sundrenched's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/214493/comments http://seekingalpha.com/article/142843-post-tarp-partying-on-wall-street?source=feed#comment-543495 543495 Fri, 12 Jun 2009 05:50:19 -0400 http://seekingalpha.com/instablog/142982-joseph-l-shaefer/6969-7-etfs-to-short-right-now?source=feed#comment-531325 531325
It's nothing esoteric, just simple high school math. Get a piece of paper out and work through a few simple examples of what happens for a couple of given changes in the benchmark to the inverse fund.

For instance, if you start with $100 in a benchmark and a double inverse fund. Benchmark goes up by 10% to $110. If it drops by 1/11=9.0909...% you're back where you started from, 100 dollars. However, movement in the double inverse fund from these changes will be $100 to $80 (minus 2 times 10%), followed by an increase to $94.5454 ($80+2x$80*9.0909%). There you go, very simple back and forth movement and you're down 5 dollars already.

You can work out similar examples for what happens if the benchmark first drops 10% then increases by 1/9=11.11% (again a loss in the leveraged fund), what if you have an unleveraged inverse fund (you still lose -- it's not just about the leverage as some think -- therefore I prefer to do a traditional short-sale for longer-term trades), or what happens if you have a triple inverse leveraged fund like Direxion (the greater the leverage the worse the decay).


On Jun 03 09:16 PM Sonic wrote:

> Is that because of the inherent decay of each leveraged fund?...I've
> been trying to get a full understanding of that. I would love to
> have a good understanding of how and why that works.
>
> jc]]> Thu, 04 Jun 2009 02:37:26 -0400
It's nothing esoteric, just simple high school math. Get a piece of paper out and work through a few simple examples of what happens for a couple of given changes in the benchmark to the inverse fund.

For instance, if you start with $100 in a benchmark and a double inverse fund. Benchmark goes up by 10% to $110. If it drops by 1/11=9.0909...% you're back where you started from, 100 dollars. However, movement in the double inverse fund from these changes will be $100 to $80 (minus 2 times 10%), followed by an increase to $94.5454 ($80+2x$80*9.0909%). There you go, very simple back and forth movement and you're down 5 dollars already.

You can work out similar examples for what happens if the benchmark first drops 10% then increases by 1/9=11.11% (again a loss in the leveraged fund), what if you have an unleveraged inverse fund (you still lose -- it's not just about the leverage as some think -- therefore I prefer to do a traditional short-sale for longer-term trades), or what happens if you have a triple inverse leveraged fund like Direxion (the greater the leverage the worse the decay).


On Jun 03 09:16 PM Sonic wrote:

> Is that because of the inherent decay of each leveraged fund?...I've
> been trying to get a full understanding of that. I would love to
> have a good understanding of how and why that works.
>
> jc]]> http://seekingalpha.com/article/141204-thursday-outlook-commodities-global-markets?source=feed#comment-531322 531322 EWJ)... I have no idea what that means.


On Jun 04 12:03 AM User 425362 wrote:

>
> the problem is fry your commentary is pretty vague and not actionable.
> You describe what has happened, but not what will. it' Kinda like
> a chimp that throws shit at the wall; all you have is a dirty wall.]]> Thu, 04 Jun 2009 02:21:42 -0400 EWJ)... I have no idea what that means.


On Jun 04 12:03 AM User 425362 wrote:

>
> the problem is fry your commentary is pretty vague and not actionable.
> You describe what has happened, but not what will. it' Kinda like
> a chimp that throws shit at the wall; all you have is a dirty wall.]]> http://seekingalpha.com/article/139156-the-dilemma-of-chinese-central-bankers?source=feed#comment-514608 514608
Was just speaking with a friend today who works as a salesperson for a Swiss company in Asia, and recently he and his colleagues have had to travel to China on tourist visas. They can't get business visas anymore because, according to his Chinese contact, "you guys only come to sell anyway" (as if it's spreading a disease).

I have zero sympathy for the Chinese "dilemma". I'm not arguing for protectionism, but there has to be reciprocity.]]> Fri, 22 May 2009 12:44:37 -0400
Was just speaking with a friend today who works as a salesperson for a Swiss company in Asia, and recently he and his colleagues have had to travel to China on tourist visas. They can't get business visas anymore because, according to his Chinese contact, "you guys only come to sell anyway" (as if it's spreading a disease).

