Investment Wisdom Of The Day Google
Put Option Cost At An All Time High, Crash Coming?
Long-term crash protection put option cost has doubled.Traders pay up for crash protection-time to worry. Just a structural change or an ominous sign of things to come?
“Long-dated crash put protection costs on the have more than doubled over the past 9 months,” a Goldman Sachs options research team led by John Marshall wrote. “We believe it is an important development to watch as it implies investors are increasingly concerned about downside risk even as U.S. equities trade near all-time highs.”
Specifically, the options that have more than doubled in value are 55 percent out-of-the-money puts that expire in five years. That is to say, in order for these derivatives to pay off come expiration, the S&P would have to lose more than half its value over the next five years.
“We see reason for concern as put prices were up a similar amount in 2007 ahead of the financial crisis, diverging from credit and equity at that time as well.”
This is a complex matter to discuss and the increase above could be caused by a number of different things. Changing dynamics in the options markets, hedging, balance sheet issues, etc…. With that in mind, maybe some smart folks are building large short positions in an anticipation of a large decline or worse, a crash. That would make even more sense.
Dream Big & Speculate Away
4/14/2015 – A mixed day with the Dow Jones up 60 points (+0.33%) and the Nasdaq down 11 points (-0.22%).
Everyday I attempt to bring you a few more data points in order to illustrate that we are in a massive financial bubble. We have two more today. First, Mr. Cramer.
Cramer: Go for it! Dream big for your portfolio
Where Mr. Cramer tries to convince me that I am just not intelligent enough to understanding proper valuation techniques. You see, its not that Netflix, Facebook, Twitter, Alibaba, etc…. are overvalued, I am just too stupid to understand how to value them properly.
Cramer thinks that some stocks are undervalued simply because investors just can’t think big enough and imagine what could happen in the future. And there could be big bucks in store if investors try to think outside of the box.
So, dream big and buy on margin. After all, it appears we live in a world where valuations no longer matter. Call me crazy, but I think Mr. Cramer had the exact same view at 2000 and 2007 tops.
Second, about a month ago Mark Cuban brought up the issue of a massive venture capital bubble and its illiqudity. I wrote about it earlier What Most People Don’t Know About Mark Cuban’s Bubble Call. It also important to note that the same bubble exists in today’s private equity funds. Well, at least in their attempts to take this junk public at incredible valuation levels (watch the video below).
That is to say, the game of musical chairs continues to intensify. In both private and public markets. When will it stop? Based on my work, we do not have that much, if any, time left. Big losses are ahead.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 14th, 2015 InvestWithAlex.com
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Scary: Is The Nasdaq Building A Head And Shoulders Pattern?
Technicians often fear the head and shoulders pattern as it entails trouble ahead. So much so that the pattern often shows up right before some sort of a big decline starts. With that in mind, the Nasdaq might be developing one right now. Take a look at the chart below and decide for yourself. At the very least, pay attention. Just FYI.
Scary: Is Nasdaq Building A Head And Shoulders Pattern? Google
Investment Grin Of The Day
Is The FED Planning To Abolish Cash?
In an attempt to gain complete control of our financial system the FED needs an additional tool. The ability to set negative interest rates in order to tax the currency. We might as well be a stone throws away from someone at the FED actually proposing this notion as CITI’s own economist believe it’s a splendid idea.
Citi Economist Says It Might Be Time to Abolish Cash
Their plan entails…..
- Abolishing currency.
- Taxing currency.
- Removing the fixed exchange rate between currency and central bank reserves/deposits.
I am truly speechless here. Apparently it is not enough that we are already suffering through the worst FED induced Ponzi Scheme in human history. They now want the FED to abolish cash in order to induce negative interest rates. To fight deflation, to induce even larger asset bubbles, to gain full control control of the population, etc…
Just imagine how high the stock market will go if the fools above are able to set interest rates at, let’s say, -6%. Yet, as we are about to find out, the bigger the bubbles the bigger the eventual consequences will be. You cannot rewrite the laws of physics and that is precisely what they are trying to do here.
