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Abraxas

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  • Apple $700: Don't Get Burned Again [View article]
    From a technology point of view the author is probably right. From a trading and investing point of view the author is probably wrong. At least, temporarily wrong. The timing of the advise is wrong.

    I believe it is a mistake to sell Apple at this moment as the market has, certainly, already priced in the technological liabilities the author refers to (they are well known, and if they are well known, they are already priced in), and Apple is about to unveil its new products.

    It sounds obvious to me, but you don't sell right before the new product cycle is about to begin. You don't sell, unless, that is, you are absolutely convinced that the new products will be a complete fiasco. That, however, if highly unlikely. It is Apple we are talking about.

    Further, large Hedge Funds and institutional investors are coming back into the stock providing support and upward pressure to the stock.

    I believe that Apple will prove to be, once again, a great investment. But even if you have doubts, the intelligent trade is, in my opinion, to buy Apple now, wait until it unveils its new products and make a decision then.

    Don't sell right now. It is the wrong time to do so.
    Aug 19 09:47 AM | 7 Likes Like |Link to Comment
  • It's Risk Parity, Not Risk Party [View article]
    "I am disinclined to take victory laps when most people are losing money"

    Me too but, as you know well, some of positions require a lot of perseverance and patience and so it is gratifying to be well compensated in due time.

    Thursday was one of those very rare days when the universe aligns for an investor: Reduced equity positions on the way up (but long AAPL), short and medium term equity and options hedges, long volatility, and short bonds.

    One cannot ask for more.

    "Although the seasonal patterns favor buying bonds in August and early September, the potential downside is much worse than the potential upside."

    Well, you know I agree. But maybe I am biased. I think short bonds is a trade that is starting to consolidate and pay handsomely. I believe the upside is still substantial.

    BTW, when professionals see that institutions have been net equity sellers since June and retail investors have kept the market up with no volume whatsoever, they know it will not end well for the retail investors. I personally find it appalling that brokers and pundits keep on sandbagging retail investors who, invariably, end up holding the bag when things sour. And regulators? Oh, yes, always, laissez-fair. Just look at the slaps on the wrist to Goldman and JP Morgan.
    Aug 17 01:42 PM | 2 Likes Like |Link to Comment
  • Apple continues to outperform; RBC hikes PT [View news story]
    It is buy AAPL, sell the broader market and short bond. Don't forget to short bond as that's where your hedge is.
    Aug 15 04:31 PM | Likes Like |Link to Comment
  • Apple: Reality Bites, So Time To Sell [View article]
    Tomas,

    My posts were polite and was given you the benefit of the doubt. I can clearly see, by your completely arrogant and foolish response, that I was mistaken and you didn't deserve my patience or kindness. Being impolite, aggressive and showing lack of respect only serves to show your true self and diminish any validity that your message may have.

    You wrote:

    "I have the feeling I have been doing this longer than you have and have made tons of money off of people who believe in the EMH."

    "So you think the market is efficient."

    "Finally if you are not looking for doubles then you are either a believer in EMH or you are lazy."

    "invest all your money in index funds and quit talking about stocks or read the book Predictably Irrational for another view on how our minds work."

    Just a couple of points before I waste anymore of my time with you:

    1) Please see my profile. You will see that, perhaps, I don't need your advise and condescending tone when it comes to trading and investing. It is sad that I have to resort to telling you. You should be respectful towards others, regardless of who you think the other person is. Unfortunately, you haven't been. That speaks very badly about you.

    2) Please learn to read or pay more attention. The bulk of your post is wasted because you failed to properly read my brief post. So, I will only repeat the following: I don't believe that the markets are efficient. Far from it. I just don't believe they are as inefficient as you seem to believe. Please see my previous post where I wrote: "The market is far from efficient, I accept, but it is not that inefficient".

    3) I have already doubled my investment in Apple. In fact I have already triple it in less than a month. But, as I also stated before, it is done through options, not equity. I have no problem sharing the information, so you can verify it:

    Bought AAPL, 17 of January 2015, $850 calls, between July the 19th and the 22nd at $2.05. The calls are currently trading at $5.95.

    I do not intend to close my position any time soon. If Apple goes back anywhere close to its high, the calls will be worth north of $50. You do the math on the profit and tell me if I know what I am doing or if I need your advise.

    Maybe you should tell us where and when you have shorted Apple, so we know that you are not what you accuse others of being: just a lot of hot air and no real money in the game.

