from time to time), Bill Ackman (just for fun, to follow the PE world), and Robert Shiller (using his Online Data at Yale to do careful historical tracking of U.S. equity & home prices for "bubble watching").
I think I mentioned Cliff's best paper on this board before: " Value and Momentum Everywhere." I am now reading a book written by one of his co-authors, Lasse Pedersen, " Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined."
Basically, the idea is that it takes some time and resources to be able to exploit small arbitrage opportunities in the capital markets, so given that cost, it makes sense for some inefficiencies to exist in markets, until they get big enough for professionals to make profits off them.... thus the amount of remaining inefficiency in the markets will typically stand at a relatively efficient level, from the perspective of the professional investors' profit levels and costs. This idea interests me a lot, because in the b-school courses I took I had EMH drilled into me, and it caused me to miss a lot of the large-scale inefficiencies that can exist in markets from time to time, like what happened in the years leading up to 2008.
I am also reading this book " Active Equity Management" from a couple of MIT professors, but it's sort of a side subject on how short-term algo traders do signal processing and build models to exploit low latency trading, which is really not my main focus. (If you want a more readable article on high frequency stuff, Gomber et al. at some German university wrote a very good article, " High-Frequency Trading.")
But what I am really fascinated by these days is the utter simplicity of this 2013 journal article, " A Quantitative Approach to Tactical Asset Allocation", by Mebane T. Faber. It just constructs a simple investing strategy based on making a decision once a month to invest, based on the current stock market index versus its simple 200-day moving average. Those stats are of course really easy to get (e.g., LINK), and you can see Mebane Faber's Timing Model webpage.
According to this guy, if I don't want to worry too much about following the market, then I can just sit back, wait for the S&P 500 current price to cross its 200-day moving average, and then re-enter the market then. (He didn't invent the strategy, which is common, but he does testing and updates on it that are available to the public.) It does seem to make good common sense... "don't try to catch a falling knife" and all that.
Back last summer, I guesstimated that the AFTY index for Chinese markets might fall to 15.50, but it's gone way below that. I guesstimated that the S&P 500 would fall to maybe a little below 1,800, but who knows when and where the trough will really occur? Nobody does, and yet, the quantitative momentum strategies are real, and really do seem to work whenever they are rigorously backtested with empirical data.
So I will sit, watch, and be waiting patiently for that next crossover of the S&P 500 above the 200-day moving average.
Posted on 2/7/16 at 5:02 am to Doc Fenton
Reuters (Feb. 5): " Yield curve moves flash global recession warning signs"
Now down to a 1.85% yield.
Typically the spread needs to actually go negative (not just to 110 bp) to signal a coming recession. Still, it's hard to make sense of what all this means in a ZIRP environment, and also in the midst of a global savings glut and deflationary headwinds, but even supposing that a U.S. macroeconomic recession is not coming, a flattening yield curve does indicate lower growth prospects. Additionally, I still maintain that we are in a corporate earnings recession (regardless of whether we are in a macroeconomic recession), and if that pulls down asset prices, then that will count as an additional headwind on the macroeconomy.
quote:
The U.S. two-year/10-year yield curve, the difference between two-year and 10-year borrowing costs, this week fell to 110 basis points, the flattest in eight years US2YT=RR US10YT=RR.
The 10-year yield fell below 1.90 percent and is down more than 40 basis points since the Federal Reserve's historic interest rates "liftoff" in December.
Now down to a 1.85% yield.
Typically the spread needs to actually go negative (not just to 110 bp) to signal a coming recession. Still, it's hard to make sense of what all this means in a ZIRP environment, and also in the midst of a global savings glut and deflationary headwinds, but even supposing that a U.S. macroeconomic recession is not coming, a flattening yield curve does indicate lower growth prospects. Additionally, I still maintain that we are in a corporate earnings recession (regardless of whether we are in a macroeconomic recession), and if that pulls down asset prices, then that will count as an additional headwind on the macroeconomy.
Posted on 2/7/16 at 5:12 am to Doc Fenton
Impressive. Wish you would have went balls deep though and made some cash.
Posted on 2/7/16 at 7:06 am to I Love Bama
I should of shorted more Nokia stocks before the settlement. However, I work for them so that would of been maybe a bad thing no? 
Prior to settlement they were going for 7.45 now it's right around 6.25 before I left work.
Prior to settlement they were going for 7.45 now it's right around 6.25 before I left work.
