Is this rally for real?

[PatientCheetah]

why not just follow the flow and stop trying to predict the future? buy quality business at reasonable valuation that has both price and business momentum and get out if momentum sags later on  ;)

[SmallCap]

Does anyone else besides me start losing interest in your investments when there are 2 up weeks in a row in the market. there has to be a name for a disorder like that but I'm not sure what it is.

[Palantir]

Does anyone else besides me start losing interest in your investments when there are 2 up weeks in a row in the market. there has to be a name for a disorder like that but I'm not sure what it is.

 

In fact there is a name: http://www.urbandictionary.com/define.php?term=hipster

[Graham Osborn]

I like making predictions, but have come to realize even if my prediction is the most probable outcome the real question is what is the absolute probability of that outcome - the essential piece of information in order to make money.  That said, I think the most probable outcome is:

 

1. This rally stalls quicker than the last one.  If it doesn't reach the SMA200, sooner.  If it does, later.  But within 6 months.

 

2. The S&P will have lost over half its value by year end, most likely 1/3+ by November.

 

3. Commodities will rally sharply by Jan 2018.

 

FWIW, I think Jim Rogers is not a good market timer.  PTJ is a good one.  WSJ is a terrible one.  If you believed the rhetoric recently you'd think Black Monday was right around the corner.

 

As some here have noted, this is not a good question for COBAF.  Most here are value investors and the whole point of the craft is to obviate the need for market timing.  The only reason I care is because I am more macro than value.

 

The other thing to realize is that being almost right on a call like that is almost as bad as being completely wrong.  You'll unfailingly trade too early on what you know or read into things where you shouldn't, and you'll lose money 9 times out of ten.  So my advice is: sell what you can when you like, but don't go short.  There is no faster path to the madhouse than shorting too early.

[writser]

What % would you estimate for this scenario?

[Graham Osborn]

What % would you estimate for this scenario?

 

If I could answer that I'd have a mansion and a turkey farm instead of a 1BR and a day job :)

[merkhet]

What % would you estimate for this scenario?

 

If I could answer that I'd have a mansion and a turkey farm instead of a 1BR and a day job :)

 

How are you handicapping the idea that:

 

That said, I think the most probable outcome is:

 

1. This rally stalls quicker than the last one.  If it doesn't reach the SMA200, sooner.  If it does, later.  But within 6 months.

 

2. The S&P will have lost over half its value by year end, most likely 1/3+ by November.

 

3. Commodities will rally sharply by Jan 2018.

 

I mean, I suppose you don't need an exact percentage, but you would need a range, right? Like a rough range? Otherwise, how do you know if it's more probable than the next one?

[randomep]

What % would you estimate for this scenario?

 

If I could answer that I'd have a mansion and a turkey farm instead of a 1BR and a day job :)

 

How are you handicapping the idea that:

 

That said, I think the most probable outcome is:

 

1. This rally stalls quicker than the last one.  If it doesn't reach the SMA200, sooner.  If it does, later.  But within 6 months.

 

2. The S&P will have lost over half its value by year end, most likely 1/3+ by November.

 

3. Commodities will rally sharply by Jan 2018.

 

I mean, I suppose you don't need an exact percentage, but you would need a range, right? Like a rough range? Otherwise, how do you know if it's more probable than the next one?

 

Ok you think that the S&P 500 will LIKELY drop by 1/2. Ok why don't you act on it? S&P 500 futures puts for 1700 strike is 50. if it goes to just 1200 (just 40% drop) you will make 10x your premium.  Just think 10:1 odds if you are right!

 

 

[Graham Osborn]

Even if I knew it wouldn't be useful.  Humans make mistakes.  The key is not being right but always having a plan for being wrong.  The rules I've picked up as a naive young trader over the past year are:

 

Most trades don't work.

You're wrong unless you're right at the right time.

It's more important to make money than to be right.

It's more important to have peace of mind than to make money.

The keys to peace of mind are: (1) margin of safety (2) ample liquidity (3) minimal leverage.

If your mind is not at peace, get the hell out of the market before you blow yourself up.

 

Soros' son often joked that Soros' market prognostications were mostly hogwash and he was simply great at following a trend and flip-flopping on a dime.  I have never known a flakier trader than Soros - or one better at trading his way out of a bind.

