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  • Refinance activity surge as rates drop  [View news story]
    Yes, yes bubbles galore, but without aspirational decisions, what kind of culture do we have as an alternative?
    Most humans are incapable of rational thought, but as long as their irrationality seeks to make their lives, and their families lives, seemingly more tolerable, do we douse those flames with too much cold water?
    The challenge is educating people so that they have the tools to make better decisions. I've been very consistent with my calls to short homebuilders, but from a societal perspective, owning a piece of dirt creates at least an illusion of being a part of 'something' important.
    Remember the words of Gerald O'Hara instilling in Scarlett a love for 'the red dirt of Tara.'
    Feb 10, 2016. 09:37 AM | Likes Like |Link to Comment
  • The Housing Market Is A Re-Inflated Price Bubble Ready To Pop, Here's Why  [View article]
    ccardea-your reasoning is quite logical. BUT, I'm on record numerous times as suggesting that ITB be shorted at 27.50, and double down thereafter. I've made a lot of money shorting homebuilders.
    If you want to go back and read my comments on this topic, you'll better understand the difference between Wallstreet momentum and what seems somewhat rational.
    Feb 10, 2016. 09:26 AM | 2 Likes Like |Link to Comment
  • S&P 500 Weekly Update: In Short, If Bulls Are Going To Step Up, They Need To Do So Soon  [View article]
    Exactly- but what words to be uttered and how will same be received?
    Does she tiptoe away from a March raise, and if so what subsequent second-guessing to knee- jerk merriment? Expect a reference to increased income on the one hand, but increased risks out of China, etc.
    I closed short positions today, expecting some short-term excitement- but will short any feeble uptick. agree with those about relatively low Vix yet if put buying decreases due to substitute products (such as inverse ETFs) I suppose historical comparisons might not hold. This might be an interesting white paper for the Journal of Finance.
    I did short UVXY via March 18 40 PUTS today- so I placed a bet on some degree of mean reversion over the next few weeks.
    Feb 9, 2016. 11:02 PM | Likes Like |Link to Comment
  • S&P 500 Weekly Update: In Short, If Bulls Are Going To Step Up, They Need To Do So Soon  [View article]
    Too much time and resources devoted to the birth/ death fairy tale. Your suggestion is far too elegant to be embraced.
    Feb 9, 2016. 10:34 PM | Likes Like |Link to Comment
  • Markets Might Be Wrong To Expect Continued Renminbi Depreciation  [View article]
    I've been short the currency simply because the debt approaches the so- called Minsky moment. I've also been short numerous China equities, of which I've shared the information for years now- RENN, DANG, etc.
    The thing about "transitions" is that the precise unfolding of same is inherently unpredictable. If one wishes to make money, it has paid handsomely to be skeptical. Jim Chanos, George Soros and Kyle Bass didn't become wealthy by extending the benefit of the doubt- quite the contrary.
    However, if would be irrational not to pull for a culture that truly wishes to enhance its journey and be a positive for all humanity. The heavy-handed actions of the government, on the other hand, have thus far fallen short of a jurisprudence identified with free societies. The odds favor a positive change, but probably not within the lifetime of anyone reading this comment.
    Feb 4, 2016. 09:39 PM | Likes Like |Link to Comment
  • Why The 10,000 Hour Rule Doesn't Apply To Investing  [View article]
    Interesting- but I would note that it's not so much the quantity of time, but rather the quality. How much more can we credit a very gifted piano teacher to one deemed rather mediocre? If we take two children of equal age and presumed competence, and then assess their talent at some future point, what result?
    Trading is different because it calls upon a skill set nurtured and developed BEFORE one ever sets foot in an institutional setting. If you read the "Market Wizards" biographical sketches, you find individual uniqueness but also common threads- such as risk management and a transcendent awareness of human propensities. The terms "trading", "investing", "speculating" are but human words used to describe and articulate degrees of risk assumption- yet the vast majority of market players dwell in one dimension, seemingly oblivious to the existence of other dimensions. Part of this myopic one- dimensionality is plagued by all the biases so well enumerated by Kahnemann and Tversky (as well as numerous brain/cognitive scientists).
    We still battle the reptile within, and our pre-frontal cortex, while rather amazing, remains a fragile reminder of both the power and limitation of evolution.
