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TaiPan

TaiPan
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  • Get Ready For The Second Round Of The Market Downturn [View article]
    I love prognostications about the next market direction, but really, if it were that clear we'd all be buyers (no sellers) or sellers (no buyers), and there would be no transactions. This we all know.

    Analyses of Bear markets show that there is an initial plunge, then a relief rally, then more plunges punctuated by relief rallies. How to tell the difference between a mere correction (e.g. October 2011) so we can get back into the market, and a real Bear so we can stay out?

    If anyone knows the answer, tell me and I'll toast you over the bows of our yachts in the Caribbean.

    So why do we spend time pondering the timing of the next Bear? Because we cherish the notion that THIS TIME we will be nimble and prescient enough to avoid the worst of the next Bear. Faint hope. Many -- the author of this article included -- have been prepared for the next Bear for years --at a considerable cost (investment profits lost). But sooner or later they will be right, and we keep our fingers poised over the sell button.

    No use scanning for catalysts; they are different each time, and often they are off-radar black swans like the Lehman collapse. Who knew? Maybe this time it is private debt, and one commenter suggests. Who knows?

    Nonetheless, when we do finally sell (the timing will be different for each of us), what do we do with our cash? The author recommends various "alternative" investments, like gold (GLD). But as a safe haven GLD is a fickle friend.
    In the Bear of Oct 2007 - March 2009, the S&P 500 (SPY) fell 50% while gold (GLD) rose 20%. Now, 20% is certainly better than -50%, but the path of GLD was a volatile series of head fakes. Would we have held on? There was a three-month period (March 2007 - June 2008) when SPY rose 3% while GLD fell 12%. Would each of us have stayed the course, or would we have sold GLD into SPY and got whipsawed? I am one of the latter.

    We need better alternatives for the next Bear. This -- and not futile predictions about the next Bear -- is a useful area for further research.
    Aug 29, 2015. 02:14 PM | 4 Likes Like |Link to Comment
  • Get Ready For The Second Round Of The Market Downturn [View article]
    bakerme:

    You say "The market canary is the VIX; when it rises above 40 and vacillates toward 60 or 80, we'll know the explosion is near. " I wonder if you would clear up my confusion about the VIX.

    The VIX is the cumulative result of investors' assessment of volatility, is it not? If so, it reflects expectations, but is not a cause of market direction. Stated differently, a VIX of (say) 60+ shows that investors expect severe changes in market price, but the 60+ does not (cannot) determine the market itself.
    Aug 29, 2015. 02:09 PM | 2 Likes Like |Link to Comment
  • The Fed Spent $23 Billion In 3 Days, But Still Had A Hard Time Pushing Up Stocks [View article]
    "Then, you can get back in, or choose an alternative investment that will benefit more from the loss of Federal Reserve credibility."

    To summarize your points, and to ask two questions ...

    The FED will engineer further stock-price increases, providing an opportunity to sell. But the FED will ultimately run out of money and stocks will decline severely.

    Gold will (finally) fulfill its promise as a safe haven.

    Then, we should seek "alternative investments".

    Question 1: Where do you get your information about reverse TOMOs?
    Question 2: What type of "reverse investments" do you have in mind. please?
    Aug 28, 2015. 09:15 AM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now - Or Is It Too Late? [View article]
    Mark:
    We investors have been hearing from many pundits for several years that the market is due for a correction. If we had heeded those predictions back then (let's say two years), we would have bought a lot of puts, at a considerable cost. And those puts would in the main have expired worthless.

    The question for me is, how much of a market correction would be required today to make current puts produce enough profits to offset the net losses on puts over the previous two years?

    Do you ever do this type of calculation?
    Aug 23, 2015. 10:58 AM | 1 Like Like |Link to Comment
  • 47% Upside To Pinnacle [View article]
    Chris:

    When you recommended LRE, energy prices had been declining for some time. Yet you thought LRE would rise during August in spite of energy's decline. So, there must have been an additional factor that undercut LRE, no? Were you expecting a resurgence in energy prices? (I must admit I don't recall the details of your article, so don't recall your expectations for energy prices.)
    Aug 22, 2015. 02:07 PM | 1 Like Like |Link to Comment
  • Currency Observations From A 'European Vacation' [View article]
    Niklaus:

    I agree with all you say about cultural diversity. You correctly say that it is inaccurate to try to understand a European country's lifestyle and culture when looking with American eyes.

    However, this article was about investing, and the rules of financial analysis are identical no matter what the country. For investors thinking of Europe, a sky-high PE ratio is a warning sign just the same as in America.

    It is valid to say that Europeans are less reliant on cars than Americans are, but how does this help the investor decide whether to buy shares in BMW or Ford? In my view it doesn't. PE ratios and book value DO help, and these measures apply equally on either side of the Atlantic.

    This leads me back to my original comment (one of two): how does hanging out in a German bar or restaurant help one decide where to invest? In my view it doesn't.
    Aug 22, 2015. 01:57 PM | Likes Like |Link to Comment
  • Currency Observations From A 'European Vacation' [View article]
    After a quick read, I have two off-the-cuff comments:

    1) I would not go into a local bar or restaurant to get investment advice, so I don't see how looking into shops as a mere tourist in a foreign country affords insight into how to or whether to invest there. Sounds like a way to write off a vacation as a business (research) expense.