    BTW, I will be happy to accept your apology and, perhaps, we can start again on better, more respectful terms. As you wrote before: Your move.
    Aug 15 09:33 AM | Likes Like |Link to Comment
  • Apple: Reality Bites, So Time To Sell [View article]
    With all due respect, again, unless you are talking about penny stocks, no serious investor buys a stock hoping to double its investment. The market is far from efficient, I accept, but it is not that inefficient and I, politely, doubt that you have information, which is unknown to the rest of the investment community.

    The only reasonable way to expect to double, triple or quadruple, your investment it through options (for instance, I just closed HLF with a 1.700% profit in a few months).

    So, please, stop the talk about looking for doubles. It doesn't help the unsuspecting retail investor.
    Aug 14 09:22 PM | Likes Like |Link to Comment
  • Apple: Reality Bites, So Time To Sell [View article]
    "Hoping for a 20% gain is boring. Tell me Apple is going to double and why is interesting."

    Perhaps you are taking yourself a bit too seriously? Or, perhaps, you are hurting and this is just a way to lash out? If it is the latter,I'll give you the benefit of the doubt for making a twitter-like mistake in the heat of the moment. Otherwise, you probably know that those kinds of comments are not made by serious investors or traders.
    Aug 14 03:04 PM | 2 Likes Like |Link to Comment
  • Apple: Reality Bites, So Time To Sell [View article]
    With all due respect, John, the timing of your advise to sell Apple is horrendous. It is fine to have doubts, but you have waited through the most difficult quarters and are giving up right before Apple comes up with the goods.

    briefly, these are some of the reasons your selling advise is poorly timed:

    Apple is likely to announce its new products in September, which means that unless you expect a total flop in terms of innovation from Apple (possible, but highly unlikely), the stock is bound to move up from here.

    Secondly, Apple is likely to continue pushing its buyback program. any announcement in this regard and the stock will rip higher.

    Thirdly, there is a lot of Hedge Fund movement in the stock, as always, but the insider numbers show that large Hedge Funds are coming back and building larger position in Apple, once again. This includes recent buys from Icahn, for instance.

    Finally, the stock is testing the year highs it may right after its large drop in january. Any move higher than 475 and you will see Apple going back to 500 in no time.

    So, respectfully, John, you have done the difficult part, but gave up at the wrong time. Now do the easy part and hurry up and buy back your stock before is too late.
    Aug 13 02:51 PM | 3 Likes Like |Link to Comment
  • The Right Clearance For The Bumpy Road Ahead [View article]
    "...in which countries guarantee (implicitly or implicitly)..."

    Mike, did you mean to write explicitly or implicitly, or am I missing something?
    Aug 13 02:32 PM | Likes Like |Link to Comment
  • Bonds: Short-Term Risk, Long-Term Opportunity [View article]
    Hi R we there yet, and Eric,

    Indeed, nothing is a sure thing, and yes, everyone should understand the inherent risks of trading and investing in the financial markets, not only TBT, going short or properly monitoring a position. All of it.

    Getting past this educational point and assuming that people do their homework, they should also realize that there are opportunity costs and that acting timely is a fundamental part of success in the financial markets.

    By the way, today we saw the 3rd Hindenburg Omen in 4 days, which shows that all is not well and that there is a high risk of a substantial downside move. Professional traders, naturally, will be conveniently quiet about this while they unload their positions on naive individual investors, who think that shorting the market is dangerous instead of realizing that it is a necessary part of a hedging strategy which should always be part of everyone's trading strategy.

    Without shorting, options' strategies, and negatively correlated position, there is no hedging, and without hedging there is no protection. The quicker individual investors learn this, the safer they will be.
    Aug 8 06:03 PM | Likes Like |Link to Comment
  • The Disturbing Evolution Of Central Banking [View article]
    "Not only are central banks evolving to become ever-more-dovish right exactly at the time when they need to be guarding ever more diligently against rising inflation as rates and hence money velocity turn higher, but they are also becoming less independent at the same time."

    Self-fullfiling complacency in the way of bubbles, manias, heard mentality, and now, central banking policy. The irony is that it is precisely this self-fullfiling complacency, blind to the dangers it creates, which incites further action, and in turn feeds back more complacency, until the inevitable destruction via market meltdown, economic crisis, fear and overreaction (Europe's austerity program).