Posted on 6/8/16 at 7:16 pm to Doc Fenton
Alright, I am now in the market putting my money where my mouth is, and shorting SPX. I took Iowa Golfer's advice and have placed orders to buy further out-of-the-money than I had been thinking about the last time I considered buying puts.
S&P 500 = 2,119.12 (Wednesday close)
SPXU = 26.25 (Wednesday close)
Put Options = 42.40 (ask for Mar-2017 at 1750 strike)
The cost is (100) x ($42.40) = $4,240 for each put option contract, so I hope I'm right on this.
I was emboldened by the S&P 500 reaching near its May 2015 peak, and also by a recent release by Goldman Sachs indicating that they are giving bearish news to their investors: " Goldman Says There's an Elevated Risk of a Big Market Selloff." Previously I had cited GS as one of the most unrealistically bullish equity research groups among the major banks. If even they are starting to go bearish, then that would seem significant.
S&P 500 = 2,119.12 (Wednesday close)
SPXU = 26.25 (Wednesday close)
Put Options = 42.40 (ask for Mar-2017 at 1750 strike)
The cost is (100) x ($42.40) = $4,240 for each put option contract, so I hope I'm right on this.
I was emboldened by the S&P 500 reaching near its May 2015 peak, and also by a recent release by Goldman Sachs indicating that they are giving bearish news to their investors: " Goldman Says There's an Elevated Risk of a Big Market Selloff." Previously I had cited GS as one of the most unrealistically bullish equity research groups among the major banks. If even they are starting to go bearish, then that would seem significant.
Posted on 6/8/16 at 7:51 pm to Doc Fenton
Keep us posted. Don't get greedy. After the election is good, and you're far enough out that you should have plenty of 10% swings in premium between now and expiry. You can always sell to close, bank some profit, and buy more puts if you think the situation warrants it.
Earnings, or in my opinion, faked earnings through buy backs, we're always my concern, and the reason I took profits and placed those profits in other assets classes.
I don't have an SPX bet, but still continue to buy insurance for a 20% correction with VIX calls.
I'm long both natural gas and silver currently. The natural gas long is volatile, and I watch it closely. My silver long has a 2-3 year time horizon. Paper silver, a synthetic long on SLV. I own physical silver as well, cost basis below $10.00. My SLV was incredibly cheap, and already a significant unrealized gain. I've taken none of this off the table yet.
I continue to watch copper and aluminum. I actually bought some junk bonds. You really made me look at commodities with your other thread, and I've always traded them anyway.
I'm crazy though. But I do try my best to stick with what I know.
Earnings, or in my opinion, faked earnings through buy backs, we're always my concern, and the reason I took profits and placed those profits in other assets classes.
I don't have an SPX bet, but still continue to buy insurance for a 20% correction with VIX calls.
I'm long both natural gas and silver currently. The natural gas long is volatile, and I watch it closely. My silver long has a 2-3 year time horizon. Paper silver, a synthetic long on SLV. I own physical silver as well, cost basis below $10.00. My SLV was incredibly cheap, and already a significant unrealized gain. I've taken none of this off the table yet.
I continue to watch copper and aluminum. I actually bought some junk bonds. You really made me look at commodities with your other thread, and I've always traded them anyway.
I'm crazy though. But I do try my best to stick with what I know.
Posted on 6/8/16 at 9:21 pm to Iowa Golfer
Every macro factor is bad, retail money has been flowing out for week, the spy volume is dismal at best and yet we keep levitating higher. I almost feel like theyre gonna let this rise into the election to give dems a nice shot at winning but who knows maybe this hovers up here till the end of summer and all the fund managers come back from summer breaks and retail money comes back in after missing a run up and sends us to the blow off top.
Sentiment is awful right now and we're still going higher its really amazing
Sentiment is awful right now and we're still going higher its really amazing
Posted on 6/9/16 at 8:22 am to Doc Fenton
quote:
The cost is (100) x ($42.40) = $4,240 for each put option contract, so I hope I'm right on this.
What exactly did you buy?
Posted on 6/9/16 at 11:55 am to I Love Bama
quote:
Impressive. Wish you would have went balls deep though and made some cash.
Posted on 6/9/16 at 12:17 pm to Iowa Golfer
quote:
What exactly did you buy?
i think he's saying he purchased 1 put at a strike price of $1,750.
Posted on 6/9/16 at 12:40 pm to Grits N Shrimp
He must have made the trade in a dark pool, or done it quite a while back. I went through the last several months trades, and nothing moved at the premium he indicated.
