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Tempted to sell the news

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  • FIREshrink
    replied
    Der...

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  • Zaphod
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    Why sell because of the news? I would think it is a short-term buying opportunity.

    I am mostly sticking to a “dumbbell portfolio” but I think that the passage of this bill will cause equities (or small cap, but maybe not tech) to move up (which it has been doing for the last two weeks probably anticipating the passage of the bill). Friday was a gift and added to the little exposure to IWM (or equities for that matter) that I have. Personally, I think equities will go up in the short term but have stayed out of this last leg. But I really wonder about rates and if/when the rates breaks 3% (i.e. inflationary spike), we will see how equities will respond. If equities tank (like it has historically at these valuations), my “dumbbell portfolio” is ready. If equities rise (like it does with emerging markets), this “dumbbell portfolio” is ready. Who knows what will happen, the major thing is to manage risk. I may be wrong, but then again that is what makes a market.
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    Def short term. BTFD still on until it aint.

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  • mitochondria
    replied
    For young physicians investing early in their careers, keep marching forward by regularly investing in a broad diversified equity portfolio, stick to it and maintain a long term vision.  Don't let the fluctuations scare you and don't try to predict them...

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  • Hatton
    replied
    I have been long QQQ since about 2008-9.  I have more generic indexes now but held QQQ.  In past volatile times when I did not know what to do with cash I bought QQQ or SPY.

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  • Zaphod
    replied







    This is simply a melt up due to market makers and certain systematic hedge funds being very short SPX gamma. Honestly not a lot of downside to selling the news. Vol bid up in event anticpation, and if it fails, will increase dramatically and if passes the air will let out of the bid and a vol crush. Have a small straddle for that right now.

    Actually got mostly out on Tuesday, rest out yesterday morning as all these crazy drivers are a bit disconnected and would rather it settle first.

    Reminds me of Brexit from a risk/reward standpoint though different mechanism than whats happening today.
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    Are you day trading? Please tell us with what % of your portfolio doing the risk on/off stuff with.

    You’re brilliant and provide great financial and life insight. Active trading falls outside the normal wisdom here. Consider the possibility that you are too smart. Many brilliant people have followed the path of trading and derivatives. Some get rich, many do not.
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    Sometimes yes. Just recognized an asymmetric set up. Worked out this time. Agree you can be too smart for your own good, like I said, I am trying harder and harder to not do anything, its pretty tough. Its not about knowing anything, just probabilities and risk/reward. This happened to be pretty favorable with little downside that I found totally worth the risk.

    I did trade some derivatives, did not catch the full profit, but still great % wise. Knowing how dumb it can be, it was a measly gain in dollar terms due to position sizing appropriately. This is a tiny portion of my account, less than 5%, and this particular trade was like 45 bucks, so nothing crazy.

    In my main retirement account I will periodically go to all cash and basically am now. Though I will trade leveraged index (qqq, spy) funds and sometimes keep a 100% exposure with much less, etc...

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  • beagler
    replied




    This is simply a melt up due to market makers and certain systematic hedge funds being very short SPX gamma. Honestly not a lot of downside to selling the news. Vol bid up in event anticpation, and if it fails, will increase dramatically and if passes the air will let out of the bid and a vol crush. Have a small straddle for that right now.

    Actually got mostly out on Tuesday, rest out yesterday morning as all these crazy drivers are a bit disconnected and would rather it settle first.

    Reminds me of Brexit from a risk/reward standpoint though different mechanism than whats happening today.
    Click to expand...


    Are you day trading? Please tell us with what % of your portfolio doing the risk on/off stuff with.

    You're brilliant and provide great financial and life insight. Active trading falls outside the normal wisdom here. Consider the possibility that you are too smart. Many brilliant people have followed the path of trading and derivatives. Some get rich, many do not.

    Leave a comment:


  • TheCHFinancialAdvisor
    replied
    In my former life as a professional risk taker (i.e. bank paid swing trader), you learned very quickly that no-one ever knows what made a market move - even in hindsight.

