Sunday, February 3, 2013
2/4/13 Long-Term Capital Mismanagement
The name itself was a misnomer. There is no long-term survival without risk management. Had there been at least one floor trader on the board of directors, LTCM would likely still be around today. All they needed was one dissident to point out, 'Dude, where's your stop loss?' And if the reply had been, 'We don't need one, this is airtight,' then I would have promoted that floor trader to Chairman of the Board.
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I almost expect Mark's next post to be made from Vegas.
ReplyDelete'Dude, where's your stop loss?
ReplyDeleteGot Corzined, tough shit MGF Global acount holder's.
BTW
DeleteGO Ravens
The scenario I'm leaning towards is a slow, steady grind upwards for a couple of months which frustrates bears and sucks in a lot of money, followed by a 5% - 10% correction over the summer and then up into year end. I think it will be hard to correct here with too many looking for it, but I think the summer correction will likely be to lower levels than we are at now.
ReplyDeleteI'm seeing a lot of noise about the sequestration on Sunday news programs.
ReplyDeleteThis may be Jesse's manufactured news crisis. In reality it is less of a crisis than the debt limit but perception is reality.
Then, to BB's post above, the debt ceiling rears it's ugly head again in August. Why do we need DC again? These 'elected' a-holes are useless.
Back from my 3-miler at the reservoir. I turned back at the 1.5 mile marker maybe 30 yards ahead of a young guy was coming the other way. I could hear him trying to overtake me. Ha! I picked up the pace, and he never got within 50 yards of me on the 1.5 mile climb back up. Not that I'm that fast, usually 50 minutes down and back.
ReplyDeleteNot bad. I don't recall the last time I actually ran that distance, I don't run so maybe never. ;)
DeleteActually, I walk the 3 miles. I haven't run or jogged since my twenties, as I don't think it's good for the knees.
DeleteMy knees are in great shape, ankles and spine as well. No complaints or aches and pains whatsoever, I'm not convinced I'd know what they were if it were to happen. Sure muscles ache a little after stacking a truckload of firewood or water skiing for more than an hour in a single day.
DeleteMy mental capacity often disappoints these days though, short term memory is about shot.
Here is a statistic of the SP 500 last two peaks and current price with respect to PE and PB. If true it seems very bullish still.
ReplyDeleteYear PE PB
2000 28.5 4.9
2008 28.5 4.9
2013 14.8 2.2
I would agree that it is very unlikely we are near a major peak in the market. We have not seen a speculative increase in valuations at all yet and I think we get that before the next major top which is years away in my opinion.
Deletehttp://goldstocksforex.com/2013/02/03/sp-500-buying-pressure/
DeleteTKMR - Genetic therapy - Jot this one down somewhere and keep an eye on it, this is an emerging technology and TKMR provides a backbone product essential to this industry.
ReplyDeleteWhy are those 9er's running the clock down while they're behind, they must just wanna go home?
ReplyDeletehttp://www.pimco.com/EN/Insights/Pages/Credit-Supernova.aspx
ReplyDelete2nd_ave -- thanks for reminding us about cheap S&P puts! If we do not get a volatility spike in the next couple of weeks and instead S&P rises to 1550, then I'll just buy 6-month S&P puts!
ReplyDelete"Here is a statistic of the SP 500 last two peaks and current price with respect to PE and PB. If true it seems very bullish still.
ReplyDeleteYear PE PB
2000 28.5 4.9
2008 28.5 4.9
2013 14.8 2.2"
T3d, where are you getting those numbers?
I'm getting a peak P/E of 33 in 1999, then 16.74 in 2007 and now its at 15...based on trailing twelve months earnings. The question is, as always, what is the market willing to pay for earnings? i actually think the fact that interest rates are so low means that the p/e people are willing to pay will continue to be low.
http://www.bloomberg.com/news/2013-02-04/panasonic-jumps-most-in-14-years-on-surprise-profit-tokyo-mover.html
ReplyDeleteGot SNE?
For some reason I always think of Panasonic being owned by Matsushita (Matsushita is Japanese for "Under the pine tree")
DeleteSome fear in the market this morning based on Italy / Spain. Surprised to read that their markets are down 6% and 8% already in February.
ReplyDeleteThe real question is whether this is the first cracks in the uptrend or just some bricks in the wall of worry.