    I've passed the bar exams of three states, a CPA exam, numerous securities exams, etc- and I can tell you that I can discuss finance and economics with anyone- but I also know that it doesn't mean a damn thing!
    But what I do know now is how to stack the odds in my favor. And in order to do that, I've learned to play the game in multiple dimensions. So, words and phrases such as "correction", "bull/bear market", and so forth have little to no meaning, from my perspective. I've studied the mathematics of probability, game theory, Kelly criterion, etc, along with the neuro sciences for more than 30 years. It is with this background that I devise various option and derivative strategies that provide the edge I seek.
    So I would simply posit for consideration that putting in the time can be an elusive
    phenomenon- it is the philosophical coceptualization and incessant determination to fight one's natural bias and proclivity that really matters. Keats referred to a 'chamber of maiden thought', Plato imagined shadows as perception posing as reality, and Karl Popper teaches that we should reach only the highest order of assumption- before shredding it further.
    Feb 3, 2016. 11:50 PM | 2 Likes Like |Link to Comment
  • Purchase index declines 7% to 221.1  [View news story]
    Viper- you're too facetious. We just had the third worst blizzard since 1880. If you ask any realtor, you'll get the straight talk. Sales will rocket up by June.
    C'mon man- go get a mortgage- do your part.
    Better yet- rescue a dog and give him a nice home. The two of you can watch the parade of life together.
    Feb 3, 2016. 09:36 AM | 6 Likes Like |Link to Comment
  • Monday Manufacturing Meltdown  [View article]
    Agree. Drip,drip drip or bang-bang? I like a "surprise, surprise" big move, as a coming feature attraction.
    Feb 1, 2016. 09:02 PM | Likes Like |Link to Comment
  • Latest Housing Market Data Still Showing Strength  [View article]
    Or, the savvy millennials may just bide their time in the basement, convince mom and dad to deed the property over to them ( as part of a strategy to avoid nursing home liens), stick the parents in a nursing home at taxpayers expense, and end up moving upstairs. When they turn 62, they can cash out with a reverse mortgage, and keep the game going.
    Jan 31, 2016. 06:05 PM | Likes Like |Link to Comment
  • Sell Or Hedge?  [View article]
    Martin and David: options can be calibrated for pinpoint accuracy, within a given time period. If I have a client whose stock is restricted for six months, I can use a collar to insure various levels of risk. However, it's still difficult to maximize returns on the hedge- normally we think of insurance events as a more or less immediate crisis. Fires and other catastrophes come to mind. Yet, a market sell-off can approximate an 'erosion' of value over an indeterminate time. But, a big difference with markets is that values can be restored, whereas a destroyed building must be replaced.
    Suppose we collar a $10,000,000 equity portfolio for 1 year. A week later there is a 10% drop. The market grinds along for the next 7 months, and just when our collar expires, the market restores all the lost value. Yes, the collar was set up at a minimal cost, but if we had collected on the collar at the 10% drop and used that cash to 'self-insure' the duration, our returns would look much better. Of course, a 50% drop would have landed us in hot water.
    The better strategy might have been to self-insure a risk greater than 10% by cashing in the initial collar and just buying put protection- or calibrating a new collar which would allow for more upside.
    It's a great game.
    Jan 31, 2016. 01:12 PM | Likes Like |Link to Comment
  • Something Is Wrong With The U.S. Stock Market  [View article]
    I wouldn't worry about tip ranks - my option plays, which have been posted for all to see, have been perfect.
    For instance, look at my strategies to short ITB- and pay particular attention to the exactitude. Most recently, look at my "blizzard counter- punch " play to sell calls vs HD.
    And going back over the last months and years, I've suggested shorting China stocks such as DANG and RENN- I'm on record as shorting EWZ (Brazil)-
    And check out the clear suggestion to sell TZA puts when small caps were flying high.
    The only other person remotely close to my tips is Phil Davis- especially relative to option strategies.
    Jan 29, 2016. 07:44 PM | 1 Like Like |Link to Comment
  • How To Profit In This Volatile Market  [View article]
    Agree-good time to trade collars with just about any underlying instrument. And an index like vix doesn't have earnings, nor does it stand to suffer any adverse publicity. The LEAP puts on SVXY will be a bit pricey, but you can sell a shorter-term further otm put to defray the cost. I'm currently short the 37.50 SVXY Feb.5 calls, which are up 25.09% at the moment. The vix is mostly churning, and I don't think we see anything but relative tranquility thru tomorrow.
