Falling Commodity Prices Could Burst The U.S. Farmland Bubble [View article]
Bubbles generally involve a significant divergence between the perception of the participants and reality. I do see the current farm bubble as being similar in nature to the gold bubble in that both have largely been predicated on the notion that there would be run-away inflation.
Reality is starting to take the upper hand in gold prices. I expect the farm bubble to follow suit but likely with more serious consequences to levered farmers.
As flash9 mentions, there is generally a significant amount of denial and emotion/dogmatic thinking involved with a bubble scenario. I think the hyper-inflation thesis qualifies as an example of this. My guess is that many farmers have bought into that line of thinking.
Imbalances That Could Derail The Stock Market Rally [View article]
Woody, I have seen the same thing, it is worth taking note of. If a euphoric disconnect from reality is indicative of a market top, we may be very close.
Volatility ETFs Could Face A Short Squeeze [View article]
I have contacted several large brokerages as well as an ETN originator in an attempt to gain some clarity on this. In all cases I have been told that demand can and does affect the share price of ETNs. This is generally mitigated by the issuance of new shares but if demand exceeds that equilibrium point it seems quite obvious that shares will rise. The obverse of this is also why TVIX fell so dramatically, as ChrisGriffeth said, when the demand went away and the premium came out of the shares.
I would be the first to warn against holding these shares for the long-term--especially leveraged ETNs. However, it still appears to me that in the situation of extreme demand (such as could be seen with a large amount of short covering--"short squeeze") that such factors that have become commonplace with these products such as roll decay and contango can be overwhelmed by simple demand--as least for a short period of time.
All said, I freely acknowledge that I have plenty of room to add to my knowledge base and welcome criticism.
Volatility ETFs Could Face A Short Squeeze [View article]
ChrisGriffith, Please explain your theory regarding the VXX vs TVIX, as you started this thread. You mentioned that you were long TVIX when it became "unhinged".
VXX and TVIX are both ETNs, although TVIX is x2.
Why would TVIX become unhinged if market forces (extreme selling, etc) have no impact on an ETNs price?
Volatility ETFs Could Face A Short Squeeze [View article]
Thanks for reading. I have watched the same underperformance you mention--according to my recollection the underperformance has become more pronounced as time has gone on.
My view is that it may be possible that the natural market forces (inflows and outflows among them) can find expression in these products through such mechanisms as contango and likely others as well.
Volatility ETFs Could Face A Short Squeeze [View article]
You have explained the theory of how ipath wishes the investor to understand the workings of their ETN. In practice however, one only needs to compare a multi-year chart of the VXX and a chart of the VIX. Even considering a significant element of contango, the mismatch is abundantly clear.
If the VIX trend was reversed over the last few years--how would the VXX have reacted?
The truth is no one knows exactly, but given that ETFs and ETNs are are a relatively new product in the marketplace, it would be unwise for investors to completely discount the potential effects of natural market forces, in my view. Time will tell.
Dividend Cuts: The Pin That Could Pop The Stock Market Bubble [View article]
Here is a link to a chart that you may find helpful--it shows the number of companies cutting dividends. You will notice that the number of companies cutting dividends in early 2013 is at the highest level since mid-2009.
Dividend Cuts: The Pin That Could Pop The Stock Market Bubble [View article]
"Of the 235 companies that surpassed their earnings estimates, 52% missed their revenue estimate. In a typical quarter, 31% of companies that beat on earnings miss on revenue, according to Greg Harrison, corporate earnings research analyst at Thomson Reuters." --Nasdaq
Dividend Cuts: The Pin That Could Pop The Stock Market Bubble [View article]
The most likely catalyst I see that could lead to dividend cuts is declining revenue. As mentioned in the article, the number of companies missing on revenue is much higher than usual.
Bernanke Signaling The Fed's Power To Control The Economy Is Waning [View article]
Bernanke Signaling The Fed's Power To Control The Economy Is Waning [View article]
Falling Commodity Prices Could Burst The U.S. Farmland Bubble [View article]
Falling Commodity Prices Could Burst The U.S. Farmland Bubble [View article]
Reality is starting to take the upper hand in gold prices. I expect the farm bubble to follow suit but likely with more serious consequences to levered farmers.
As flash9 mentions, there is generally a significant amount of denial and emotion/dogmatic thinking involved with a bubble scenario. I think the hyper-inflation thesis qualifies as an example of this. My guess is that many farmers have bought into that line of thinking.
Imbalances That Could Derail The Stock Market Rally [View article]
I have seen the same thing, it is worth taking note of. If a euphoric disconnect from reality is indicative of a market top, we may be very close.
Imbalances That Could Derail The Stock Market Rally [View article]
Volatility ETFs Could Face A Short Squeeze [View article]
Volatility ETFs Could Face A Short Squeeze [View article]
I would be the first to warn against holding these shares for the long-term--especially leveraged ETNs. However, it still appears to me that in the situation of extreme demand (such as could be seen with a large amount of short covering--"short squeeze") that such factors that have become commonplace with these products such as roll decay and contango can be overwhelmed by simple demand--as least for a short period of time.
All said, I freely acknowledge that I have plenty of room to add to my knowledge base and welcome criticism.
Volatility ETFs Could Face A Short Squeeze [View article]
Please explain your theory regarding the VXX vs TVIX, as you started this thread. You mentioned that you were long TVIX when it became "unhinged".
VXX and TVIX are both ETNs, although TVIX is x2.
Why would TVIX become unhinged if market forces (extreme selling, etc) have no impact on an ETNs price?
Volatility ETFs Could Face A Short Squeeze [View article]
Volatility ETFs Could Face A Short Squeeze [View article]
My view is that it may be possible that the natural market forces (inflows and outflows among them) can find expression in these products through such mechanisms as contango and likely others as well.
Volatility ETFs Could Face A Short Squeeze [View article]
If the VIX trend was reversed over the last few years--how would the VXX have reacted?
The truth is no one knows exactly, but given that ETFs and ETNs are are a relatively new product in the marketplace, it would be unwise for investors to completely discount the potential effects of natural market forces, in my view. Time will tell.
Dividend Cuts: The Pin That Could Pop The Stock Market Bubble [View article]
Chart:
http://bit.ly/165Y0uS
Dividend Cuts: The Pin That Could Pop The Stock Market Bubble [View article]
http://bit.ly/ZsAmBD
Dividend Cuts: The Pin That Could Pop The Stock Market Bubble [View article]
Much will depend on the consumer.