    2) The EURO has been rising against the US dollar since mid-July (according to Oanda . com), so hedging any European investments against the USD would be a bad idea at this time. That is, better not to hedge to the dollar, and thus benefit from the rising EURO.
    If your holiday was during the past several weeks but your US dollar was buying more and more EUROs, there must be a different explanation. Maybe bank chicanery?
    Aug 21, 2015. 01:12 PM | 3 Likes Like |Link to Comment
  • 47% Upside To Pinnacle [View article]
    Chris:

    You say you're having a rough day. I am guessing that it is partly due to the declining LRE, which was supposed to thrive during August, no?

    What's the problem there, with LRE?
    Aug 21, 2015. 12:47 PM | 1 Like Like |Link to Comment
  • Dual Momentum August Update [View article]
    The author never has (as far as I now) answered questions. It's too bad because the approach would be interesting if only we could get answers.

    We don't even know how the portfolio strategy performs, though the author undoubtedly does.
    Aug 11, 2015. 09:54 AM | Likes Like |Link to Comment
  • What If I Had Stayed Away From The 'Sell' Button? [View article]
    For perspective, my time frame is a lot shorter than those of many commenters here. My average holding period (of ETFs in the main) is about 20 days.

    Whenever I have reviewed sells, I have found that in most cases I was better off selling (thus avoiding further declines) than holding and hoping the ETF did better (which did happen, but not so often). I sell when (as soon as) an ETF starts to decline steeply compared with its price behaviour during my holding period. So, I might hold 20 days (with a very-successful ETF holding), or only a few days (with an ETF that for some unaccountable reason disappoints almost as soon as I buy it).

    Avoiding large losses seems more beneficial to my portfolio performance than holding onto a flagging ETF and hoping it turns into a `ten bagger`. In other words, I try to hit lots of singles, and avoid striking out.

    This is the opposite of holding on, keeping away from the sell button.
    Aug 10, 2015. 11:14 AM | Likes Like |Link to Comment
  • HEDJ: Is There Any More Upside In This Euro-Hedged ETF? [View article]
    Choosing HEDJ or VGK according to one’s prediction of relative currencies (EURO versus the USD) can be treacherous. Four months ago the EURO bought about $1.11 USD; a few days ago when the article was written, about $1.09; today, back up to $1.11. (See Oanda.com).

    The USD should be lower against other major currencies because of QE, but it’s up. The EURO should be declining against the USD because of its own imminent QE, and down against the USD because of imminent interest-rate hikes in the USA, but there’s no strong trend yet.

    This lack of a clear pattern shows in a comparison of HEDJ and VGK over the past four months. My charting programs allows me to put the two ETFs on a chart, and gradually shorten the periods, to see how the two ETFs are trending against each other. They have converged, not diverged; there is no obvious superiority of HEDJ over VGK except for brief periods.

    So, the thesis that the EURO will rise against the USD (hence VGK will outperform HEDJ) seems sound, but reality disagrees ... so far.
    Aug 9, 2015. 02:47 PM | Likes Like |Link to Comment
  • ETFReplay.com Portfolio August Update [View article]
    With such a long "lookback" period (6 months and 3 months), the portfolio is destined to contain yesterday's ETFs, not recently-promising ones. In the current portfolio, there are many bond ETFs, which have been thrashed over the past few weeks.

    You need a more responsive and flexible system.

    Would an investor not be better to simply invest in SPY?
    Aug 3, 2015. 01:53 PM | Likes Like |Link to Comment
  • Will Canadian Real Estate Crash? [View article]
    The "Loonie" has always been known as the "petrodollar", and with the price of oil at lows ... so is the CAD.
    Aug 3, 2015. 01:29 PM | Likes Like |Link to Comment
  • Will Canadian Real Estate Crash? [View article]
    Author:
    You say that “Vancouver is the most similar to the US because the immigration is intertwined with questionable financial structures behind the money coming into the country.”

    I am not sure what you mean by “questionable financial structures”, but I doubt that this Chinese money is as fickle and “hot” as you believe. My personal observations lead me to think that if Vancouver house prices correct, the Chinese owners will stay put, there won’t be a mass exodus, and house prices will be weak but stable. Here’s why.

    For a while I was looking for distressed house sales (there are some already on the market, no need to wait for Armageddon), and none of them was owned by a Chinese. If you have different data, I’d love to have it.

    So, if Canadian homeowners find themselves financially-strapped, and forced to sell, it will be (non-Chinese) speculators, and over-eager first-time buyers, but not Chinese owners in the main. When I look at Chinese families living in the lower mainland of B.C., I see a lot of young families putting down roots in Canada, not speculators ready to move their money elsewhere. In fact, it could be argued that Chinese owners will be a stabilizing force, since they have ample cash reserves to stay put and weather a decline in house prices.

    If it was Chinese money that drove prices up, and if that money already invested in houses proves to be stable in the face of a housing recession, you cannot fairly characterize the Vancouver housing market as a “Ponzi Scheme”. For house prices to continue rising, new money must enter the market, of course. If that new money disappears, house prices will level off or decline slightly. But if Chinese money currently invested in houses remains in B.C. houses, then why would there be a housing crash?
    Aug 2, 2015. 10:35 AM | Likes Like |Link to Comment
  • S&P 500: Calm Before The Storm [View article]
    Author:

    The S&P 500 is up over 24% the past two years, while money flow has been declining. How, then, does money flow help the investor decide WHEN to exit the market?
    Jul 21, 2015. 10:31 AM | Likes Like |Link to Comment
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