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    • Wed Nov 26th 05:57 AM
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      Commented on:
      Profiting from Risk Aversion
      In the present situation, considering that the market has been hammered nearly 50% from highs, the trade may be to sell puts on the individual companies and buy puts on the index. With the extreme levels of IV on the individual stocks the IV arbitrage should be pretty good. I would want to select more than 20 names for the trade. Possibly something with the Naz 100 sould be better to deal with as there are fewer names in the index.
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    • Wed Nov 26th 05:43 AM
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      Commented on:
      Life After Citi: Shorting High Yield Bonds
      The factor that is driving the price of the low grade bond sector is the deleveraging of the hedgies. They had a pretty good trade going of borow short and cheap from the banks and lend longer and higher to the companies / buy bank loans. That is unwinding with a real crash as the hedge funds have to sell. It is driving the yields through the roof. As noted by someone else, the priced in default rates are unlikely to be hit in the real world future. I would rather look for a bottom pretty soon and look to get long in this sector. Why buy shares when you can lock in near 20% yields on the debt?
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    • Fri Nov 21st 12:30 PM
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      Commented on:
      The REIT Time to Buy
      The real problem will be in the Retail / shopping center REITs. They will not have tennants after January.
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    • Fri Nov 21st 12:24 PM
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      Commented on:
      'Market Timing Is Impossible'
      Click on the Author name. His earlier articles are available here and it is fairly well laid out. In addition there is a paper that you can download that will give the data for the different assets.
      View article »
    • Tue Nov 18th 09:01 AM
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      Commented on:
      Testing Ablin's Trend Following Strategy
      The difficulty that the individual has in using the 200 da cross over strategy are shown in the graphs. There are years and years of under performance. Then the "big one" happens and the market does make a large drop that is avoided. In general, this can go along for 10 to 20 years with the B&H outperforming the timing because of the whipsaws. So the investor endures small annual underperformance while telling themselves that there will one day be a crash that they will avoid.
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    • Fri Nov 14th 09:13 AM
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      Commented on:
      Redefining Strategy for ETFs
      As I understand your article, you still use the 200 dma. When price is below the 200 dma, AND the 50 dma is also below the 200 dma, then use the 50 dma as the signal for the 25% and 25% investments. If price declines below the 50 dma, sell out the position again and wait. Continue to use the 50 dma as the trigger line until the 50 dma exceeds the 200 dma and then follow that for the trigger, combined with the 8% drop.

      Is the 8% drop sell trigger employed with the 50 dma when it is below the 200 dma? Suppose I'm up 10% above the 50 dma which is still below the 200 dma. Do I sell on an 8% drop from there or wait until a break below the 50 dma?

      Finally, if there any data available showing how the outlined trading method would have worked in the past with the major indices along with the increasing number of trades? Doing the additional dance on the over / under of the 50 dma could lead to quite a number of additional whipsaws. Sometimes the seemingly logical tweaks do not improve the returns.

      Thanks for putting out the article.
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    • Thu Nov 13th 11:39 AM
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      Commented on:
      REITs Are Gold Mines on the Short Side
      The problem with the SRS is the huge price swings. It is almost impossible to look at it on a daily basis. Watching something lose 30% in a day or two is not good for the stomach.
      View article »
    • Tue Nov 11th 14:27 PM
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      Commented on:
      AIG Bailout 2: Why?
      As others have commented, AID is having to post collateral based upon a Mark to Market valuation of securities which no one is actually selling. The securities may not have suffered defaults, but they have been marked as if they will. Calling their bluff and having them turn over the bonds will cause there to be at least some market. Any appreciation and the current payments will accrue to AIG. The coupons may be reasonably current. Taking the 6% bonds in at 50% will give AIG a current yield of 12 and retire the debt to Treasury. I like the idea but more needs to be known about the particular bonds being called in by AIG.
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    • Mon Nov 10th 19:14 PM
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      Commented on:
      Where Are the TIPS Strips?
      The value of TIPS can go both up or down depending upon inflation or deflation. Getting the stripped version would have some downside risk. Buying the coupon version and reinvesting the coupon could give a better ride.
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    • Thu Nov 6th 14:58 PM
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      Commented on:
      Pair Trade: Oil & Gas Exploration and Drillers
      BBG is not a drilling operation but a production company. It seems to be pretty sound financially and has substantial production volumes. I don't see it as a comparable company to RDC.

      Thanks for the idea of the JPM / WFC trade.
      View article »
    • Tue Nov 4th 20:56 PM
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      Commented on:
      Short Term Still Bumpy for MLPs
      If you follow these and the index, perhaps you can comment upon BSR and MTP. Both should offer diversification among the MLP operations and avoid the tax filing hell that they can cause.

      Thanks
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    • Sun Nov 2nd 22:26 PM
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      Commented on:
      VIX Watch: Uptrend Could Still Continue
      try a chart with the 10 dma, and a 10,50,10 macd histogram, then look at the $RUT at the crossover points.

      Declining VIX indicates declining fear, still very high but declining.
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    • Sun Nov 2nd 21:09 PM
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      Commented on:
      Corn and Its Industry: The Next Tobacco
      Although I find the article filled with a large amount of hooey, I would recommend that you look at the studies on the effects of the high frutcose corn syrup. I'm not pretending to be a ntrition expert, but the implications of a number of these studies is that the body processes this sweetener differently than regular cane sugar. Some attribute the much higher diabetes rates to the now wide and increasing useage of the hfcs. As was also pointed out, the secondary and maybe much larger beneficiary of the limits on cane sugar imports have been the corn farmers. How much less would corn sell for if there was no market for the corn syrup as a sweetener?
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    • Sun Nov 2nd 18:16 PM
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      Commented on:
      In Defense of the U.S. Taxpayer: End Deferred Compensation and Its Tax Subsidy
      lorddarley and kinabaru are certainly correct.
      There is nothing to tax as nothing has been paid. And the companies receive no deduction for it until it is paid. In some cases, it may not ever be paid. Company goes down the tube and these plans become unsecured creditors.

      however, it is interesting to note that the GSE run by Barney Frank has stated that they will honor the defered compensation agreements for their executives. The WSJ article on this issue quoted the FRE spokesperson as stating the necessity of honoring the deferred pay packages for the managements that helped destroy the companies. Where will Barney land on that issue? Wipe them out along with the preferred holders is my solution. BTW, they were GUARANTEED a 9%+ return on the deferred money.
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    • Sun Nov 2nd 18:10 PM
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      Commented on:
      Central Banks Are Destroying Traditional Risk Spread Methodologies
      The Fed and Paulson have really screwed up the credit market pricing. In the rush to provide credit for various good purposes, they have driven the uninsured borrowers out of the market - or made borrowing unaffordable for them. It was not too bad if they had stopped at the GSE bailouts and guarantees. When they have now made the facility available for commerical paper of selected issuers they have ruined the rates for the rest. Banks have to lend money to borrowers. They also should have to do their own credit evaluation and pricing. The Fed has now guaranteed the loans to some very large borrowers, screwing many of the smaller ones which may really be much more credit worthy. It is a version of the "good money driving out bad" principle at work.
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