I have zero sympathy for the Chinese "dilemma". I'm not arguing for protectionism, but there has to be reciprocity.]]> http://seekingalpha.com/instablog/142982-joseph-l-shaefer/4904-a-non-chartist-charts-the-coming-summer-decline?source=feed#comment-510807 510807 Wed, 20 May 2009 04:58:03 -0400 http://seekingalpha.com/article/138115-a-safe-bet-in-a-bear-market-rally?source=feed#comment-507955 507955

On May 18 04:41 AM Ludovici wrote:

> Are there any bright mathematically inclined people out there who
> have logically analyzed the rationale for trailing stops? Is an
> investment that has fallen 25 percent necessarily worth less than
> an investment that has risen to the same value, or than another that
> has just stood still? If not, where's the logic in this practice?]]> Mon, 18 May 2009 07:50:59 -0400

On May 18 04:41 AM Ludovici wrote:

> Are there any bright mathematically inclined people out there who
> have logically analyzed the rationale for trailing stops? Is an
> investment that has fallen 25 percent necessarily worth less than
> an investment that has risen to the same value, or than another that
> has just stood still? If not, where's the logic in this practice?]]> http://seekingalpha.com/article/134225-starbucks-is-on-the-right-path?source=feed#comment-486473 486473
What pisses me off the most about Starbucks is that they pretend to be a premium chain and Howard Schultz keeps disparaging the competition, but so many times I've had: burnt coffee, lukewarm coffee, Americano as light as tea (do these barristas get any training?), stale scones (at least 2 days old, on one occasion it was powder dry), overfriendly/smarmy personnel, annoying cross-selling, dirty sofas (2 days worth of food between the cracks), etc. The contrast with Howard Schultz's hype is what makes it so annoying.

The current price completely puzzles me. It's priced like a growth stock, without the growth. There's so many other, better places out there for my money.]]> Sat, 02 May 2009 06:08:21 -0400
What pisses me off the most about Starbucks is that they pretend to be a premium chain and Howard Schultz keeps disparaging the competition, but so many times I've had: burnt coffee, lukewarm coffee, Americano as light as tea (do these barristas get any training?), stale scones (at least 2 days old, on one occasion it was powder dry), overfriendly/smarmy personnel, annoying cross-selling, dirty sofas (2 days worth of food between the cracks), etc. The contrast with Howard Schultz's hype is what makes it so annoying.

The current price completely puzzles me. It's priced like a growth stock, without the growth. There's so many other, better places out there for my money.]]> http://seekingalpha.com/article/133198-the-death-of-the-asian-development-model?source=feed#comment-482045 482045 Wed, 29 Apr 2009 01:11:02 -0400 http://seekingalpha.com/article/131710-bill-miller-is-correct-for-now-value-funds-burying-quants?source=feed#comment-469295 469295
Are you basically saying that some very large quant funds didn't get enough time to close their huge short positions and are now effectively insolvent? Or are they merely hurting? 27% down is bad but a far stretch from a forced liquidation.

Can anyone clarify? Thanks.]]> Mon, 20 Apr 2009 05:46:54 -0400
Are you basically saying that some very large quant funds didn't get enough time to close their huge short positions and are now effectively insolvent? Or are they merely hurting? 27% down is bad but a far stretch from a forced liquidation.

Can anyone clarify? Thanks.]]> http://seekingalpha.com/article/131505-thoughts-on-the-s-p-500-going-to-325?source=feed#comment-467417 467417
Today the growing consensus is that the government will manage to stave off the worst, and that we're "only" in for a very bad recession, so even if little has changed fundamentally, there's a certain logic to the recent rally. My sense is that even if stocks were to drop again, there would be very strong support in the high 600s (bottom-fishers stepping in), so holding stocks today doesn't feel as scary as a month ago. I accept that it's a possibility that the S&P 500 will see 500, but equally I believe it's possible that after a brief snap-back from current levels, aggressive government action and inflation will make sure that we're never seeing the S&P below 750 again. If only one could short stocks in inflation-adjusted dollars!

