Roger Nusbaum

Equities Get a Kick in the Pants

This not being true means that the US economy is now always and forever ruined. If you actually believe that then yes my comment would not stand up.

I do not ahve that opinion. The building block is that yes the SPX will grow back at some compound rate, my take is a rate below normal. The reason to take defensive action, aside from minimizing emotional responses is that occasionally things come up in our lives that we must spend money on in an unexpected fashion. If you started out with $500,000 in 2007, then fully cut in half with the market only to find out at that moment you must pay for something that cost $40,000 your financial plan might be ruined. If in a similar circumstance you were down 30% in a down 50% world you might be able to recover from that, certainly have a better shot at recovering anyway.


On Oct 03 01:02 PM goalposts wrote:

> "From the biggest picture sense we know the S&P 500 will make
> a new high again. Obviously we do not know when, but it will happen.
> That will happen regardless of whether the S&P 500 goes down
> to 800 (or any other number) or not."
>
> This is a stunning statement to make. We absolutely do not know that.
> The mentality that the U.S. market will always, sooner or later,
> come back and make new highs, is what got a lot people to hold on
> to their 'nasdaq 5000' purchases and who are still, 10 years later,
> sitting at an over 50% loss. Long term buy and hold in the market
> of a country 12 trillion dollars in debt is too risky for me.
>
> If one really believes the market will always make new highs, why
> bother to make defensive moves?

Equities Get a Kick in the Pants

yes other things up and SDS down. If, I say if, someone takes no other action then a position in SDS would hedge progressively less of the portfolio on the way up and progressively more on the way up.


On Oct 03 01:44 PM Old Trader wrote:

> Roger,
>
> Is it safe to assume that the percentage of SDS in the portfolio
> is the result of market action (your longs have been rising in value,
> while the dollar value of your SDS has been shrinking), rather than
> active action on your part, in terms of lightening up on hedges?

Double-Short Drawbacks

the firms would say that they cannot go to zero. they do twice the inverse or twice the result (depending on a long or short product) on a daily basis.

So, can an index move 50% in either direction in one day? you're opinion on that would give you your answer.


On Apr 14 12:07 PM Stone Fox Capital wrote:

> Won't all these double shorts end up at $0 some day regardless of
> whether the market goes up or down?

Act Defensively, But Not from Fear

khwender, the trade turned out to be correct, could have just as easily gone the other way. simple a matter of luck. your statement has fallacies galore. hopefully you can detach enough from the situation to see that.

Making and Protecting Money in a Bear Market

goalpost, for a little context...i have been writing about taking defensive action when SPX went below its 200 DMA and then getting back in when it goes above. that might happen soon or, as you say, not.

One theme I have been working with is that if this becomes a systemic thing in the US, ok, but there are other countries where this is cyclical and that is where we will need to look to put money.

Making and Protecting Money in a Bear Market

more like swap than futures. the markets that facilitate the running of the funds are impaired due to short sale restrictions. this includes the derivatives of those markets.

Believe It or Not, It's Still a Normal Bear

cal48koho, your comments about PE ratios raise potential issues. I'm not sure where you get 25X, is that a forward number? looking at the components it is tough to find companies above 20. C and GM have negative PE but their low prices give them less weight in the index and so I don't think they could move the needle to 25.

the more important issue, assuming your numbers are correct, would be DJIA composition. I do not have the 30 names from 1929 if the sector make up was as different as I think then comparing pe ratios from 80 years apart may not be a good idea.

a little more generally i am not a fan of pe ratios for trying to predict anything because they can stay high or low for a very long time.

you might be right to be very bearish (if i read you correctly) but if you are right it won't be for the PE ratio part of your thesis.

Believe It or Not, It's Still a Normal Bear

My "fixation on "normal, 'textbook,' etc" is to encourage people not to panic. Before anything bad happened I harped on have a plan for defense and then stick to it so you don't have to panic. Now that things are bad "don't panic, stick to your plan" seems like obvious follow through for people who have been reading me for a couple of years, or longer.

"i told you so" is pretty low on my priority list, thanks.

Staying Calm and Re-Entering a Double Short ETF

The SA editors added the comment about QID, I have never used that fund.

Staying Calm and Re-Entering a Double Short ETF

i have read that article. i can't refute it. there are flaws in the products but they capture the effect of reducing portfolio volatility which has mattered as the cycle has been ending. When the next cycle starts the need for the hedge ( as I see it) will then diminish.

when the next cycle starts to get long in the tooth there might then be a different way to hedge but personally i have no complaint with out the double short has behaved.

Why I Increased My Double Shorts

all things considered I would prefer it if you turn out to be correct;->

Using the Double-Short ETFs (QID, SDS, MZZ, DXD)

on a daily basis whatever QQQQ does QID should do twice the opposite. QQQQ up 1%? QID should be down 2%.

This is daily not over long periods of time