3 WTF Charts | Zero Hedge
I call your attention to the last chart, high yield credit versus the S&P index, and the comment by Barclays' Phil Solarz. He is correct that HY broke down in 2007-2008 before equity markets got the news. I think the same thing is happening now.
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- 2Posted by $ jbrenner 10 years, 6 months agoThis is an interesting find, straightlinelogic. So how does one bet on a bear market without losing one's shirt? I know there are mutual funds that are derivatives, including ones that are bearish. Many people can sense a bear market coming, but timing it is very difficult. The history of crashes says that a market accelerates towards the top and then drives right off a cliff. Timing the cliff and/or getting in during the precipitous drop requires more active management than I am capable of. Any advice?| Mark as read | Best of... | Permalink
- 2Posted by straightlinelogic 10 years, 6 months agoMy only advice on speculating on a bear market is to not try to pick the top, but wait until after the market has had its first big drop and first big bounce. Even then it is tricky. In 2007-09, we had days where the market would rally 400 Dow points and if you were short you got your face ripped off. I would say if you cannot sit on top of the market and monitor it constantly, then stick with cash and safe money market funds (those that invest solely in US treasury bills) and let the market do its thing. I traded the last crash and made some money doing so. However, I had a Bloomberg terminal and instant access to equity option and CDS markets. It was absolutely nerve wracking, even when I was making money. Now I don't have that access, and other than some small speculations on inverse equity index funds, I probably will just sit in cash. However, unlike last time, when it feels like the world is about to end, I'll start buying equities of strong companies that will be able to capitalize on the carnage among their competitors.| Mark as read | Parent | Best of... | Permalink
- 2Posted by $ jbrenner 10 years, 6 months agoThat is pretty much the strategy that I have been employing over the last decade. Timing the market is exceedingly difficult, and many insiders say that it is impossible. Isn't it strange that those people get their money out of the market before the rest of us? Well, maybe not so strange.| Mark as read | Parent | Best of... | Permalink
- 2Posted by straightlinelogic 10 years, 6 months agoThere were plenty of insiders who got killed in the last crisis. I use simple sentiment indicators and Elliott Wave counts for my market analyses, but nothing is infallible. The wait for the first big drop and big bounce (62 to 87 percent retracement) advice is based on EW and Fibonacci relationships. If you're right about 60 percent of the time and you exercise prudent money management, you may be able to survive as a trader. The one big difference I've seen between the top notch pros and everyone else is the pros know they have to take losses, and they take them, sooner rather than later.| Mark as read | Parent | Best of... | Permalink
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- 1Posted by Solver 10 years, 6 months agoRight now the American money printing spigot is on, although the valve is being turned toward the off direction. Many have high margined investments and some have made a fortune on this rush of nearly free money scheme. Nearly all of them know that they can start cashing out their gains out before the spigot is turned off, as the Federal central planners have professed, is happening before the end of this year.| Mark as read | Best of... | Permalink