I'm not a permabull by any means, just pointing out that it's not necessarily easy to make money even if you get the bear case right. You also have to get your timing right, not an easy thing in an environment with so much government intervention, and the looming danger of inflation and maybe even a dollar collapse.]]> Sat, 18 Apr 2009 05:23:35 -0400
Today the growing consensus is that the government will manage to stave off the worst, and that we're "only" in for a very bad recession, so even if little has changed fundamentally, there's a certain logic to the recent rally. My sense is that even if stocks were to drop again, there would be very strong support in the high 600s (bottom-fishers stepping in), so holding stocks today doesn't feel as scary as a month ago. I accept that it's a possibility that the S&P 500 will see 500, but equally I believe it's possible that after a brief snap-back from current levels, aggressive government action and inflation will make sure that we're never seeing the S&P below 750 again. If only one could short stocks in inflation-adjusted dollars!

I'm not a permabull by any means, just pointing out that it's not necessarily easy to make money even if you get the bear case right. You also have to get your timing right, not an easy thing in an environment with so much government intervention, and the looming danger of inflation and maybe even a dollar collapse.]]> http://seekingalpha.com/article/128442-don-t-jump-into-the-markets-and-be-an-april-fool?source=feed#comment-445121 445121 Mon, 30 Mar 2009 10:16:46 -0400 http://seekingalpha.com/article/127885-is-it-time-to-jump-back-into-the-market?source=feed#comment-440450 440450
Maybe instead of "taking candy from a baby", it should be "like taking the 401k off of a pensioner".]]> Wed, 25 Mar 2009 22:31:10 -0400
Maybe instead of "taking candy from a baby", it should be "like taking the 401k off of a pensioner".]]> http://seekingalpha.com/article/127744-what-happens-when-you-hold-leveraged-etfs-for-more-than-one-day?source=feed#comment-439438 439438 Wed, 25 Mar 2009 09:48:46 -0400 http://seekingalpha.com/article/126608-bonus-outrage-look-for-the-facts?source=feed#comment-431789 431789
What is it about Wall Street that without a bonus they wouldn't be motivated to do a good job? Do surgeons threaten to do a half-hearted job if they don't get a bonus? What about teachers? Firemen? Engineers? What's so special about the people on Wall Street?]]> Thu, 19 Mar 2009 01:16:59 -0400
What is it about Wall Street that without a bonus they wouldn't be motivated to do a good job? Do surgeons threaten to do a half-hearted job if they don't get a bonus? What about teachers? Firemen? Engineers? What's so special about the people on Wall Street?]]> http://seekingalpha.com/article/126245-ashamed-of-aig?source=feed#comment-428758 428758
No need to break bonus contracts and set off a deluge of lawsuits, no need to let AIG go bankrupt and set off a firestorm of CDS.]]> Tue, 17 Mar 2009 04:26:09 -0400
No need to break bonus contracts and set off a deluge of lawsuits, no need to let AIG go bankrupt and set off a firestorm of CDS.]]> http://seekingalpha.com/article/126211-jeremy-grantham-reinvesting-when-terrified?source=feed#comment-428754 428754
Nouriel Roubini rates the chance of an L-shaped recession (depression) at one in three now, and my impression from reading him between the lines is that he really thinks it's higher than that. Now, I do think the collapse in trade and manufacturing of the past months is related to destocking and that this will reverse itself sometime soon, which some people will interpret as the first rays of spring, but I'll take that as a trading opportunity, not a time to go back in.

Mr Grantham makes a good point about having a plan about when to get fully invested again. For me it will be when there's a clear bull market again. The next 5-10 years I plan to swing trade and use options strategies to make money.]]> Tue, 17 Mar 2009 04:14:31 -0400
Nouriel Roubini rates the chance of an L-shaped recession (depression) at one in three now, and my impression from reading him between the lines is that he really thinks it's higher than that. Now, I do think the collapse in trade and manufacturing of the past months is related to destocking and that this will reverse itself sometime soon, which some people will interpret as the first rays of spring, but I'll take that as a trading opportunity, not a time to go back in.

