Wednesday, December 31, 2008
Quantitative Easing for Children
Quantitative easing from Marketplace on Vimeo.
more reasons not to fuck with TBT
AFAIK the gov't isn't buying treasuries at this point, though they've said they could. they buy agencies (GSEs).
via
http://www.stereohell.com/door/
also check this wonderful artwork:
http://www.stereohell.com/door/strip/
Friday, December 19, 2008
leveraged ETFs are for gambling
Now I'm just a little blog over here, but I've said several times in the past that ETFs are very wonky in how they work. They don't buy stocks they do things with warrants, futures and options and force other people to go buy or sell. Its stripped the PURPOSE OF INFORMATION out of the market.
The purpose of trading is to determine the correct pricing for an equity. Traders buy and sell the thing and keep the price accurate and realistic (theoretically) or at least go probe the depths and heights of prices to see where people are going to freak out.
Think about the tape during the day. Those aren't all individuals making decisions. Most of those trades are machine driven, and most of THOSE aren't related to the immediately occurring price "discussion". They are to cover options, or as part of pair trades and vastly more exotic trading strategies. They are to cover warrants, to refill market makers' inventories, and in some cases to just swoop up a bunch of shares and hide them until later. Shares trade in dark pools of liquidity (cue eerie black metal soundtrack here — I suggest Burzum)
This is why the stock market is broken. Its not investing, its gambling, and the derivatives have selfishly removed the information component from the main market. Of course right now the information is this: we're fucked, its all over valued, sell sell sell !! Which is correct and as it should be. Would've been better if it had started a few years ago.
The Fly (as much he wouldn't admit it) has morals too:
The purpose of trading is to determine the correct pricing for an equity. Traders buy and sell the thing and keep the price accurate and realistic (theoretically) or at least go probe the depths and heights of prices to see where people are going to freak out.
Think about the tape during the day. Those aren't all individuals making decisions. Most of those trades are machine driven, and most of THOSE aren't related to the immediately occurring price "discussion". They are to cover options, or as part of pair trades and vastly more exotic trading strategies. They are to cover warrants, to refill market makers' inventories, and in some cases to just swoop up a bunch of shares and hide them until later. Shares trade in dark pools of liquidity (cue eerie black metal soundtrack here — I suggest Burzum)
This is why the stock market is broken. Its not investing, its gambling, and the derivatives have selfishly removed the information component from the main market. Of course right now the information is this: we're fucked, its all over valued, sell sell sell !! Which is correct and as it should be. Would've been better if it had started a few years ago.
The Fly (as much he wouldn't admit it) has morals too:
While it’s true, being long 10,000 SRS on a 9 point day can be fun; it also can twist your stomach into knots when the opposite occurs, going up. For the love of large intestines and sanity, in 2009, “The Fly” will “go old school” and start short selling individual names directly, rather than through proxies.Of course I made loot off SKF 3 times this week, so ...
http://www.ibankcoin.com/flyblog/index.php/2008/12/19/no-more-volatility/
Thursday, December 4, 2008
if treasuries and USD sell off, what gets bought ?
if everybody decided to sell all of those treasuries and dollars ... what would or COULD they buy ?
the yuan can't handle it and wouldn't want to be pushed up that high. no currency buy itself can handle it. no equity market or sovereign bond market can handle it.
nobody wants the responsibility of all that investment. the problem in the world right now is too much "wealth" and no safe place to put it. (which reminds us how sad it is that poverty and resource-wars still plague the planet)
so reasons the sell off hasn't started:
1. if anybody flinches the game of confidence collapses and an amazing amount of "wealth" is destroyed in a sell off. nobody can step away from the table (except us little guys). any move has to be done very slowly and gradually.
2. there's nothing to sell this stuff off into
3. the big holders (esp. china, japan) benefit from a higher dollar for their export economies and the negative effect it has on commodities. they don't want the dollar to collapse. its in their best interests to keep loading up on this fictitious and nonredeemable wealth. everybody seems to think that the US is a real country with "balances" and obligations. its more like the bank in Monopoly.
disclosure: I gave up on TBT (short treasuries) with a small loss. the bubble gets bigger for now. it will move, the chart looks like it would move, but only as a trade. this is the age of VIX + 60. TBT is a long term move at some point. could be years.
and what a wicked world if everybody jumps on this one and bangs it into the ground. what would happen if the hedge funds put their momentum machines on treasuries and caused it all to squeeze out into some other unstable market ? greed is systematically destroying the financial world.
the yuan can't handle it and wouldn't want to be pushed up that high. no currency buy itself can handle it. no equity market or sovereign bond market can handle it.
nobody wants the responsibility of all that investment. the problem in the world right now is too much "wealth" and no safe place to put it. (which reminds us how sad it is that poverty and resource-wars still plague the planet)
so reasons the sell off hasn't started:
1. if anybody flinches the game of confidence collapses and an amazing amount of "wealth" is destroyed in a sell off. nobody can step away from the table (except us little guys). any move has to be done very slowly and gradually.
2. there's nothing to sell this stuff off into
3. the big holders (esp. china, japan) benefit from a higher dollar for their export economies and the negative effect it has on commodities. they don't want the dollar to collapse. its in their best interests to keep loading up on this fictitious and nonredeemable wealth. everybody seems to think that the US is a real country with "balances" and obligations. its more like the bank in Monopoly.
disclosure: I gave up on TBT (short treasuries) with a small loss. the bubble gets bigger for now. it will move, the chart looks like it would move, but only as a trade. this is the age of VIX + 60. TBT is a long term move at some point. could be years.
and what a wicked world if everybody jumps on this one and bangs it into the ground. what would happen if the hedge funds put their momentum machines on treasuries and caused it all to squeeze out into some other unstable market ? greed is systematically destroying the financial world.
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