Posted on 6/9/16 at 2:45 pm to Iowa Golfer
$200 puts for March of 2017 seem to be going for about $9.80. Is that considered expensive?
Posted on 6/9/16 at 4:13 pm to LSUtoOmaha
I'm not sure what you're trying to accomplish, but you're looking at mini options? XSP maybe? Or a mini on hte actual futures contract?
By traditional measures, these are very expensive, as were Doc. Fentons.
But for a variety of reasons, Black Scholes, etc, are not a good measure with certain options, VIX and SPX, SPY etc being some of those.
That's why I asked what you're trying to accomplish. Insurance? Speculation? Hedging another position?
There is no easy answer, although you could go ask the economists on the poli board, and they would tell you I'm incorrect about Black Scholes. And then you could ask them why the options I mentioned above are never priced in accordance with their academic theories that they like to debate about, all the while never making the trades themselves. Or probably understanding the real world applicability of.
Some of these folks apparently are going to turn into CFA's. We're lucky on this board to have a couple of them that actually posts things that are realistic and helpful.
Three specifically on this board. A banker type. A CFA type, and I believe a financial planner. I don't always agree with them, but their posts are almost always unbiased, without an agenda, and posted from a practical perspective, not posted to promote a meaningless academic debate.
By traditional measures, these are very expensive, as were Doc. Fentons.
But for a variety of reasons, Black Scholes, etc, are not a good measure with certain options, VIX and SPX, SPY etc being some of those.
That's why I asked what you're trying to accomplish. Insurance? Speculation? Hedging another position?
There is no easy answer, although you could go ask the economists on the poli board, and they would tell you I'm incorrect about Black Scholes. And then you could ask them why the options I mentioned above are never priced in accordance with their academic theories that they like to debate about, all the while never making the trades themselves. Or probably understanding the real world applicability of.
Some of these folks apparently are going to turn into CFA's. We're lucky on this board to have a couple of them that actually posts things that are realistic and helpful.
Three specifically on this board. A banker type. A CFA type, and I believe a financial planner. I don't always agree with them, but their posts are almost always unbiased, without an agenda, and posted from a practical perspective, not posted to promote a meaningless academic debate.
This post was edited on 6/9/16 at 4:21 pm
Posted on 6/10/16 at 5:59 pm to Iowa Golfer
Nothing, because I'm a noob at trading who messed up.
When I saw the market where it was Wednesday afternoon, I knew it was a good time to buy SPX put options. I don't do any trading at work though. So I waited until I got home to put in my order for X contracts.
You can't put in a market order after hours, so I put in a limit order at $42.40, and figured the market will keep drifting back-and-forth enough to where it will get triggered eventually. Of course it didn't.
If you've seen the news the past 2 days, you know that the market opened significantly lower on both days, and never went back up. So that $42.40 ask was non-existent on Thursday. I put in another order for $44.00 on Friday morning, but that didn't happen either.
So I'm in a weird spot. I correctly picked a very good spot to buy, but I wasn't able to lock in a price until after hours, at which point I missed it; and now that the ask has drifted up above $50 (already an almost 20% jump in just two days!), I don't want to buy after that big of a move up.
I still have all my cash, so it's not like I lost any money, and in a NIRP environment, you can't feel bad about not having any losses. It still feels like I lost money though. I've been kicking myself watching the market ticker for the last two days.
The funny part is, had I seen an initial price of $45 on Wednesday, I probably would have taken it, but now I just can't seem to get over missing a good buying entry point. So I think I'm going to just wait this out unless the market drifts back above 2,120 like it did on Wednesday. FML.
When I saw the market where it was Wednesday afternoon, I knew it was a good time to buy SPX put options. I don't do any trading at work though. So I waited until I got home to put in my order for X contracts.
You can't put in a market order after hours, so I put in a limit order at $42.40, and figured the market will keep drifting back-and-forth enough to where it will get triggered eventually. Of course it didn't.
If you've seen the news the past 2 days, you know that the market opened significantly lower on both days, and never went back up. So that $42.40 ask was non-existent on Thursday. I put in another order for $44.00 on Friday morning, but that didn't happen either.
So I'm in a weird spot. I correctly picked a very good spot to buy, but I wasn't able to lock in a price until after hours, at which point I missed it; and now that the ask has drifted up above $50 (already an almost 20% jump in just two days!), I don't want to buy after that big of a move up.
I still have all my cash, so it's not like I lost any money, and in a NIRP environment, you can't feel bad about not having any losses. It still feels like I lost money though. I've been kicking myself watching the market ticker for the last two days.
