Uncle Bill

Fed Rate Cuts Devalue the Dollar

No alpha here, Jahan. It reads like a letter to a relative.

Fed Rate Cut No Shoe-In - WSJ

Ip was dead wrong last time when they cut by 1/2-point. He also said then that there might not be a move at all. He's a good reporter, he's just being used by these guys at the Fed. Business as usual. Man, are we in trouble in this country. Buy puts on any rally.

A Wall Street Trip Could Trigger a Chinese Fall

Beware the guy who makes short-term trades and extends those gains to an annual rate.

Volatility of Broad-Based ETFs

The Law of Large Numbers tells you that the volatility of a broad-based ETF will be less than the averaged volatility of its members. That's because not all elements of the index will reach extremes at the same time. Take the Dow Jones Industrial Average, for example: The Diamonds Trust, which tracks the DJIA, closed yesterday with an option implied volatility of 18. On the same day, the lowest option implied volatility of any of the 30 members of the index was 19 from Proctor & Gamble (PG). DuPont (DD) was 22, UTX was 23 and Disney (DIS) was 25. The rest were higher. The answer to your customer's question is that broad-based ETFs are less volatile than their components. As for Geoff's assertion that "sector ETFs will often be as volatile or more volatile than a substantial fraction of individual stocks," I'd like to see some proof. Take Gold/Silver (XAU). It's loaded with speculators, and it carries an implied volatility of 38. Implied volatilities for it's two main components -- Barrick (ABX) is 36 and Newmont (NEM) is 32. The smaller companies in the index carry higher implied volatilities. That's because right now the index is moving higher. When the index is moving down, all of the component's implied volatilities will be higher than the index. For more information about how the understanding of implied volatility can help you trade the market, check me out at
http:/impliedrisk.blog... Thanks.

Charting the Market's Response To Yesterday's Rate Cut

I think it's just the chart. It looks like volatility is lower back in the day because the index was around 500. With the index at 1000, movements on the chart would appear to be twice as large even if the volatility stayed the same. It's all about the scale of the chart. Wonder what it would look like if the top scale on the left side was 30, or the top scale on the right was 3,000. That''s why I asked what the charts mean. But I think Bespoke can't tell us because they manage money, and they have a fiduciary responsibility to determine if thier advice is appropriate for each client. Am I right?

Charting the Market's Response To Yesterday's Rate Cut

Pretty charts. What's it mean for the market?

Outlook for The Market, The Fed and Housing

First, "I think the market is probably higher by years end and should see positive returns in 2008." Then, "If the Fed eases now while the economy is not in trouble, I think we could see a very good stock market like the 1990s." Again: "I own a basket of home building stocks...I still think they are very cheap and will perform well over the next several years." Finally: "I am not making forecasts of these things." I've never seen someone disclaim thier own comments in the same post. Nice work.You're long and wrong.

Four Reasons For Uncertainty on The Fed

I don't understand. "At the present time, my view on the FOMC is cloudy." You give us a bunch of reasons why it's cloudy. Then later, "to me, it indicates the Fed will cut rates significantly through 2008." Sounds like you've made up your mind by the end of your article.

August Was a Bad Month - But Keep It In Perspective

What premise? The "give me your money" premise? The market has done nothing but go up for four years, and now all the risk arbitrage that has allowed this to happen is being unwound. The dollar is at an all-time low, debt ratio is at an all-time high. There are no bids for existing homes. These are facts, not emotions. Go soothe your clients psyches somewhere else.