Mr Grantham makes a good point about having a plan about when to get fully invested again. For me it will be when there's a clear bull market again. The next 5-10 years I plan to swing trade and use options strategies to make money.]]> http://seekingalpha.com/article/124183-massive-cuts-required-to-restore-investment-bank-returns?source=feed#comment-413604 413604 Wed, 04 Mar 2009 23:01:39 -0500 http://seekingalpha.com/article/123077-eight-signs-gold-is-headed-for-a-correction?source=feed#comment-405440 405440 Fri, 27 Feb 2009 04:20:14 -0500 http://seekingalpha.com/article/122461-why-gold-etfs-trump-gold-bullion?source=feed#comment-404009 404009
To each his own, but personally I think it'll be easier to make money in oil than in gold at current price levels, with less risk of a vicious drawdown.


On Feb 25 03:06 PM clam75 wrote:

> I don't wholly trust the gold ETFs. Can one of their shareholders
> actually go to a depository and SEE the physical gold that is owned
> by the fund? If not, I'd be very suspicious. Until the Dow/gold
> ratio gets to 2:1, I think that buying physical gold is a good play.]]> Thu, 26 Feb 2009 03:00:17 -0500
To each his own, but personally I think it'll be easier to make money in oil than in gold at current price levels, with less risk of a vicious drawdown.


On Feb 25 03:06 PM clam75 wrote:

> I don't wholly trust the gold ETFs. Can one of their shareholders
> actually go to a depository and SEE the physical gold that is owned
> by the fund? If not, I'd be very suspicious. Until the Dow/gold
> ratio gets to 2:1, I think that buying physical gold is a good play.]]> http://seekingalpha.com/article/122257-china-trying-to-break-the-euro?source=feed#comment-403154 403154 Wed, 25 Feb 2009 12:14:10 -0500 http://seekingalpha.com/article/122585-how-to-stimulate-the-economy-fire-the-sell-side-analysts?source=feed#comment-403088 403088 Wed, 25 Feb 2009 11:39:29 -0500 http://seekingalpha.com/article/122460-the-advantages-of-offshore-banking?source=feed#comment-402494 402494
Let's face it, the real motivation for going offshore is tax evasion / avoidance, whatever you want to call it.

A financial planner once proposed a structure to me to set up a shell company in the Isle of Man. I'd own 100% of the shares in this company and I shift as much money in it as I'd want (the "company" would then invest it in shares and other assets), and whenever I'd need to pull money out, this company would make me an interest-free nontaxable "loan". No dividend or capital gains taxes would ever have to be paid. That's how it was presented to me with a nod and a wink. None of your other 7 reasons were even mentioned.]]> Wed, 25 Feb 2009 06:33:37 -0500
Let's face it, the real motivation for going offshore is tax evasion / avoidance, whatever you want to call it.

A financial planner once proposed a structure to me to set up a shell company in the Isle of Man. I'd own 100% of the shares in this company and I shift as much money in it as I'd want (the "company" would then invest it in shares and other assets), and whenever I'd need to pull money out, this company would make me an interest-free nontaxable "loan". No dividend or capital gains taxes would ever have to be paid. That's how it was presented to me with a nod and a wink. None of your other 7 reasons were even mentioned.]]> http://seekingalpha.com/article/122461-why-gold-etfs-trump-gold-bullion?source=feed#comment-402485 402485
Today there was an interesting article about silver in the Financial Times also. It's up 40% for the past 4 months, mainly driven by investment demand. Industrial demand has dropped and output has increased. Looks like a good shorting opportunity once the trend breaks.]]> Wed, 25 Feb 2009 06:21:36 -0500
Today there was an interesting article about silver in the Financial Times also. It's up 40% for the past 4 months, mainly driven by investment demand. Industrial demand has dropped and output has increased. Looks like a good shorting opportunity once the trend breaks.]]> http://seekingalpha.com/article/121245-rating-the-top-12-u-s-banks-from-hidden-gems-to-zombies?source=feed#comment-402147 402147 Tue, 24 Feb 2009 18:44:33 -0500 http://seekingalpha.com/article/68082-india-globalization-capital-subcontinent-infrastructure-boom-play?source=feed#comment-401418 401418
Bought 5000 shares at $1 each, then it dropped to 50 cents overnight. I don't set stops on microcaps like this because they would too easily get busted.

