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Eric Stalee

 
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  • One Of The Safest Available Trades? [View article]
    You bring up good points particularly the rebalancing issue and the tail risk from a broker suddenly asking you for your shares. Those I should have covered, especially rebalancing.

    Tail risk from the broker unfortunately can't be avoided as you point out.

    Rebalancing is more of an issue that can be taken care of. Perhaps you know this, but for those that don't, you can call your broker (at least with Ameritrade and I believe Fidelity also) in order to reserve shares to short later in the day if you desire. Hedgefunds that work with (GS) also reserve shares to short in this way. Therefore, a few minutes before the afterhours session closes, you could rebalance your positioning for the next day by expanding it appropriately. Or you could buy to cover the profitable position until you are rebalanced for the next day. Perhaps cycle from expanding and contracting the position every other day in order to rebalance. Of course, as you point out, rebalancing by expansion would have you no longer working with the decay if done daily. The decay would be non-existent if one rebalanced by expansion.

    Thank you for pointing that out.
    Jul 24 12:06 PM | 1 Like Like |Link to Comment
  • Is The Perfect Storm Here? [View article]
    Deathcross $SPXA200R
    http://bit.ly/LDNvFr

    Market is toast.
    Jul 21 12:17 AM | 2 Likes Like |Link to Comment
  • Why You Must Never Ever (Ever) Invest In A Leveraged ETN For Much Longer Than A Day [View article]
    Not sure how they're fraudulent...they do exactly what they're supposed to do. Track the inverse or leveraged gains for one day.
    Jul 18 12:36 PM | Likes Like |Link to Comment
  • Why You Must Never Ever (Ever) Invest In A Leveraged ETN For Much Longer Than A Day [View article]
    Option puts.
    Jul 18 01:07 AM | 2 Likes Like |Link to Comment
  • Why You Must Never Ever (Ever) Invest In A Leveraged ETN For Much Longer Than A Day [View article]
    Somewhat on the right track, yes.

    Both TZA and TNA are leveraged products and therefore both will go to zero. However, since TZA is an inverse it will get to zero even faster.

    Being and inverse AND a leveraged fund is a double whammy.
    Holding TZA as a long position more than one day would make you worse off than if you hold TNA for the same amount of time (however if you only trade options on either intraday, there is no difference, the difference only begins after holding overnight).


    (Correction on the comment above's example: "(e.g. you buy at 50 it goes to 100 you made a 100% profit, or goes from 50 to 25 you made a -50% loss)"

    If you buy at 50 and it goes to 100 you made a 100% profit, if it goes down from 100 to 50 you made a 50% loss

    [tired, sorry])
    Jul 18 12:13 AM | 1 Like Like |Link to Comment
  • Why You Must Never Ever (Ever) Invest In A Leveraged ETN For Much Longer Than A Day [View article]
    "math of decay has nothing to do with the price behavior of the futures"

    Very true.

    Here's another truth tidbit.
    Leveraging futures or inverting futures returns is NOT the same thing as the underlying futures contract itself.

    The reason for this is due to the lognormal scale that is used to track gains and losses in the stock market.

    Logarithmic gains, normal losses (e.g. you buy at 50 it goes to 100 you made a 100% profit, or goes from 50 to 25 you made a -50% loss).

    For instance, if the VIX doubles from 17 to 34 100% in one day, it's inverse tracking ETF, SVXY, goes to ZERO (100% loss), even though VIX can still go higher.

    Canary's article has nothing to do with contango or backwardation.
    It's only simple price behavior math.
    Jul 17 11:19 PM | 1 Like Like |Link to Comment
  • Why You Must Never Ever (Ever) Invest In A Leveraged ETN For Much Longer Than A Day [View article]
    All leveraged ETNs eventually go to zero (there's a reason they have to keep reverse splitting them).

    You could short a bunch of inverse leveraged etfs, hold them a few years and have a significant ROI.

    Strangely enough, probably one of the safest investments available Lol.
    Jul 17 10:52 PM | 1 Like Like |Link to Comment
  • Bulls Assume QE3 Will Happen [View article]
    Although I agree with you, remember the Fed can do whatever it wants. It doesn't have to do QE# it could instead initiate a 'flow' program, which although unlikely is not an impossibility.

    A flow program can hold the markets up for some time.

    You can inject a meth addict with the drug and it will last for a bit, or you can keep a small stream going into them which will last longer.

    Only problem is, after the meth has been flowing for a while, it becomes normal and the flow dosage has to be upped.
    Jul 17 09:15 PM | 6 Likes Like |Link to Comment
  • TVIX Hits All-Time Low Despite Market Weakness [View article]
    There are warnings there for a reason.

    CS posts them.

    Granted they probably hope people won't read them, but they've done their part by posting the warning.

    Nothing to investigate about it.
    Jul 4 12:46 AM | 2 Likes Like |Link to Comment
  • The Current U.S. Stock Market Collapse Makes No Sense [View article]
    The current sell off makes no sense.

    So what? Welcome to the markets. There doesn't have to be a 'reason' to sell off. A bird in a whole flock take flight. The rest follow, some faster than others.
    May 24 04:09 PM | 2 Likes Like |Link to Comment
  • Why I Am Short Gold: 5 Reasons [View article]
    so then even more reason to have gold which can buy good oil whenever you need it. Right? :)
    May 22 07:47 PM | Likes Like |Link to Comment
  • Why I Am Short Gold: 5 Reasons [View article]
    With gold you can buy oil from Iran...with oil you can buy...anything, since virtually everything (plastics, cars, transports, energy) needs oil in some form or another?

    Therefore gold = more reasonable way to store wealth instead of having barrels of crude in your backyard.


    Just to use an example from your words.


    I would also love to see the rate of how many Zimbabwe dollars it would take to buy a loaf of bread plotted relative to the rate of how many grams of gold it would take to buy a loaf of bread there before the hyper-inflation started. Maybe I'll make a chart if I can get that data.
    May 22 12:59 AM | 1 Like Like |Link to Comment
  • SodaStream Unlikely To Suffer The Same Fate As GMCR [View article]
    Not sure if this is where he got the data from, but shortsqueeze lists data on many stocks.

    http://bit.ly/IFwyZX
    May 7 05:41 PM | Likes Like |Link to Comment
  • While there are still plenty of risks to an economic recovery, the start of 2012 is nothing like the 2008-2009 crisis, observes Goldman's Jim O'Neill. One third of the euro zone that’s supposedly falling apart is actually improving, and China appears close to a soft landing. "The evidence from all over the place is that it’s nothing like '08."  [View news story]
    Do what Goldman does, not what Goldman says.
    Feb 2 11:17 PM | Likes Like |Link to Comment
  • Don't get carried away by today's misplaced optimism over the ECB and Greece, says Art Cashin. It's more a "sigh-of-relief" rally than anything else. Greece is just the immediate, right-now issue, but the problem isn't going away anytime soon. Soon we'll have to deal with Portugal, and then Italy. (video)  [View news story]
    Always good to hear another opinion.
    Jan 18 11:40 PM | Likes Like |Link to Comment
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