The funny part is, had I seen an initial price of $45 on Wednesday, I probably would have taken it, but now I just can't seem to get over missing a good buying entry point. So I think I'm going to just wait this out unless the market drifts back above 2,120 like it did on Wednesday. FML.
Posted on 6/10/16 at 6:51 pm to Doc Fenton
Just be patient and wait. You can be angry all you want. You just can't trade, or invest on emotion.
There is someone out there on the other side of the trade, when the trade is right.
This is not the friendly economic debate about tariffs citing academics, this is different. You want to rip the other guy's head off.
VIX was up again today. It will settle. So will SPX. Wait. Your 1750 target is a long term target, and you don't need to jump in before the time in right.
You might consider just playing around with OVX. Not right now, but something to pass your time, and take your mind off of missing the opportunity. Maybe a $200 play on oil volatility if you really need to do something.
I'm still fuming that I left money on the table on my long oil. But I closed it, took my modest profit, and just fumed. I haven't traded since because there has been no real opportunity, and I'd be trading on emotion. I force myself to just sit and wait.
Look at how my larger trades on here are spaced. Over a span of years. Long natural gas. Then nothing until recently. Long oil, and out. Long silver. Long ERN, still ongoing, but took principal out. Nothing really since these, except buying some MMM and CVX on dips. A couple of pair trades. A couple of income producing puts and calls. But virtually no really big trades. All the larger ones are spaced out, not on purpose, but becuase I force myself to try to wait until I think the time is right. If I miss an opportunity, I find something else to occupy my time. I just walk away. Golf, fish, eat chocolate, whatever. Or drop a dime on some short term calls or puts. Nothing major.
On each I closed at least a portion at a gain, let some ride in some instances, closed completely on others. Natural gas is a good example. It's been over a year before I dipped my toes back in.
I don't know if you're right or wrong, but I know you've done a ton of research to lead you to believe that short equity is the correct play. O.K., so be it, you've made up your mind. Now discipline. Go in at your price point, at your time. And if you missed it completely, you really need to learn discipline, becuase you might need to wait years for another "perfect' set up.
There are traders. There are guys addicted to trading, and can't not trade. Don't be the second guy. Rarely can you win day trading anymore. You can win with some well thought out occasional trades. But discipline is so very, very important. Especially if you miss and need to wait several years to go again. But better to eat it, take your frustration out somewhere else, than jump in angry and lose money foolishly.
There is someone out there on the other side of the trade, when the trade is right.
This is not the friendly economic debate about tariffs citing academics, this is different. You want to rip the other guy's head off.
VIX was up again today. It will settle. So will SPX. Wait. Your 1750 target is a long term target, and you don't need to jump in before the time in right.
You might consider just playing around with OVX. Not right now, but something to pass your time, and take your mind off of missing the opportunity. Maybe a $200 play on oil volatility if you really need to do something.
I'm still fuming that I left money on the table on my long oil. But I closed it, took my modest profit, and just fumed. I haven't traded since because there has been no real opportunity, and I'd be trading on emotion. I force myself to just sit and wait.
Look at how my larger trades on here are spaced. Over a span of years. Long natural gas. Then nothing until recently. Long oil, and out. Long silver. Long ERN, still ongoing, but took principal out. Nothing really since these, except buying some MMM and CVX on dips. A couple of pair trades. A couple of income producing puts and calls. But virtually no really big trades. All the larger ones are spaced out, not on purpose, but becuase I force myself to try to wait until I think the time is right. If I miss an opportunity, I find something else to occupy my time. I just walk away. Golf, fish, eat chocolate, whatever. Or drop a dime on some short term calls or puts. Nothing major.
On each I closed at least a portion at a gain, let some ride in some instances, closed completely on others. Natural gas is a good example. It's been over a year before I dipped my toes back in.
I don't know if you're right or wrong, but I know you've done a ton of research to lead you to believe that short equity is the correct play. O.K., so be it, you've made up your mind. Now discipline. Go in at your price point, at your time. And if you missed it completely, you really need to learn discipline, becuase you might need to wait years for another "perfect' set up.
There are traders. There are guys addicted to trading, and can't not trade. Don't be the second guy. Rarely can you win day trading anymore. You can win with some well thought out occasional trades. But discipline is so very, very important. Especially if you miss and need to wait several years to go again. But better to eat it, take your frustration out somewhere else, than jump in angry and lose money foolishly.
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