Bricks, assuming Spain breaks down and requests bailout.
DeleteGold - I'm surprised to see gold hasn't bolted past $1700 this morning considering all the talk this weekend about how sequestration is a certainty.
ReplyDeleteCondolences to Niners fans. Four shots at winning in the last two minutes, and the Ravens blocked each one.
ReplyDeleteRavens are damn lucky they didn't have to face the skins.
DeleteAnd the niners wouldn't show up to play if the skins were in the Super Bowl.
DeleteThe Niners probably did face a few Skins in the 1800s.
DeleteAnd you're right, any Ravens that faced the Skins back then ended up on the wrong end of an arrow.
DeleteRaspberry drops weight loss...
ReplyDeleteStore shelves are bare.
A brain surgery clinician just took the trouble to text me with a link to this product. This guy never texts me.
"If you see this on a friend’s Newsfeed, or if it is posted directly to your wall, then there is a good possibility that your friend has been hacked or has a rogue Facebook application installed. We have seen this posting several times. There is most always a disclaimer from the Facebook account doing the posting claiming that they didn’t post it, and they don’t know how it happened. Accounts posting this message should change their password ASAP."
Deletehttp://facecrooks.com/Scam-Watch/Raspberry-Ultra-Drops-is-cool-stuff-Really-rocks-lost-6-pounds-within-a-week-Facebook-Scam.html
Hun?
DeleteFigures.
DeleteAccording to the add, weight loss is nearly linear with product usage, it dips and then climbs again.
DeleteSays Dr. Oz recommends it.....
It's damn expensive raspberry juice.
Los Angeles Times: Are Raspberry Ultra Drops is a 'Miracle' Fat Burner?
If those raspberry drops helps you to push away from 20,000 calories in a week, then the product really works. But I prefer the old standbys> cocaine, heroin, and/or a fifth a day for 7 days.
ReplyDeleteHow about tincture of Rasberry-cocaine? That would hack your facebook....
DeleteYou mean the original Coca Cola? We should resurrect the old formula and sell it online. There must be at least one offshore principality where it's legal.
DeleteI'm gonna lose some weight running on a tropical beach after I retire on MJNA.
DeleteUp another 30% today.
Or maybe just lie on the beach drinking a fifth a day. Rum is fattening though.
F raspberries, bring back the original coca-cola, dump this new coke stuff!
DeleteMJNA - Man, that's terrific! ;)
TKMR/TKM.TO - Guys, keep an eye on this one, it's one I found completely by accident, didn't come to me from someone's hackberry FB account.
tof- If you have time, drive down to their office for a smell test.
DeleteMLNX - LOL, since revenue estimates went from $170mm -> $110mm -> $70mm
ReplyDeleteAnd management totally discredits themselves in several ways.... Such as by saying: "Not sure how, but we'll find a way to compete if INTC imbeds ethernet"
Really don't think shorts need to cover yet......
Solars picking up...Congress renewed the the renewable energy tax credit.
ReplyDeleteCREE - Nice move on this one too, huh?
DeleteIs there a credit for led's? Maybe.
DeleteNIHD
ReplyDeleteStandard & Poor's downgraded its rating on NII Holdings Inc. (NIHD:$6.775,0$0.195,02.96%) one notch further into speculative territory, noting the wireless carrier's credit measures have deteriorated from factors including a delay in deploying 3G networks in its markets, primarily Brazil.
The CUBA ETF has a wireless carrier with operations in SA as one of it's components. I don't recall the ticker.
DeleteEven Havana's hot pass the cigars. Oh I do not smoke, pass the brownies.
DeleteTOF asks:
ReplyDelete"Here is a statistic of the SP 500 last two peaks and current price with respect to PE and PB. If true it seems very bullish still.
Year PE PB
2000 28.5 4.9
2008 28.5 4.9
2013 14.8 2.2"
T3d, where are you getting those numbers?
I'm getting a peak P/E of 33 in 1999, then 16.74 in 2007 and now its at 15...based on trailing twelve months earnings. The question is, as always, what is the market willing to pay for earnings? i actually think the fact that interest rates are so low means that the p/e people are willing to pay will continue to be low.
The years are most likely what you state could not exactly tell from the chart. I guess what struck me strange was that the prior two peaks each had the PE and PB as the same, seems improbable.