    It's interesting, but conservative strategies like collars can be used for more than just hedging. It's a great way to generate both option income and gains on shares. You can also short 100 shares, sell a put and buy a call-depending on option skew and pricing. The 'new fangled' instruments created by the casino offer numerous zero-sum strategies that cover one's account, while increasing the odds of beating the dealer.
    Another play is to counter-punch stocks like AMZN and CMG, because so many purely directional players have to cover one way or the other several times over a given 30 day stretch. Today, for instance, I has a bull call spread on AMZN. The testosterone junkies get jerked around so much, that you just set up a minimal cost play, and wait for the action.
    And, one can use the futures as well, especially since the world-wide casino is growing-and is full of surprises. Currencies can be combined with ETFs, and the assortment of strategies is limited only by one's imagination (and bank roll).
    And to think I used to study balance sheets, EBITDA, NCF, conference calls, etc. Of course, I used to believe in Puff the Magic Dragon, Santa, tooth fairy and government integrity as well. .
    Jan 28, 2016. 02:45 PM | 1 Like Like |Link to Comment
  • S&P 500: Eminence Front?  [View article]
    "Last dance with Mary Jane, one more time to kill the pain."

    Tom Petty
    Jan 27, 2016. 08:35 PM | Likes Like |Link to Comment
  • New homes sales surge in Dec., complete best year since 2007  [View news story]
    Hi Martin- a great conceptual question. I own some self-storage properties and will sometimes short PSA, or a real estate fund- but the correlation is really unreliable.
    To my way of thinking, ITB gets "covered" as it goes up in price with generic risk-on pulses. And, unlike AMZN or TSLA, home builders have inherent limitations. Plus, over the years I've made so much on home builders, I have a large built in cushion.
    Honestly, I really short the over enthusiasm of Wall Street traders who often want to be 'early' on trends. Yet, the macro trends can't rationally justify a sustained move in residential activity. In fact, as the economy improves, more mom and pop builders will get back in the business.
    If you check the charts, ITB can build up to a peak, and then whammy, it throws up all the gains in a couple of days. I suppose a bull could sell puts at this point, but present value suggests it's better to let it get off the ground, and then play the fall.
    Jan 27, 2016. 04:30 PM | Likes Like |Link to Comment
  • New homes sales surge in Dec., complete best year since 2007  [View news story]
    I've noted before, as have others, that historical comparisons over n time, where the underlying variables have morphed and shifted, is somewhat of a wasted exercise.
    The other issue, which must be superimposed on any framework, is that 'the economy' is more splintered and situational. This too is related to the above comments regarding consumer preferences, lifestyle changes, median income and affordability.
    So, what really matters is your own 'territory'. Your live/work/travel bubble is a bit more unique than generic macro data would suggest. For instance, one might be in a 'seller's market', while your friend Theodore, who lives 20 miles south of you, might be in a 'buyer's market.' Another compelling reason why home prices don't drop to reflect a perception of a given area is quite simple: the odds increase that a given home will be underwater, and/or the net derived from a sale is not sufficient to allow substitution.
    For example, our Florida property has greatly accelerated in value, while our mountain home not so much. We have neighbors that can't sell (can't clear the debt), so they are 'stuck.' Some of our Florida friends have cashed out with nice gains. Thus, taking an 'average' we find that half the body is frozen, and the other half boiling-but nationally we have a misleading data point.
    Growing up I shared a small bedroom with my brother. My family had 2 bathrooms. My father built the house himself (with a little help), for $10,000. He NEVER had a mortgage his entire life!
    I mention this because if we want to look at history, we need to understand the extraordinary shift in how people make decisions. I'm old enough to detect enormous differences in basic behavior, say from the mid-1960's to now. It would take far too many pages to pursue that topic, but in terms of making money from housing, I've stated before that selling ITB calls at 27.50, and doubling down at dollar increments has made me hundreds of thousands of dollars. If you check the timing of my comments/suggestions, you'll see that I've been 100% correct. While others pontificate about housing ad nauseum, I've indicated, with little fanfare, how to put money in your pocket.

    Jan 27, 2016. 01:10 PM | 2 Likes Like |Link to Comment