I have been trading markets for over 35 years and used to be “on the floor” in the wheat option pits as a market maker. I have traded just about everything that has a derivative attached to it, as well as many many equities.
I have to be frank, here. These kids trading this are just market sluts. The average trader is late 20s, early 30s and he is like a duckling. They say that a baby duck will follow a battleship to be its momma if that is the first thing they encounter, and ALL THESE GUYS HAVE KNOWN is easy money from the fed. All of them think they are geniuses, and all of them think that the JOB of the fed is to throw money at them. For 12 years they have been the recipient of a market in an absolute cascade of money so that anyone who can count to 5 made money. You bought it. It went up. You sold it. Easy peasy.
Now we are realizing that this wanton hemorrhaging of money has an effect. It makes the dollar worth less, and people wrongly call that “inflation.” (the “inflation” is the increase in the money supply.. the prices are just the result). These people do not know how to respond to a “market” not propelled along by Uncle Sugar, have never seen a long term bear market, and literally sit around hoping th fed will save them. The fed is raising rates, and this has caused the market to swoon, and it is both amusing and tragic to watch them. All they can do is desperately hope the fed “pivots” and returns to handing out boodle.
Today Powell (chairman of the fed) had a presser. First he released a written statement and ALL HE SAID THAT WAS DIFFERENT was “we will be aware of the long term impact of rate hikes, and aware that we are raising for an effect 6-8 months out” (this is not a quote, but a paraphrase of what was in the statement.
Well, the markets went NUTS! The DOW just zoomed up close to 400 points and the talking heads on CNBC were all warbling about the dovish change and just... HALLELUJAH!!! GLORY!!! THE FED MAY BE LESS HAWKISH. They could just smell those presses cranking back up and good times are gonna roll and BUY BUY BUY!!!
For the record, I dumped 5 different short positions about an hour before the meeting,as they were profitable and I was over leveraged (no, I am not smart... just lucky this time).
Some stuff in the DOW e-minis, some emini S&P, Some bonds and a dollar v british pound position, and a short emini s&p option. I was pretty neat and trim, and only held some short index calls.
I am a newbie to trading the fed like this, though, and still think in the “old timey” way of trading. I just thought “oh crap, I am going to have to roll these short calls out (expiration today) and trade around them.”
I didn’t even know that the fed releases written statements and then has a press conference. So, then Powell himself came out and essentially said “nothing has changed and we are going to continue to raise rates as long as it takes”
BOOM! the pack of starving jackals and screaming zombies reaching for that easy money like a jonesing junkie when you dangle a glassy bag in front of him... they all panicked and sold at once. Market went down total 800 or so points (closed down 500 from yesterday, 800 from hi of day) just as quickly.
This is insane. I have seen more sophisticated investing playing roulette. There are no “markets” here. I am more cynical about this stuff than I have ever been in my life.
I did ok, though. Was profitable going into the fed release and really scored once the fireworks started (sold multiple emini dow futures).
Again, there is no “investing” going on here. This is just guys shooting craps... with your IRAs. I like it, because traders always like volatility. When a market is moving up or down, you can always trade it and make money. The problem with this stuff is they are killing the market. Fact is, they have already killed it. There is just a lot of money right now speculating on the fed and what they will do. It is really disgusting.
I guess I know what a pimp feels like when he runs a stable of girls. It makes money, but there is nothing moral about it.
Wall Street used to be the home base of capitalism. Real capitalism is dead. There is just the husk left to pick over.
Ron Paul was right. The fed is THE most destructive, anti free market, big government infringement on freedom there ever has been or will be. It will be the death of the republic.
Great post.
Thank you.
Good post.
I always tell people that if they are considering “investing” in the stock market—they should stop—and go to the casino.
At least at the casino you know what the rules are.
I am too old to have anything to do with these “markets”.
And thus the reason they keep running the market up then going home with empty pockets when the fed does what it said it would.
Maybe one day the fools will run out of money.
As an investor I am frozen having taken out what I think is enough to ride for five years from now. I hope not to sell a thing as we are into meat territory. Never sell the cow if you can. Just milk her.