Eric Peterson

Eric Peterson
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  • Investing In Silver Is A Shining Move To Make  [View article]
    Typo: I meant AGQ in the above comment, not ACQ.
    Oct 31, 2012. 07:30 PM | 1 Like Like |Link to Comment
  • Corn Time Spread Looks Good For Picking  [View article]
    I don't mean to be too argumentative, but I would never enter a spread trade where the total bid-ask difference is larger than the profit goal. It takes a decent move in your preferred direction just to close it out for no loss.

    It's kind of like buying a pink-sheet stock with a bid-ask spread of $0.50 to $1.00 and trying to make a 25 cent profit. It doesn't work.
    Oct 31, 2012. 07:25 PM | Likes Like |Link to Comment
  • Investing In Silver Is A Shining Move To Make  [View article]
    ProShares Ultra Silver (AGQ) is 2x leveraged and is NOT an investment. It's a short-term trading instrument for trades on the order of days or a couple weeks at most.

    I won't go into the details, but if for example you buy AGQ when silver is at $32.00, you hold it for several months, then sell ACQ when silver is at $32.50, you are *guaranteed* to lose money even though silver went up a little.

    This is not because of fund expenses, but because of the mathematics involved in matching the daily price move percentages.

    If you want leverage on silver for a period of months, buy a futures contract, or buy SLV on margin. Do NOT buy a leveraged ETF such as ACQ.
    Oct 31, 2012. 07:15 PM | 1 Like Like |Link to Comment
  • Corn Time Spread Looks Good For Picking  [View article]
    You want to enter this trade at 0.90 and exit at 1.13 for a "25% profit" of only 0.23. But look at the bid-ask spreads on your order screen! Bid-ask for Dec is 0.15 and bid-ask for Feb is 0.30 for a total bid-ask spread of 0.45!

    It's a horrible trade to go for 0.23 profit on a total entry bid-ask spread of 0.45.

    Also, you should never place an order to enter this spread at 0.90, giving up both bid-ask spreads completely. You should try to enter at 0.80 or 0.75.

    Nice ideas in the article about time spreads and volatility, but the specific trade shown is very bad.
    Oct 31, 2012. 06:56 PM | Likes Like |Link to Comment
  • Using Covered Calls To Protect A Portfolio As We Head Toward The Unknown  [View article]
    Covered calls offer downside protection and lower portfolio volatility during small corrections. But they don't offer protection during larger corrections of 10% or more. Of course you do better having the covered calls than not having them. But you aren't protected in case of a large decline.
    Oct 31, 2012. 03:57 PM | Likes Like |Link to Comment
  • Don't Fear A Normal Gold Correction  [View article]
    Or another way to look at it: Stocks are a much better inflation hedge than gold! As long as world economies don't collapse.
    Oct 31, 2012. 03:51 PM | Likes Like |Link to Comment
  • Selling Puts And Calls: A Better Recipe  [View article]
    Hi Ken, very interesting strategy! I'm an experienced option seller (mostly on futures contracts in many markets). One thing in the graphs doesn't make sense to me:

    Graph 3, showing Feb 2009 - Jul 2012, has the "double strategy" performing 8% worse than the puts alone, right? Then I go to Graph 4, and I look only at the portion from Feb 2009 - Jul 2012, the same period as Graph 3. There, the "double strategy" performs better than the puts alone! (Details: The ATM put goes from about 0.7 to 1.2, a gain of 0.5. The "double strategy" goes from about 0.8 to 1.35, a gain of 0.55).

    But it's the same time period! How is that possible? Either a bug in the graphs or I'm not reading them correctly.

    Thanks for your reply!
    Oct 31, 2012. 03:28 PM | Likes Like |Link to Comment
  • When I Buy And Sell The S&P 500  [View article]
    You don't give any reasons why the two overlaid time series should be similar.
    Oct 30, 2012. 09:27 PM | 1 Like Like |Link to Comment
  • 2 Startling Delusions About the Current Bull Market  [View article]
    I don't think Lou is promoting any particular position right now. I don't think he says anywhere in the article that people should buy right now.

