10
Sep
2008
Understanding the “equity market neutral” strategy
Posted by John as Investing & Trading
This is a convergence trading strategy that is designed to generate returns independent of what happens to the overall market. It does this by attempting to neutralize all or most market directional risk (aka systematic risk or beta) as well as sector risk. With this strategy the focus is on
07
Sep
2008
What will the bailouts do for the stock market?
Posted by John as Investing & Trading
The Fannie & Freddie bailouts will help with sentiment in the short run, much like the Bear Stearns bailout, as we will likely see a general rally in equities on Monday and for a few days after that. This short term correction (rally) against the long term trend may take some of the indices [...]
16
Jul
2008
Backwardation & Contango: Why The Confusion?
Posted by John as Investing & Trading
Those in the financial press often write about a futures market that is “backwardated” or in “contango.” Very often, they get confused when explaining a market in light of these concepts, and believe it or not, this even confused Fed Chairman Ben Bernanke. Last February Bernanke basically said that the then backwardated term structure [...]
26
Jun
2008
Bear Trend For Equities Remains Dominant - Update
Posted by John as Investing & Trading
Back in April, I wrote the following:
“Earnings are bad, inflation is bad, the credit crisis is bad…. But isn’t it always darkest before the dawn? Are stock market bottoms made when the news is the worst and things look bleakest? Yes and yes.
But how does one know when a bottom is in place? It’s very [...]
01
Jun
2008
Has the EUR’s long term bull market ended?
Posted by John as forex
The EUR has been in a bull market since 2002 but the economic and political fundamentals of Europe are not looking too good these days…and there are some dark clouds on the horizon for this currency when you consider the broader global socioeconomic framework.
Of course, the EUR was a flawed currency from the start (as [...]
30
May
2008
Will another large securities firm fail?
Posted by John as economy
A new report from Moody’s Investors Service explains that the biggest systemic risk to the $62 trillion credit-derivatives market is not its size and complexity but the potential failure of a large securities firm or investment bank which is acting as a counterparty. A bank collapse could damage the operational integrity and pricing in the [...]
07
May
2008
And Now: Introducing The Positive Side Of Globalization, Economics, & Finance…
Posted by John as strategy and tactics
It is always important to keep everything in context. At the present moment the majority of people are focused on the “negatives” in our world, and presently, things are indeed negative both politically and economically. It is also important to be objective and see the world as it truly is — understanding the [...]
07
May
2008
96% of Stockton, CA homeowners who purchased in 2006 are under water
Posted by John as economy
My thoughts: The bottom in housing may not be here yet, and will probably take longer to achieve than most expect. But news like this means we are getting closer….
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You bought at the peak of the market. You put next to nothing down. (Maybe you even took out one of those 105% LTV [...]
06
May
2008
Returns are anything but normal
Posted by John as strategy and tactics
Much of modern finance and risk management is built on the concept of efficient markets and the “bell curve” or symmetrical normal distribution. However, out in the real world things are a bit different. Over the years many have treated the so called “black swan” events as something that is an anomaly. [...]
04
May
2008
Foreclosure Rage: (former) homeowners take out their anger
Posted by John as economy
Foreclosed homes are being damaged at a high rate as homeowners take out their anger on houses before they are forced to move out, increasing the costs for the banks that take back ownership (because they have to sell at a lower price as the new buyer has to pay for repairs.
Is this just another [...]