[Graham Osborn]

Ok you think that the S&P 500 will LIKELY drop by 1/2. Ok why don't you act on it? S&P 500 futures puts for 1700 strike is 50. if it goes to just 1200 (just 40% drop) you will make 10x your premium.  Just think 10:1 odds if you are right!

I'll consider selling S&Ps if the rally makes it above the SMA200.  Short of that there would be too much risk of a further rally - as we have seen.  I don't think anyone would have the temerity to hold on through a choppy bear market for a full 50% drop - anyone who is trading index futures is unlikely to hang on for that big a stretch in a choppy bull market.  Plus if you trade it you can make money even if it turned out to be an intermediate term correction provided you recognized the fact and didn't fight it.

 

As you might imagine offsetting the liquidity and leverage requirements.  I am not a heavy futures trader but it's less of a racket than leveraged ETFs.

 

For me I bought 2017 > 2018 OOM puts on various leveraged stocks.  What a mistake!  For one thing, I should have contented myself with futures or shorts where I have greater control, if I had the need to be bearish.  But even if I'm right and the market does tank in the period I described, the volatility will be unlikely to offset the decline in time value for the puts.  I'm hanging onto those puts because they are basically a pile of paper after this rally and should likely be worth more at some point during the year.  Never again - worst trade of my life.

 

 

[writser]

You come up with a _very_ extreme scenario, say that it is the 'most probable', but refuse to give any odds / rough estimates. I was trying to get you to come up with a percentage because I was trying to sucker you into a bet that I could easily hedge with a few puts. Good for you that you didn't fall for it. But honestly, if you keep your predictions this vague and you refuse to put your money where your mouth is you should probably keep it for yourself because you are wasting your time (and mine, but I don't have anything better to do).

[Uccmal]

why not just follow the flow and stop trying to predict the future? buy quality business at reasonable valuation that has both price and business momentum and get out if momentum sags later on  ;)

 

At least 3 bullsh*t macro threads going on at the same time on this board.  If some of these characters put as much time into actually studying companies, and learning the practical side of trading, they might actually find something to invest in that didn't have S&P in its title. 

 

When I posted earlier in this thread last week, the TSX was in bear territory.  It is up several percent since then, while people moaned about S&P market valuations, and fretted about whether a rally is real or not.  I bought stocks up to last week, and was selling into the rally yesterday. 

 

[JBTC]

why not just follow the flow and stop trying to predict the future? buy quality business at reasonable valuation that has both price and business momentum and get out if momentum sags later on  ;)

 

At least 3 bullsh*t macro threads going on at the same time on this board.  If some of these characters put as much time into actually studying companies, and learning the practical side of trading, they might actually find something to invest in that didn't have S&P in its title. 

 

When I posted earlier in this thread last week, the TSX was in bear territory.  It is up several percent since then, while people moaned about S&P market valuations, and fretted about whether a rally is real or not.  I bought stocks up to last week, and was selling into the rally yesterday.

 

+1  :)

 

[writser]

Couldn't agree more. A handful of people continually analyze the stool of Ray Dalio and stare at graphs but have never brought up a single actionable idea. There was plenty to do the last few weeks regardless of macro. Please go to the corner of Bridgewater and Soros instead if you don't like money.

[ni-co]

Are you guys frustrated or what's the motivation behind the last few posts?

 

Did we somehow force you into reading the macro threads? Or do we take up too much space in this forum?

 

What's your problem?

 

I suppose you haven't read the subtitle of the "General Discussion" forum: "Feel free to talk about anything and everything on this board".

[TwoCitiesCapital]

Are you guys frustrated or what's the motivation behind the last few posts?

 

Did we somehow force you into reading the macro threads? Or do we take up too much space in this forum?

 

What's your problem?

 

I suppose you haven't read the subtitle of the "General Discussion" forum: "Feel free to talk about anything and everything on this board".

 

They also seem to assume that just because someone is bearish on the S&P that there is no purchasing going on anywhere else and we're wasting our lives away just discussing this...like this guy below

 

Couldn't agree more. A handful of people continually analyze the stool of Ray Dalio and stare at graphs but have never brought up a single actionable idea. There was plenty to do the last few weeks regardless of macro. Please go to the corner of Bridgewater and Soros instead if you don't like money.