DeleteThe source was Stansberry research in an e-mail from a friend. The low's were stated as
18 and 2.4 2002ish
10.9 and 1.6 2009
Where do you source for your numbers ?
UGAZ @ 20.42...
ReplyDeleteOff 20.35...
DeleteOn 20.33...
DeleteWithdrawn
Deletewow. all within 6 minutes!
DeleteThat's 2nd new long term trade plan for 2013 of just 5 or 9 trades. He just wants to get the year out of the way early so he can kick back with his favorite brews. LOL
DeleteOf course all brews subject to change at a moments notice.
Way to go Ravens, sorry west coast boys, great game in terms of terms of tension once the lights went out.
I could be slick and say, 'Those weren't trades, just a few morning stretches.'
DeleteFSYS - The beating continues.....
ReplyDeleteWPRT - Not a heck of a lot better.
A close below 1,498 suggests a top is in...using the 1980 playbook.
ReplyDeleteper Cashin
DeleteSentimental Journey – Step II – Friday, we cited some research of fund manager sentiment that had been reviewed by Jason Goepfert. It hinted optimism might be headed to an extreme. Jason also looked at some other sentiment data over the weekend, so it's due for a new observation. Here's a bit from his marvelous SentimenTrader:
Cashin’s Comments February 4, 2013
Earlier this week, we discussed an unweighted version of the AIM Model that monitors advisor and investor sentiment surveys.
The latest readings are in, and the model has climbed again. It is now at a point that has been exceeded only three other times in 25 years.
The NAAIM survey that we discussed yesterday is not part of this model, due to its limited history. If we included it, then the model would surge to 75%, a new all-time high.
As it stands, the three other occurrences were:
June 13, 1997 - Stocks flattened out and made only very slight gains over the next six months.
March 10, 1998 - Stocks flattened out for three months, had a quick surge to new highs, then collapsed.
December 23, 2004 - Stocks topped immediately and went basically nowhere for almost a year.
While a long-term investor would have done absolutely fine by ignoring the three extreme readings, those with a time frame under six months or so would have had some difficulty generating buy-and-hold gains in the broader market. As we've seen several times in the past three years, stocks can continue to chug along on momentum for weeks or even months after an extreme in optimism is reached, but those gains are typically then given back during a subsequent correction.
Whether we're at an extreme in optimism now is debatable. Prior to this week, it was fairly clear that we were not. But now, given some of the latest readings, it's more of an argument.
The fact that these two sentiment indicators are at almost extreme bullish levels, means the markets surge may be even more understandable. Add in the very recent surge in corporate insider selling and it might be wise to put another lookout in the tower.
I'm watching the bids in MJNA. Unbelievable.
ReplyDeleteMedical Marijuana, Inc.
Delete2665 Ariane Drive
Suite 207
San Diego, CA 92117
United States
If that's within a reasonable driving radius for you, why not stop in and introduce yourself as an interested investor?
http://www.medicalmarijuanainc.com/index.php/portfolio
DeleteChart MJNA, CBIS, HEMP, XCHC, GRNH
DeleteThey are all trading like that with dbl digit daily gains.
A guy good at entering/exiting five or six trades in a few minutes could do well....
Since I mentioned it, MJNA has gone from .07-.09 to .45.
Too funny. I'm even more skilled at avoiding train wrecks.
Delete"why not stop in and introduce yourself as an interested investor?"
DeleteAnd request samples! ;)
One of two dangers as I see it, involves big boys like Pfizer or someone jumping in. The other is the Federal government, but that seems unlikely as CC has pointed out.
Damn, another 53% today, huh?
You won't believe this (actually, you will since it's happened to all of you). My order to sell the original UGAZ position @ 20.35 was not triggered because I neglected to move from 'Preview Order' to 'Place Order.' So I closed @ 20.60 for a gain. (The second order to open @ 20.33 was placed/withdrawn in a separate account.)
ReplyDeleteSee, B&H works! LOL!
DeleteMy gut instinct tells me too many people are still looking for a pullback. As such we get a few up and down days just like the past couple, then we zoom to 1,550 and then take our mandatory 10% hit.
