Down goes the Dow

seattle prattle wrote:

yes he sold his XLE and Ira call the whole discussion (like it was yesterday).

He said on Monday that he had sold some of it. I guess he sold the rest since then.

Initially I sold part of my position, and with the continued move up, sold it all. It just had moved way too far and fast based on fundamentals. Perhaps some big short covering, I assume. The global economy will remain challenged, as well as the oil and gas industry. I hope to buy it back at some point, and if not move on. I have never owned XOM individually, but I did make some recent comparative comments relative to MSFT and AAPL, which over the short run were provident.

Maserati wrote:

As an investment.

Well based on Tesla's results, I'd say Hyundai sells about a million cars too many for it to be a good investment.

VIX got crushed this whole month. I'd say get in while you still can but that time was about 6 months ago.

It was agip that said buy the market when Vix hit 30s. I would assume the opposite is true now it has fallen to 20.

Do you guys think a high cash allocation is pointless for the next year?

Maybe go down to 12 months worth of moderate cost of living? For a single guy in a tier 1 city that would be close to 30k.

Swaglord_the_real_one_1_1_1 wrote:

Do you guys think a high cash allocation is pointless for the next year?

Maybe go down to 12 months worth of moderate cost of living? For a single guy in a tier 1 city that would be close to 30k.

It would depend a lot on how much of a margin you have elsewhere, like other investments, a second income in the household, mortgage paid, etc.

I mean, it's not the kind of thing i would be too worried about but it depends on one's temperament.

Yeah Igy, I’m thinking of selling my Tsla because the rate of appreciation has outstripped the fundamentals?.

Seriously though, even I am tempted to sell at this point, I have made something like 36 or 37% on it. Unless I buy back the gold under wash sale rules, I will have a good loss to play off against. I might buy back the gold just before the end of the year, depending on where it is at the time.

Anybody else do any tax loss harvesting?

Swag, here is my opinion fwiw, which might not be much because I have failed in this new environment—a strong cash position will be advantageous, but timing will be key, as always. I think I will pick up some airlines on a dip, they are still cheap-ish. Yes I know Q4 numbers and probably Q1 also, but vaccines will revive that industry, it is one place that will really benefit from pent-up demand and improve, even as fuel costs might rise.

I have converted to believe that over the next year, deflation will obtain, depending on how it is calculated—unless there is a rebound combined with helicopter money direct to consumers. Business failures will finally begin to be felt through the economy, and as Igy is fond of saying, the marginal benefit of each additional stimulus dollar decreases. It is already very little, and the next round will be even less.

Stay in selected things for the stimulus and vaccine deployment, then get out and wait to see how things shake out once new policies start being articulated. More than a few are predicting a real equities crash within 2 years. My own view is that there will be at least a good buying opportunity coming up, if not a complete crash.

In fact I think it was Dent who tried to make the case that it would be so bad that the things to buy will be the same things that did well during and after the depression—30-yr treasuries, and AAA corporate bonds.

Things have changed, though. This recovery in equity prices is unprecedented. Fed printing is off the charts. Stimulus is equally epic, and will get bigger. The Fed will now actively try to create inflation, but will have to do it through velocity increase, because they have said that they will never raise rates. The dollar continues to fall, but should rebound in an “economic” rebound. Gold is now not uncorrelated to anything in particular—USD, inflation, etc.

Bitcoin and maybe Litecoin or Ethereum is/are looking like the only wildcard(s). Manipulated? Absolutely. But what isn’t? Gold? BS, there is proven manipulation. Stocks? BS, there is proven manipulation through spoofing/futures. Bonds? Proven rating manipulation. My $200 bitcoin purchase is now down only 2.2%?.

I am curious to see if residential RE holds its value. At this point I might suggest that you look at some if you can afford it.

My 2 cents. I am strongly in cash, almost overwhelmingly if you exclude RE and art. My equities are just making up for dollar weakness. I hold no bonds, and have nothing to do with commercial RE.

Good one on TSLA, here is good reference to the insanity:

https://twitter.com/charliebilello/status/1332369964033073155

Ghost of Igloi wrote:

It was agip that said buy the market when Vix hit 30s. I would assume the opposite is true now it has fallen to 20.

nah, the VIX only works as a buy signal, not a sell signal.

in other words, while a high VIX is virtually always a good buy signal, a low VIX is not a good sell signal.