 

Just as a follow up to your comments, you can be bearish and still be making money by being long other things in the other opportunities that you assume we're missing for some reason.

 

My portfolio was about 15-17% in oil stocks the past two weeks - I made a lot of money across multiple names

I added significantly to Altius at $5.60 & and $6.30 - I made a good bit of money

I added to FCAU at $5.85 - I made a good bit of money

I added to PDER at $150 - I made money

I rolled 40% of my 401k into emerging market stocks and 10% into HY debt at 10% yields - I made money

 

The S&P rose a few percentage points - I lost a little money, but still in the green for my total short position.

 

Please excuse me while I continue to discuss the macro and the overall expensiveness of the U.S. while making money on both sides of that trade.

 

[ni-co]

With regard to the topic of this thread: I think Burbank has the best take on the current situation. What we are witnessing is a liquidity event happening (unwinding QE).

 

Fundamental guys are like the head of the snake. Sometimes the head carves the path for the body, sometimes the body is making the head go all over the place, which is basically right now.

 

http://de.scribd.com/doc/303060902/Notes-John-Burbank-Passport-at-University-of-Texas-UTIMCO

[Graham Osborn]

Are you guys frustrated or what's the motivation behind the last few posts?

 

Did we somehow force you into reading the macro threads? Or do we take up too much space in this forum?

 

What's your problem?

 

I suppose you haven't read the subtitle of the "General Discussion" forum: "Feel free to talk about anything and everything on this board".

 

They also seem to assume that just because someone is bearish on the S&P that there is no purchasing going on anywhere else and we're wasting our lives away just discussing this...like this guy below

 

Couldn't agree more. A handful of people continually analyze the stool of Ray Dalio and stare at graphs but have never brought up a single actionable idea. There was plenty to do the last few weeks regardless of macro. Please go to the corner of Bridgewater and Soros instead if you don't like money.

 

Just as a follow up to your comments, you can be bearish and still be making money by being long other things in the other opportunities that you assume we're missing for some reason.

 

My portfolio was about 15-17% in oil stocks the past two weeks - I made a lot of money across multiple names

I added significantly to Altius at $5.60 & and $6.30 - I made a good bit of money

I added to FCAU at $5.85 - I made a good bit of money

I added to PDER at $150 - I made money

I rolled 40% of my 401k into emerging market stocks and 10% into HY debt at 10% yields - I made money

 

The S&P rose a few percentage points - I lost a little money, but still in the green for my total short position.

 

Please excuse me while I continue to discuss the macro and the overall expensiveness of the U.S. while making money on both sides of that trade.

 

Smart guy.  I'm about half short and half long oil.  I'd like to diversify into aluminum and some other commodities.  I'm not good at counter trends but I feel there is some secular floor here.  Good luck all.

[Uccmal]

Are you guys frustrated or what's the motivation behind the last few posts?

 

Did we somehow force you into reading the macro threads? Or do we take up too much space in this forum?

 

What's your problem?

 

I suppose you haven't read the subtitle of the "General Discussion" forum: "Feel free to talk about anything and everything on this board".

 

You are right of course.  Carry on.

[Guest Grey512]

I'm open-minded to the possibility of this rally not being real. Also struggling to find many long ideas. So I'm defensively positioned via cash and puts.

[TwoCitiesCapital]

Are you guys frustrated or what's the motivation behind the last few posts?

 

Did we somehow force you into reading the macro threads? Or do we take up too much space in this forum?

 

What's your problem?

 

I suppose you haven't read the subtitle of the "General Discussion" forum: "Feel free to talk about anything and everything on this board".

 

They also seem to assume that just because someone is bearish on the S&P that there is no purchasing going on anywhere else and we're wasting our lives away just discussing this...like this guy below

 

Couldn't agree more. A handful of people continually analyze the stool of Ray Dalio and stare at graphs but have never brought up a single actionable idea. There was plenty to do the last few weeks regardless of macro. Please go to the corner of Bridgewater and Soros instead if you don't like money.