ReplyDeletewe shall see though. a close below 1,498 could be the start of some more downside. fun to watch. keeping tabs on stocks i want to buy if this happens.
Deleteone thing i would love to see if this happens is a break below 3.20 for /ng if we go to 1,550. then it's time to buy the shit out of UGAZ. that's ideal which means it prob won't happen.
DeleteI would agree that a odds of an all-out decline are low. But that's exactly why I think we may see one.
DeletePGH sure looks like a bottom on the weekly chart.
ReplyDeleteAny bets where MJNA ends the day? 0.415 is my wild-a--- guess.
ReplyDeleteHigher than high!
DeleteThere you go. Company motto at earnings announcements: 'Higher.'
DeleteAGO - Just when you think it's safe to buy @ xx.83, these turds smack it down another dime real fast to run your stop?
ReplyDeleteI'm still waiting for a pre-earnings rush to the exits....
f*ck my post got delete. short form:
ReplyDeletespoke with broker about SD RE market. her pts:
*its a buyers market
*anything sub $500k town homes are off market in 10 days with 10+ bids each
*most depressed neighborhoods rebounding most
*everything else is rising rationally
*one more smaller wave of shadow inventory to come on the market and then inventory will be quite low
*inventory aside from shadow inv is low
she was pretty positive on the market. she said sentiment has changed dramatically in past 18 months but it's rational in that overall prices are rising steadily and not irrationally.
Delete*anything sub $500k town homes are off market in 10 days with 10+ bids each
that sounds like a seller's mkt to me
Sounds like a seller's market to me if the buyer bid is strong, buyers rushing in causing bidding wars......
DeleteAmazing, the complete reversal from housing glut to demand boom. I see it in many regions here as well, not many fire sales to pick and choose from anymore, they're gone or just not on the market. Like they were snatched up overnight by bottom buyers.
Stock market sell off? That would be a stroke of luck!!!!
"Chart MJNA, CBIS, HEMP, XCHC, GRNH"
ReplyDeleteGolden, which ones grow the "Acapulco"?
They all grow green ($$$$$) which enables that trip to Acapulco. Or Panama Red, or Maui wowie.
Deletehttp://www.youtube.com/watch?v=uyPYM5uUViI
DeleteGRNH - Grow lights as well???, LOL!!!
Delete"http://www.bloomberg.com/news/2013-02-04/panasonic-jumps-most-in-14-years-on-surprise-profit-tokyo-mover.html
ReplyDeleteGot SNE?"
Yep. :) That was my strategy of buying a 1/2 position when it became clear that the uptrend is for real and then waiting for a pullback to load another 1/2. Well, if last week's pause is all we got for a pullback, then we may have much more upside in SNE left...
If we look at the lows made by S&P futures since mid-January,
ReplyDeletehttp://www.finviz.com/futures_charts.ashx?t=ES&p=h1
we would see a concave increasing function that has already flattened out. In the past, such functions would always start going down -- that is, we would start seeing lower lows. The chart doesn't lie...
Look at the daily chart of $USD futures:
ReplyDeletehttp://www.finviz.com/futures_charts.ashx?t=DX&p=d1
The support at 79 seems unbreakable...
Geoff would say that $USD futures made a "daily swing low" and have now started a new medium-term uptrend. Doesn't bode well for the stock market...
Deletehttp://www.dailykos.com/story/2013/02/04/1184523/-FCC-Proposes-Groundbreaking-Free-Public-Wi-Fi-Throughout-United-States-Mobile-Companies-Protest
ReplyDeleteWow, no s**t! Now I've got to find my list of WIFI hardware manufacturers!!!!!!!!!!!! Damn, where is it?????????
DeleteBetter yet, let us know if you walk in to see MJNA employees interrupting high-fives to greet you.
ReplyDeleteA few more divergencies pointed out here:
ReplyDeletehttp://www.zerohedge.com/news/2013-02-04/stocks-and-fx-breaking-bad
It is not clear what measures of US credit they use there, but if you look at HYG, it has been collapsing since January 24...
Just visited Big Sista, and have to assume Jr. isn't doing well.
ReplyDeleteGDXJ in fact down -1%.
DeleteGDX is giving up all daily gains, GDXJ is in the red already...