I'm less concerned about the paper loss than about what this may tell about the company's prospects for survival. Seems like the main problem is access to credit, which is hopefully a temporary problem. According to the press statement, the company is cutting expenses so that it can ride out the downturn. I'll hold on to my shares (now lottery tickets) at this price.]]> Tue, 24 Feb 2009 10:50:03 -0500
Bought 5000 shares at $1 each, then it dropped to 50 cents overnight. I don't set stops on microcaps like this because they would too easily get busted.

I'm less concerned about the paper loss than about what this may tell about the company's prospects for survival. Seems like the main problem is access to credit, which is hopefully a temporary problem. According to the press statement, the company is cutting expenses so that it can ride out the downturn. I'll hold on to my shares (now lottery tickets) at this price.]]> http://seekingalpha.com/article/112963-nine-ways-to-profit-in-2009?source=feed#comment-399419 399419
Please keep us updated -- a year is an eternity in this market!]]> Sun, 22 Feb 2009 23:44:43 -0500
Please keep us updated -- a year is an eternity in this market!]]> http://seekingalpha.com/article/121917-luxury-manhattan-real-estate-could-fall-another-50-barron-s?source=feed#comment-399413 399413 Sun, 22 Feb 2009 23:26:11 -0500 http://seekingalpha.com/article/121777-whole-foods-pick-of-the-day?source=feed#comment-399403 399403 Sun, 22 Feb 2009 23:11:27 -0500 http://seekingalpha.com/article/121847-william-bernstein-don-t-panic-and-sell-into-a-crash?source=feed#comment-398181 398181
If one must really stay invested in stocks (I prefer to trade and use options strategies in this market), my advice would be to replace "buy and hold" with "stay invested". Meaning, if you held your stocks all the way down, some may not make that much sense anymore in the new climate. So sell them at a beaten-down price and buy other stocks with the money (at equally beaten-down prices) that make more sense in the current economic climate. As Warren Buffet said: "you don't have to make the money back the same way you lost it." For instance, in this market, I focus a lot on the debt level and free cash flows of a company -- something that was much less important a few years ago.]]> Sat, 21 Feb 2009 22:00:11 -0500
If one must really stay invested in stocks (I prefer to trade and use options strategies in this market), my advice would be to replace "buy and hold" with "stay invested". Meaning, if you held your stocks all the way down, some may not make that much sense anymore in the new climate. So sell them at a beaten-down price and buy other stocks with the money (at equally beaten-down prices) that make more sense in the current economic climate. As Warren Buffet said: "you don't have to make the money back the same way you lost it." For instance, in this market, I focus a lot on the debt level and free cash flows of a company -- something that was much less important a few years ago.]]> http://seekingalpha.com/article/121518-acknowledging-our-animal-spirits?source=feed#comment-398167 398167
> Our choice is not between horrible government and no government.
> That is a false dilemma. However, this does not mean that there aren't
> good and bad governments. I suggest that we search for ideas about
> what good government would look like, instead of repeating the naive
> view that the elimination of all government would lead to a flourishing
> society.


On Feb 21 08:18 PM john s. gordon wrote:

> sundrench - finland is racially homogeneous, and full of hardworking
> people, and it is relatively easy to develop a national consensus
> on what needs to be done.
>
> u.s.a by contrast has many diverse attitudes about any number of
> things.
> read 'nine nations of north america' by joel garreau.
>
> remember finland was the only country that ever paid off its 1917-18
> war debt to the u.s.a, they did it by imposing a reduction in living
> standards on all citizens, and there was general agreement that it
> was the proper thing to do.]]> Sat, 21 Feb 2009 21:36:00 -0500
> Our choice is not between horrible government and no government.
> That is a false dilemma. However, this does not mean that there aren't
> good and bad governments. I suggest that we search for ideas about
> what good government would look like, instead of repeating the naive
> view that the elimination of all government would lead to a flourishing
> society.


On Feb 21 08:18 PM john s. gordon wrote:

> sundrench - finland is racially homogeneous, and full of hardworking
> people, and it is relatively easy to develop a national consensus
> on what needs to be done.
>
> u.s.a by contrast has many diverse attitudes about any number of
> things.
> read 'nine nations of north america' by joel garreau.
>
> remember finland was the only country that ever paid off its 1917-18
> war debt to the u.s.a, they did it by imposing a reduction in living
> standards on all citizens, and there was general agreement that it
> was the proper thing to do.]]>