The VIX can remain low for a long long time as the market ascends.

"If the VIX is high, it's time to buy" tells us that market participants are too bearish and implied volatility has reached capacity. This means the market will likely turn bullish and implied volatility will likely move back toward the mean. The optimal option strategy is to be delta positive and vega negative; i.e., short puts would be the best strategy. Delta positive simply means that as stock prices rise so too does the option price, while negative vega translates into a position that benefits from falling implied volatility.

"When the VIX is low, look out below!" tells us that the market is about to fall and that implied volatility is going to ramp up. When implied volatility is expected to rise, an optimal bearish options strategy is to be delta negative and vega positive (i.e., long puts would be the best strategy).

—Investopedia

Currently very few shorts on the market and institutions one of highest percentage long—ever.

Weekly return data

Some very large numbers here.

Ranked by one month return

XLE (energy)

1m +35%

3m +11

12m -28%

VB (Small Caps)

1m +14

3m +17

12m +14

VTV (Value)

1m +14

3m +9

12m +2

VTI (USA total market)

1m +9

3m +7

12m +19

VGT (Tech)

1m +6

3m +3%

12m +42%

China (CXSE)

1m +5

3m +11

12m +62

Previously out of favor sectors continue to bounce back - contrarians could have made good coin in those. But knowing when to buy into poorly-performing names is the hard part. Obviously Igy hit gold with XLE, so it's not impossible.

Previously hot sectors tech and China are still making money, but are underperforming.

Like one of the commenters, my wife thinks the Iran-Israel situation is the one. She was right about Syria, she has that dog sense.

My btc now down only 1.16%. Lol volatility.

This continuous trading action is interesting, even beats Forex for ease?.

Into the great unknown... If Iran-Israel erupts, what happens to btc, since apparently Iran is one of only a few power users?

Of course oil prices, vix up, Treasuries up, down stocks....hard to say on many assets, since they are just sold and go to cash....

Maserati wrote:

My btc now down only 1.16%. Lol volatility.

This continuous trading action is interesting, even beats Forex for ease?.

Into the great unknown... If Iran-Israel erupts, what happens to btc, since apparently Iran is one of only a few power users?

I've made 97 cents on my bitcoin venture. That's not less than 5%, friends.

I shall brag about my crypto trading acumen for a long time.

But seriously...I wonder if buying a set amount of Bitcoin every week or month would make sense. To get away from central bank tyranny. On the one hand it makes sense theoretically. But on the other hand you are simply putting your money into air, with no FDIC, SIPC or anything like that.

agip wrote:

Maserati wrote:

My btc now down only 1.16%. Lol volatility.

This continuous trading action is interesting, even beats Forex for ease?.

Into the great unknown... If Iran-Israel erupts, what happens to btc, since apparently Iran is one of only a few power users?

I've made 97 cents on my bitcoin venture. That's not less than 5%, friends.

I shall brag about my crypto trading acumen for a long time.

But seriously...I wonder if buying a set amount of Bitcoin every week or month would make sense. To get away from central bank tyranny. On the one hand it makes sense theoretically. But on the other hand you are simply putting your money into air, with no FDIC, SIPC or anything like that.

I am trying to think of ways that could bite you.

One would be that the IRS announces it would require brokers of crypto to issue 1099 forms for any purchase or holding over $100.

But in general, the more crypto is held by large institutions and less by a small number of whales, the more stable it will be. The way it has performed up to now, it seems to be manipulated to trap unwary holders into losing.

I am up 0.32% now. Agip you are the better man?.

Yes btc could well have been about shearing the sheep—but it’s so new that short-term panickers could be getting progressively replaced by longer-term holders like institutions and more serious investors who have the inertia to be able to hold through the volatility.

Heck even if that’s not true, it seems like there will be constant buying by the bitcoin trust and other custodians like PYPL. Unfortunately that possible reduction in volatility might mean an end to upward price action. I.e. it could get frozen-in-place at a certain price, said freeze getting harder the more concentrated ownership becomes.