DeleteIn the past 7 years, I have never seen a market sell-off defied by the miners. So the time to buy the miners will be AFTER the current market pullback is over. So far, GDX seems to be making a bottoming pattern, with high swings up and down jumps inside a sideways channel.
Delete^VIX is still very low historically, at 14.50 right now. If you think that it will stay like that or move up over the next few weeks, then I would suggest piling into VXX or TVIX, since the VIX futures are not reflecting yet the new level of VIX:
ReplyDeletehttp://www.cboe.com/DelayedQuote/DQBeta.aspx
The February futures are only 0.55 above VIX right now, while the usual discrepancy is at least 1.00 for the front-month futures 3 weeks away.
Hope you get your 50% move in TVIX.
Deletehttp://finance.yahoo.com/news/analysis-miner-wants-chummy-global-063026475.html
ReplyDeletefull disclosure i bought a small stake in this company today around $1.65.
1498 is strong support, bulls defending this level buying dips under so far?????.....
ReplyDeleteIt is interesting to see that FXY is up today despite a very large jump in $USD. It is even more interesting to see SNE up today despite a FXY being up. This suggests that the recent drop in Yen is not fully priced into SNE yet...
ReplyDeleteDavid - i don't think it ever makes sense to make much of daily moves other than looking at it in the context of the bigger picture.
DeleteI like TOF's use of weekly charts. The daily stuff is noise.
Deletehttp://philpearlman.com/2013/02/02/recent-research-supporting-the-value-of-technical-analysis/
ReplyDeleteAdded a little more DMND at $14.06/7
ReplyDeleteThere's been a +10% in the number of comments on the other blog. The bad news is the comment refers to MJNA.
ReplyDeleteprobably because it is a good elixir for holding junior miners.
Deletelooks to me like 1,498 will be defended...which means we go higher. best probably to wait for a big down down that is a lower low.
ReplyDeletethat is, if you want to go short.
DeleteLet me quote from a pro:
Delete"i don't think it ever makes sense to make much of daily moves other than looking at it in the context of the bigger picture."
:) The bigger picture is that investors are extremely bullish but the series of lows on the hourly S&P futures chart has flattened out. So the time for a correction is NOW, and during such a correction, it would make sense to make a pause at 1498 and suck in a few longs who thought that this support level has been defended...
Why not short the top, if you must short!?!?!? We're clearly not at the top, maybe we know more around end of March?
DeleteThe problem is no one really knows where the top is. What if the crowd in fact believes we have yet to see the top? Then the top will already be in. The only way to short is to wait for a clear sell off, then catch the middle of the decline by shorting on strength and covering on weakness.
Delete"We're clearly not at the top"
DeleteI would beg to differ. I think we are at an intermediate term top, and a correction down to 1450 has started. After that S&P will most likely run up to 1550-1600, followed by another 5% correction, etc., until the Fed hits that it will stop plowing $85B into the markets every month. At THAT point we get a major 20%+ correction.
"hits" = "hints"
DeleteIf I were choosing a manager, 2nd would be the one I'd choose to manage my short funds. He's got it exactly right. Wait for the sell off and a retrace and short when the retrace fails.
DeleteUGAZ bid/ask 19.81/ 20.20. I kid you not.
ReplyDelete'Dude, where's your stop loss?'
ReplyDeleteWhat's a stop loss?
Oh, you must mean that stop limit bid you place that gets triggered at open by the last pre-market bid of $0.01 and your shares are bought by the first bids as the regular session opens. This guarantees your shares become someone else's property, for better or for worse.
Delete"There's been a +10% in the number of comments on the other blog. The bad news is the comment refers to MJNA."
ReplyDelete"probably because it is a good elixir for holding junior miners."
Man! That was my chance to quickly make back my AUMN losses -- move a lateral move from AUMN into MJNA! I guess I was not stoned enough to do the right move...
Remember that when BLOW and KSTL hit the IPO market.
DeleteStill can't locate that CANDY ticker!!!
DeleteI am stone sober (nice play on words, eh?) and I've been doing just fine with MJNA.
DeleteThe only reason I paid any attention was the last election and the fact that I can't turn on the news without another story on how the state is moving forward with licensing growers, stores and other outlets. This is the ground floor, either you are on it or you may, in fact, be too stoned.
Today:
MJNA 38%
CBIS 34%
HEMP 58%
XCHC -18%
GRNH 95%
Go ahead and laugh.