    He is merely arguing against two common misconceptions: 1) People think the market hasn't done well the past 3 years, and 2) People think that it's too late to get into a bull market if it's been going for a few years already.
    Oct 29, 2012. 08:17 AM | 4 Likes Like |Link to Comment
  • 2 Startling Delusions About the Current Bull Market  [View article]
    Lou, very interesting article, thank you. It's good to sit back and look at the big picture once in a while, instead of focusing on the last week or month. I'll be following your future articles.
    Oct 29, 2012. 08:11 AM | 1 Like Like |Link to Comment
  • 2012 Europe Outlook: How The Fiasco Will Unfold, Part 2  [View article]
    An example to illustrate my point further:

    If I made a prediction in September 1998, when the SP500 was around 1000, that it would go under 700, was that prediction correct? The SP500 did indeed go under 700, but 11 years later in 2009, after it went over 1500 in 2000 and 2007. So my prediction made in September 1998 came true, but it was completely useless. It was NOT a correct prediction.
    Oct 28, 2012. 02:56 PM | 1 Like Like |Link to Comment
  • 2012 Europe Outlook: How The Fiasco Will Unfold, Part 2  [View article]
    On June 4, James wrote:

    "are now in a major downtrend, just as I predicted." ... "Will markets test the October 2011 low, as I predicted on their way to a probable date with 950-1020? That is a key test of my prediction. Time will tell. I think all indications are that the probabilities of that are rising immensely."

    That was written on the exact day of the low at slightly under 1300. Nowhere near "950-1020". The markets reversed and went up to set a new 4-year high over 1460. Your predictions have been wrong. That's the fact.

    You can't just say that sometime in the future we will go down below 1020. Predictions that have no time limit are completely useless and can NEVER be proven wrong! You know that.

    Nobody has been able to make any money from your prediction, and anyone sitting out as you suggested has missed out on a 30% up move in the SP500.

    Certainly it's possible that sometime in 2013 or 2014 or 2015 we revisit 1020. But so what? That's not a prediction and it's not tradeable.
    Oct 28, 2012. 02:45 PM | 1 Like Like |Link to Comment
  • S&P 500 Most Heavily Shorted Stocks  [View article]
    Bespoke: How about an analysis of how the top 25 shorted stocks perform?

    For example, what is the average return on these 25 stocks during the 3 months or 6 months after the data is released, compared with the SP500? Are there any ETFs or mutual funds that keep a portfolio of the most shorted stocks, adjusting holdings each month when the new data is released?

    The data by itself is not particularly useful unless there is a study on how these stocks perform.
    Oct 28, 2012. 02:33 PM | 2 Likes Like |Link to Comment
  • S&P 500: 2012 Vs. 1987  [View article]
    THE major difference between October 1987 and now:

    30-year T-Bonds were paying over 10% interest! Now they are paying under 3%. So back in 1987 you could sit out of the stock market and make a very decent return on your money. There was lots of motivation to dump all your stocks at any sign of weakness. Thus the crash.

    Now you can't get much sitting out of stocks, especially in CDs or money markets, which pay nothing.
    Oct 27, 2012. 07:50 PM | 2 Likes Like |Link to Comment
  • Why You Should Step Away From The Commodities Table  [View article]
    So why not short PTM and buy platinum futures contracts in an equal dollar amount? Seems like an easy arbitrage trade with very little risk that will make a profit of more than $4 per share of PTM shorted, when the price eventually goes down to the NAV.

    Or for those who don't have a futures account, short PTM and buy an equal dollar amount of PPLT (assuming it doesn't also have a premium of almost 30% like PTM).
    Feb 29, 2012. 05:36 PM | 1 Like Like |Link to Comment