 

Just as a follow up to your comments, you can be bearish and still be making money by being long other things in the other opportunities that you assume we're missing for some reason.

 

My portfolio was about 15-17% in oil stocks the past two weeks - I made a lot of money across multiple names

I added significantly to Altius at $5.60 & and $6.30 - I made a good bit of money

I added to FCAU at $5.85 - I made a good bit of money

I added to PDER at $150 - I made money

I rolled 40% of my 401k into emerging market stocks and 10% into HY debt at 10% yields - I made money

 

The S&P rose a few percentage points - I lost a little money, but still in the green for my total short position.

 

Please excuse me while I continue to discuss the macro and the overall expensiveness of the U.S. while making money on both sides of that trade.

 

Smart guy.  I'm about half short and half long oil.  I'd like to diversify into aluminum and some other commodities.  I'm not good at counter trends but I feel there is some secular floor here.  Good luck all.

 

Less smart and more finally catching a break. I've been heavy into commodities and EM for the past two years and have been building the stake the entire time. Now it's pretty much my entire portfolio less a bit of exposure to European financials and a few bond funds in my 401k.

 

My only point was that he was assuming that just since we're bearish on U.S. equities that it must mean we're bearish on everything and not making money/losing money  because we're not investing anywhere. I was simply providing evidence of where I've been adding despite have extremely dark views of the forward return for U.S. equities as a whole.

 

Something to keep in mind - as of the end of January (I think) the CAPE for EM was around the 4th percentile while the CAPE for the U.S. was around 96th percentile. That certainly doesn't mean that the U.S. is going to fall flat on its face, but if people aren't selling everything in the U.S. to buy EM, then I don't know what a clearer signal to make that rotation would be. Especially for those of you who aren't expecting a recession/world falling apart.

 

 

[ni-co]

I also started investing into commodity companies but only uranium and fertilizers, with smallish positions.

[EliG]

Something to keep in mind - as of the end of January (I think) the CAPE for EM was around the 4th percentile while the CAPE for the U.S. was around 96th percentile. That certainly doesn't mean that the U.S. is going to fall flat on its face, but if people aren't selling everything in the U.S. to buy EM, then I don't know what a clearer signal to make that rotation would be. Especially for those of you who aren't expecting a recession/world falling apart.

 

I'm curious how you get your EM exposure. Individual companies? ETFs?

 

If ETFs, which ones?

 

 

[TwoCitiesCapital]

Something to keep in mind - as of the end of January (I think) the CAPE for EM was around the 4th percentile while the CAPE for the U.S. was around 96th percentile. That certainly doesn't mean that the U.S. is going to fall flat on its face, but if people aren't selling everything in the U.S. to buy EM, then I don't know what a clearer signal to make that rotation would be. Especially for those of you who aren't expecting a recession/world falling apart.

 

I'm curious how you get your EM exposure. Individual companies? ETFs?

 

If ETFs, which ones?

 

All kinds of ways - individual name equities that trade ADRs or pink sheets, companies with large EM exposure (like SAN for instance), and mutual funds through my 401K.

[maverick]

why not just follow the flow and stop trying to predict the future? buy quality business at reasonable valuation that has both price and business momentum and get out if momentum sags later on  ;)

 

At least 3 bullsh*t macro threads going on at the same time on this board.  If some of these characters put as much time into actually studying companies, and learning the practical side of trading, they might actually find something to invest in that didn't have S&P in its title. 

 

When I posted earlier in this thread last week, the TSX was in bear territory.  It is up several percent since then, while people moaned about S&P market valuations, and fretted about whether a rally is real or not.  I bought stocks up to last week, and was selling into the rally yesterday.

 

I agree that it's a trading market and there is money to be made trading in and out. Unfortunately, I have a full time job which precludes me from spending my energy on trading. I own some individual stocks which I believe are undervalued and I want to hold them on for long term (investing rather than trading). I have a large exposure in fixed income type earning a steady 8%-12% current yield. I believe that equity prices are currently being governed more by central bakers' policies than the fundamentals. It's hard to find value currently and the value names could get even more cheap if the market has a total loss of confidence in the central bankers. I am willing to wait patiently before going for the swing.