How does XCHX fit in?
DeleteXCHC acquired CBIS's phytivia Brand of products and all associated rights and the European JV with Dupetit from CBIS. The Phytiva products are unique hemp inclusive products for skin care and rejuvenation. (hemp oil like Dr. Bronner's uses). So these co's are concentrating on hemp and marijuana.
DeleteYou should have placed a bet on MJNA's closing price!
Deletealright this does look to be a clear break below the prior lows if it holds here. as such the best play is to wait for a bounce to just below the 1,498 level to short. so perhaps a drop to 1,470 then a bounce to 1,495.
ReplyDeleteJO - Good entry here?
ReplyDeleteThe WAG (wild-a-- guess) came pretty close.
ReplyDeleteVERY close.
DeleteA little panic at the close upon breaking 1498... TVIX is up to a 2-week high...
ReplyDeleteSell it, buy it back tomorrow.
DeleteThe similar advice you gave me last time would have worked like a charm. However, what if the market gaps up tomorrow and then quickly sells off, while I am still asleep? Then I will miss the buying opportunity... Even if I wake up and see a lower value of TVIX, how will I know whether I should buy it right away or wait for an even lower value? This seems like an intuition-based trading strategy, which does not rhyme with me. What does rhyme, however, is placing a sell limit at $5.88 ($1 above my initial purchase price) for 1/4 of my position and waiting for that limit to be hit.
DeleteMWW - ????
ReplyDeleteYUM - Lost a bit more in AH, $61.... The latest and greatest whipping post.
ReplyDeleteStill confused, so was military spending down last Q, or were contracts pulled forward to get ahead of cutbacks?
ReplyDeleteURA - Holding up pretty dang well, wonder if it can bust through the 200sma against the odds of a market top?
ReplyDeleteClosed lower than the opening price today, so I have to think it's gonna roll over.
VE - Hasn't seen a volume spike despite not making much headway, I kinda like that.
VE was up around 3% this morning in Paris based on a couple of good corporate developments until the overall Euro-mess dragged them down. Should be ready to rebound if market calms down.
Deleteevening fellas, i spent a little time correcting some poor decisions today,
ReplyDeletebot puts on NFLX last week, was slightly in the money on friday, was doing ok this morn then somebody upgraded them and they ended up +9 at the close. I closed out my puts for a small loss.
bot aapl calls last week, was slightly in the money on all of them on friday. AAPL was doing pretty good for awhile, I'm fat and sassy, then aapl drops. Got stopped out of half my position with a small loss, will probably get stopped out of the other half for a bigger loss.
VXX - whew, closed out half my position a dime above breakeven, now back to a more managemable sleep at night position for me.
tza - almost back to break even, interesting, i took a much smaller position on this when i opened and it hasn't been stopped out yet.
tvix - i liked this one when david mentioned it last week so took a smaller position. I'll was thinking of selling half tomorrow morning assuming we open down.
overall - down a little with the long aapl calls that were in the money last friday. just the wrong setup. happy to be alive.
Stocks are bid up, treasuries are bid up, real estate is bid up, no remaining places for capital to hide?
ReplyDeletecouldn't resist. bought BIDU at $101 after hours for a trade. trades at 19 times earnings vs. 40% growth rate. seems cheap.
ReplyDeleteSmack dab on the 50 and lower BB. Worth a shot.
Deleteyep that's another reason i got in...figured if its going to bounce it might as well bounce here...not a huge position...about 10% of port. valuation is actually quite cheap and i'm considering going all in if it drops more.
DeletePretty sure I separated my shoulder going over my handle bars today trying to avoid a Fing dog. Great.
ReplyDeleteTraining wheels.
DeleteNIHD Outlook
ReplyDeletehttp://phx.corporate-ir.net/phoenix.zhtml?c=137178&p=irol-newsArticle&ID=1781387&highlight=
Seems mixed bag, want to sell and lease back towers, and does not expect breakeven till 2014 if assumptions prove out.
Long and its Rocky, hey Bulwinkle
Will this be the end of the early and often predictors?
ReplyDeletehttp://www.ritholtz.com/blog/2013/02/pundit-tracker/
new post
ReplyDeleteNLY - Looks like bear flag...
ReplyDelete