Perhaps I will end this with the following statement, echoing the NRA. I just hope that most Americans are smart enough to realize the same.
I’ll give you my cash when you pry it from my cold, dead hands.
Why The FED Has No Clue
4/13/2015 – A down day with the Dow Jones down 81 points (-0.45%) and the Nasdaq down 8 points (-0.15%).
The stock market continues to behave as forecasted. If you would like to find out what happens next, please Click Here.
Despite the appearance of having complete control over our financial markets, the FED might lose that power of perception fairly soon. And once the FED trade goes, the markets should implode. I have long argued that the FED has no idea of where we are and what their reckless QE and zero interest rate policy has done. Case and point…..
Exclusive: Fed’s Williams sees less risk of rate retreat after lift-off
“So even if the economy got some bad shocks, really you are probably just talking about flattening that path out a bit, or maybe raising rates more slowly.”
Economic lift-off……what economic lift-off? See, I told you they were clueless. Over the last few months I have presented at least a dozen data points showing that the US Economy is rolling over and accelerating down. (Ex: chart below). Plus, forward earnings and guidance are expected to be adjusted lower due to the strong dollar and the same economic issues. We should see the evidence of that in Q-1 reports.
Finally, no matter what the FED says, asset bubbles do not translate to strong economic growth. The view Mr. Williams has is identical to the view Mr. Bernanke held in Q-1 of 2008. As the FED minutes revealed, Mr. Bernanke was concerned about overheating the economy and the housing sector. The 2007-2009 bear market was pushing into its 6th month by that point.
That is to say, don’t rely on the FED to make your investment decisions. And if you do, you will pay dearly for it.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 13th, 2015 InvestWithAlex.com
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Druckenmiller: Time To Bet Against The FED To Earn Huge Returns
Stan Druckenmiller made over $1 Billion by betting against the bank of England with George Soros in the early 1990’s. In other words, when he talks, you better pay attention. And what does he have to say today? The exact same thing I have been yapping on this blog for quite a while now.
I know it’s so tempting to go ahead and make investments and it looks good for today,” the retired founder of Duquense Capital Management said, “but when this thing ends, because we’ve had speculation, we’ve had money building up four to six years in terms of a risk pattern, I think it could end very badly.
There is nothing more deflationary than creating a phony asset bubble, having a bunch of investors plow into it and then having it pop.
I feel more like it was in ’04 when every bone in my body said this is a bad risk/reward, but I can’t figure out how it’s going to end. I just know it’s going to end badly, and a year and a half later we figure out it was housing and subprime. I feel the same way now.
When you have zero money for so long, the marginal benefits you get through consumption greatly diminish, but there’s one thing that doesn’t diminish, which is unintended consequences.
When this thing ends, because we’ve had speculation, we’ve had money building up for four to six years, in terms of a risk pattern, I think it could end very badly.
Then again, feel free to listen to your Charles Schwab financial adviser and go long on margin.
Druckenmiller: Time To Bet Against The FED To Earn Huge Returns Google
Investment Wisdom Of The Day
Two Hedge Fund Managers Discuss The Stock Market, Currencies, Commodities & Investment Ideas – Weekly Podcast
April 11th, 2015: We have a great show for you this week. Hedge fund managers Matthew Demeter and Alex Dvorkin discuss the following topics….
- What the stock market is doing and what we expect to happen over the next few weeks.
- COT Report and what the big guys are buying. Listen to make sure you are not on the wrong side of the trade.
- Deflation, employment numbers, gold, geopolitical and macroeconomic issues.
- A multitude of great investment ideas and various tops/bottoms that can make you a ton of money.
- And of course, much…..much more.
Don’t miss this one and join us again next Saturday.
Listen to the podcast by clicking on the player above. If you prefer iTunes, please Click Here