Posted on 03/03/2020 7:10:27 AM PST by L,TOWM
Thank you for giving some well-needed expert assessment of the situation.
I’m sad for everyone who didn’t prepare for this inevitable time. We’ve been overdue for a massive correction for quite some time given the market forces you so well explained here.
The Federal Reserve Bank is NOT a government entity. It is a consortium of banks that established the federal reserve to be the nation’s Central Bank as required by the Federal Reserve Act of 1913.
The Senate has confirmation power over the 12 Governors of the Fed and the Chair is selected by the POTUS, with Senate approval. The term for the chair is 7 years I believe and 2 term limit. The only government oversight on the fed is a quarterly presentation to congress and being subject to questioning by congress at any time.
The math doesn't work. 2/3 of $22T is $14T. we import $2T, not all of which is consumer goods. But let say for the sake of argument the $2T we import is all consumer goods. The percent is 2T/14T = 14%. 14% is a lot but not mind blowing.
Whatever. I learned a long time ago that GS makes the same amount of money in a bear market as they do in a bear. So - I model my investments after their strategy. I buy strangles and straddles. That's not "betting" - that's "hedging." Value investors lose in a bear. So you do what you do - and I will do what I do. Have fun in this continued correction.
BTW - I'm up 5.87% overall since the 24th. My bets are paying off.
Quote from CNBC. The 440,000 is not hyperbole.
A recent Johns Hopkins study claims more than 250,000 people in the U.S. die every year from medical errors. Other reports claim the numbers to be as high as 440,000. Medical errors are the third-leading cause of death after heart disease and cancer.
I didn’t say it was hyperbole. Yes, it is an issue that should be dealt with, no doubt. But as I said, far, far more than lives are saved than lost through our medical system. Sharpen up!
Right on, right on.
“ So - I model my investments after their strategy. I buy strangles and straddles. That’s not “betting” - that’s “hedging.”
After a lifetime as a portfolio strategist, I am now free to focus on just managing our family money.
I developed a simple strategy that makes life easy...
I buy things going up.
I sell things going down.
I measure market risk as I do it and adjust exposure accordingly.
I enjoy nice returns, with less risk, and life is good.
I do a lot of hedging. I am more of a technical trader - paying attention - mostly - to 20-50-200 daily-weekly and monthly moving averages. It's amazing that when things are trending up well - and then they fall - they always seem to find their support at one of those levels (usually - unless there is some other reason). I then place well-hedged strangles and straddles on options where I won't get eaten up by the spread.
Well - worked out today - sometimes you get the bear. I sold out of my short-term calls between 9:40 and 9:45 and added to my puts. Finished well....enough to still eke out a profit if it reverses on me.
Ditto.
(I used to be President of a group of active investment professionals.)
Same with this virus. 80% show no signs of illness. Possible cure and vaccine is on it’s way soon. Yet, we are going to destroy the world economy?
My point was that there are hundreds or thousands of things that are more serious. Yet, we are not driving the world economy to a brink of collapse over them. Heck, since you don’t like the medical malpractice stat, how about obesity. Obesity kills over 300,000 people a year.
The preventable causes of deaths in the world reaches millions, yet we do not panic over them. This virus will never reach pandemic proportions and will soon fade into memory while hundreds of thousands will die for no reason other than we did nothing.
As I was explaining to some others (as you read) - yesterday the thing that really struck me was VXJ20 finishing up on 128K volume. That was a signal that all wasn't right and that there was probably more to come. WE will see. Who knows what the algos are going to do to us. Either way, I have GLD calls in place now that I think the bleeding has stopped in gold. The margin calls are over for now. I also exited my VXV20s. If we reverse - I'll just get back in. But for now - stop the bleeding.
I had texted a friend of mine back on the evening of the 20th that I thought the dam had broken. There was that drop on the day of the ATH's. It happened at about 10 am (here). NYC would have been about to head to lunch. Trump didn't tweet. There was zero news...or at least I couldn't find any....then all of the sudden - boom. I felt like that was the algos firing across the bow. It was a hunch.
Treasury rates went below 1% today. What does this mean?
Basically, investors feel safer in bonds with a ridiculously low rate than they do in equities.
People are scared.
Be careful about wishing for negative rates. That means investors are willing to PAY for the privilege of not having their money in equities.
I will shoot you an pm...
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The supply chains are a mess. China shut down entire cities. Tourism is severely disrupted. The big hotel chains and travel companies are projecting millions of dollars in loss revenue. Experts say it could take more than a year to recover. There is talk in Japan of cancelling the Olympics.
Not to mention the virus is now spreading in the US and a 3 dozen other countries.
No matter what, there has been significant economic damage by this virus. A Fed rate cut won’t fix it.
Hannity last night compared this insanity to the swine flu in 2009. No sell off even after 1000 dead in the USA. Obama didn’t even act for 6 months! Are we all a bunch of sky is falling nitwits 10 years later?
But there was an article today where the Chinese said things are started to improve with the virus. Does no one believe them?
Pretty tepid reaction actually do a 50 bp cut.
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