    For my money, best way to understand markets is to grasp the following:   Price makes news, news does not make price.

    Have a great weekend everyone!  Go timers!!

    KJF

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  • Zaphod
    replied




    Again I am humbled and submit to the “we know nothin about nothin” folks.

    Market tanking but on Mueller/Flynn news, NOT tax bill, which will pass tonight.

    I don’t know how day traders do it with a straight face. Kinda like the gambler that swears that he is “overall up”.

    Even with this tax bill, I still think it’s a good time to rebalance/shift from US to international based on long term performance and valuations.
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    Mueller/Flynn was also a known risk though, as is nuclear saber rattling this week which has been over shadowed. And again, was an asymmetric set up.

    Now that tax bill looking to have votes may dampen this flynn news, but realized vol increasing (albeit from historic lows). Always an opportunity. Not for most people to mess with and even I shouldnt. Getting better every year at messing with things, but not perfect yet.

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  • TheGipper
    replied
    Again I am humbled and submit to the “we know nothin about nothin” folks.

    Market tanking but on Mueller/Flynn news, NOT tax bill, which will pass tonight.

    I don’t know how day traders do it with a straight face. Kinda like the gambler that swears that he is “overall up”.

    Even with this tax bill, I still think it’s a good time to rebalance/shift from US to international based on long term performance and valuations.

    Leave a comment:


  • Zaphod
    replied
    Not a bad day...

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  • FIREshrink
    replied
    My written financial plan says to sell CAPE > 25 and sell more at CAPE > 30 but I have delayed for months because I do not see any evidence of imminent demise.

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  • The White Coat Investor
    replied




    Tax bill is basically a done deal now. Tempted to sell the news. Maybe my opportunity to sell 1/3 of US stocks, which is all I can do without tax consequences anyway. Guess that would move me to 75% international stocks, up from 60% now. Or make me 53/47 stocks and bonds if I bought bonds, down from 61% stocks now.

    The bull market and other factors make me have very little need for risk.
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    Does your written financial plan say to buy the rumor and sell the news, or is that some idea you got from CNBC?

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  • djohnflatfeecfp
    replied
    Dang.  I'm getting out.  The sunspots never lie!

    http://www.thinkadvisor.com/2017/11/30/biggest-crash-ever-is-probably-coming-by-2020-harr?eNL=5a20698a140ba0057e9acdf8&utm_source=TA_DailyWire&utm_medium=EMC-Email_editorial&utm_campaign=11302017&page_all=1

     

    "You write that your “new secret weapon” is sunspot cycles. That sounds iffy.

    I get a lot of flak about that one. We’re in a down cycle now, and it won’t bottom till around early 2020. Demographics tell you when the economy will slow, but sunspots tell you when a crash or major stock correction is going to happen. We researched sunspot cycles, recessions and major financial crises as far back [as possible], and 11 out of 11 happened in a down sunspot cycle."

     

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  • BladeRunner
    replied
    I will never claim to be the savviest investor, especially in this forum of super smart people, but after 30 years of watching the markets, the only thing that I feel certain to say with any confidence is that "no one knows nuthin".

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  • Zaphod
    replied
    The thing about it is if one is to do any kind of timing, this is what could be considered an asymmetric set up. The market has basically priced in the tax bill passing in some form or another. If it does, big deal, maybe a couple points.

    As I alluded to earlier, the crazy climb we're seeing in equities is not the tax bill, its the result of MM/dealers being very short gamma/delta hedging. Remember that hedge fund in March this year that nearly went bust? Same thing was happening then, very short gamma, all dips bought as its profitable to MM books from a delta hedge stand point, have to cover your gamma as market goes higher (buy ES futures).

    If it doesnt pass, this isnt priced in (though given this admin/congress' track record is a good bet) you have an opportunity to profit from your setup of likely not much more upside, and possibly (anything can happen) much larger downside. Not a bad bet. I was out Tuesday for the most part 2/2 to this and a couple other reasons (weirdness in volatility, other setups/catalysts abound).

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