    And then, everyone seems shocked at the virulence of the next (un)avoidable crisis.
    Aug 8 03:58 PM | Likes Like |Link to Comment
  • Bonds: Short-Term Risk, Long-Term Opportunity [View article]
    Eric,

    Most financial institutions currently believe that interest rates face strong upward pressure (due to various known reasons), and instead of fighting the trend, they are profiting from it by shorting bonds. By using the title: "Bonds: Short-Term Risk, Long-Term Opportunity", and implying that it is better to wait for a good entry point to the long side, perhaps you fail to indicate that retail investors, just like institutional traders, also have an opportunity to make money now, while interest rates go up and bond prices go down.

    I believe that the sensible trade is, indeed, shorting bonds, not going long. Besides making sure that investors avoid losing money on their fixed income positions, this trade has the added benefit of presenting an excellent hedge for the equity markets, which appear to be reaching dangerous levels.

    Some will point that, evidently, equities keep on going up. Nevertheless, institutions have been net sellers since june, while retail investors are the ones buying. We all know how that usually ends. It won't be pretty!

    If the equity markets reverse, and they will once the Fed tappers, while interest rates go up, retail investors are set to suffer a painful double hit. As I said, in my opinion, it would be more sensible to, at least, be short bonds (easily done through TBT or other reverse ETFs) to cushion the blow.
    Aug 6 08:37 AM | 1 Like Like |Link to Comment
  • Get Ready For An Electric Week [View article]
    Very good and balanced post, Kevin. Thank you.
    Jul 25 07:27 PM | 1 Like Like |Link to Comment
  • The Healing Power Of Quarter-End [View article]
    Did you see the massive equity sell-off into the close today? After the various Fed speakers and POMO induced market ramp-ups during the day, on no volume whatsoever, window dressing and all, huge selling volume shows the true colors of the institutions at the close.

    And who ends up holding the bag? Retail investors, naturally.
    Jun 28 04:09 PM | Likes Like |Link to Comment
  • The Healing Power Of Quarter-End [View article]
    I often feel bad for the average retail investor who, invariably, ends up holding the bag when the music stops. Government officials, investment advisors, financial news outlets and pundits have no problem massaging and distorting the facts to create the 'right' news to fit their interests and the prevailing narrative, even if that means making 180 degree turns and contradicting themselves on a daily basis. What is a poor retail investor to do but to trust their judgement and invest accordingly?

    Witness these week's numbers and how they were presented to the general public. First, a couple of days ago, we get four good numbers which, naturally, are portrayed as positive for the markets because, well "good news is good news", after all. That makes sense, and retail investors happily jump in. Markets go up. Next day GDP figures suffer a tremendous set back when they are revised down from 2.4 to 1.8. Now, the various agents portrait the bad news as positive because this should prevent the Fed from any early tapering. So this time, only 24 hours later, "bad news are good news", and retail investors are happy to oblige, once more, and jump in again.

    In the mean time PIMCO's Gross repeatedly comes out in interviews to tell investors not to "overreact" by selling bonds. Naturally, he and the journalist interviewing him, neglect to say that his flagship fund is long bonds and almost down 4% for the month and that he needs time and liquidity to get out, so investors would be well advised to remember that their interests and his don't match well up this time around and that, should they, in fact, heed his advise, they are likely to bail him out and be left holding the bag.

    Who is truly looking after the retail investor? With those agents, journalists, and advisors who needs enemies!

    Which bring us back to where we started. As I said, I often feel bad for the average retail investor who, invariably, ends up holding the bag when the music stops.
    Jun 28 02:56 PM | 1 Like Like |Link to Comment
  • "We're in a highly levered economy where households can't afford to pay much more interest," writes Bill Gross, noting monthly payments on a 30-year mortgage have jumped 20-25% since January and mortgage applications have plummeted 39% in 2 months. He's not buying Bernanke's tough talk given the reality of our economy and the chairman's "helicopter" reputation. "Investors selling Treasurys (TLT, TBT) in anticipation the Fed will ease out of the market might be disappointed." [View news story]
    "Investors selling Treasurys (TLT, TBT) in anticipation the Fed will ease out of the market might be disappointed."

    What Gross really means is "our position is enormous, please don't sell Treasuries before we sell them, otherwise we, not you as intended, will end up losing lots of money!"
    Jun 25 07:25 PM | 2 Likes Like |Link to Comment
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