What a Rollercoaster
What a ride today. The market had a 1000 range in the DJIA, which I’ve never seen before. Grains puked, and set back my plans to enter the grain market.
I put a toe into the water and bought some blue chips at really, really cheap prices. I didn’t go hog wild in my purchases, but did buy some stock. I might buy some more just based on valuation, but then again, I might not….only time will tell.
That hard sell off in the grains really startled me, corn especially.
Now, I get a weekend of relaxation, and time away from the markets. It’s important to realize that there’s more to life than the market. I’ve been abandoning my life as of late, and it’s time to relax. This weekend, I plan on listening to a lot of music, taking walks on the beach, and doing some fishing. Perhaps I will squeeze in a few hours working on finishing my book…..which has taken the back burner as of late.
I don’t think we’ve seen capitulation as of yet, but I think the smart money is starting to buy good stocks on the cheap.
Jeff
Wild week my friend, I am delighted in myself I covered my bean/corn spreads. I don’t think I saw a single commodity in the green. The WASDE was a suprise to many, I was shocked to see the corn portion. But thats why a guy really oughta stay out on report days, you get burned a few times and learn the hard way. Have a great weekend, enjoy the weather, It’s getting cold up here in Wyo.
rhett
October 10, 2008 at 8:37 pm
Rhett,
When do you generally get your first snow?
Jeff
masteroftheuniverse
October 10, 2008 at 11:44 pm
Hi Jeff,
That WAS a little frisky today wasn’t it. Damn – my system’s turned me into a day-trader. I’m with you on the capitulation assessment. Trading was too orderly. Wild swings, bad fills, no visibility – there’s some good capitulating market action.
Have export markets dried up in the grains? How are commodity export sales financed? Letters of credit? If so, financing problems may be spilling into the physical markets. And then there’s forced liquidations. What a mess.
Well CME has ended up as the second largest holding in my portfolio. Yesterday I bought my original position back, and today immediately got a signal to buy more. Let’s hope the volume in the futures markets keeps up.
In your experience, how many guys on the exchange would be going bust right now?
Cheers,
George
allocator
October 11, 2008 at 12:22 am
George,
Lots of guys going bust right now in the exchanges. Grain exports are financed with letters of credit, and also operate under a government guarantee program. These grain markets look just like 87. I want this volatility to simmer down so I can put on my spreads. With the vix in the stratosphere, I expect Monday to be a real doozy. Sometimes, I wonder if there is something else(threat of war) or something adding to this. Then I think that the Obama factor is a real part of the volatility, with people unwinding positions in order to escape retroactive taxes like Clinton put in. Whatever, it’s a fine mess, and never before have we seen such good trading opportunities. That being said, I’m really exhausted. Pulling all nighters was OK in college, but I’m getting too old for this shit.
Jeff
masteroftheuniverse
October 11, 2008 at 12:33 am
Good for your art collection: http://bloomberg.com/apps/news?pid=20601109&sid=aIAWDrA4RSTQ&refer=home
Dave Bacon
October 11, 2008 at 1:18 am
Those Russkies have certainly been the buyers for the past couple of years, and I think that buying spree will be abating somewhat. I’m seriously hoping to do well at the Sotheby’s auction in November. I’ve never seen such fine, affordable work in one auction As I don’t really drink much, do drugs, or gamble(poker’s not gambling), art is my only vice. I only buy art because I like it, not for the investment value, as I will give my collection to a local museum and my alma mater. John will end up with a couple of minor pieces, but that’s it.
Jeff
masteroftheuniverse
October 11, 2008 at 1:36 am
What happened in 87? I wasn’t paying attention to commodities back then.
Cheers,
George
allocator
October 11, 2008 at 2:11 am
Commodities all puked locked limit down, across the board during that crash.
Jeff
masteroftheuniverse
October 11, 2008 at 2:21 am
Hey Jeff.
How do you think the volatility will be after the rollercoaster stops going down? Do you think there will be a drop in volatility due to the lack of interest in buying (by small speculators) ?
I really enjoy your blog. There’s nothing that can be compared to the real war experiences shared by an experienced trader.
PS: I was only one year old in ‘87 lol
MDan
October 11, 2008 at 7:17 am
Hi Jeff,
it’s quite interesting, how some relation between indu, oil, $/€, $/Y come to light today as the VIX touched the heaven. I don’t understand why gold hasn’t spiked today. It’s also seems, that the correlation in the markets has resolved.
Jeff, do you have any data how the markets have reacted in the past as the markets have been closed for several days. I read somewere that Berlusconi suggested to close the markets for the next whole week …
In Germany we have some interssting phenomenon. Look here:
http://aktien.onvista.de/charts.html?ID_OSI_OLD=83055&MONTHS=36&ID_NOTATION_BENCHMARK=1966970&SHOW_TECH_FIGURES=0&WKN=&ID_EXCHANGE=191&DISPLAY=1&SCALE=1&SUPP_INFO=0&GRID=1&MA1=0&MA2=0&VOL=1&COMP_IND=0&SIN_COMP=A0DPR2&IND1=0&IND2=0&Go.x=0&Go.y=0
You see here the difference bw. the prefered and common stock price for Volkswagen. I was able to short some of the common stock at 290€ (the overvaluation is obvious)
But now I don’t now if it was really clever. Do you have ever seen something comperable in the US market?
nik
October 11, 2008 at 1:58 pm
[...] What a Rollercoaster « Masteroftheuniverse’s Weblog "I put a toe into the water and bought some blue chips at really, really cheap prices. I didn’t go hog wild in my purchases, but did buy some stock. I might buy some more just based on valuation, but then again, I might not….only time will tell. That hard sell off in the grains really startled me, corn especially. Now, I get a weekend of relaxation, and time away from the markets. It’s important to realize that there’s more to life than the market. I’ve been abandoning my life as of late, and it’s time to relax. This weekend, I plan on listening to a lot of music, taking walks on the beach, and doing some fishing. Perhaps I will squeeze in a few hours working on finishing my book…..which has taken the back burner as of late. [...]
links for 2008-10-11 : Trader Eyal
October 11, 2008 at 2:00 pm
[...] correlation does not imply causation but the contrary view is slowly percolating, see this and this, through the financial community based on discussions I have had. Given that Democratic policies [...]
A New Age Dawns? | Barrel Strength
October 11, 2008 at 7:41 pm
Jeff,
What kind of book are you writing?
Alex
October 11, 2008 at 10:16 pm
Just a little autobiography with a few lessons in life thrown in:)
Jeff
masteroftheuniverse
October 11, 2008 at 11:13 pm
Jeff,
Thanks for the advice on Oct 7. I have a few questions about trading treasurys, but will have to wait as I have a big challenge ahead of me. My parents are very conservative and placed 90% of their retirement in bonds such as FKTFX , BCL , NKL , and PCK. 3 out of 4 of the bond funds took a 50% loss in value. They knew I was doing well stock trading and have asked me what to do.
This is what I was thinking, take 20% out and keep in cash. Leave the 80% and wait or hedge it and wait out for this panic to blow over. If a huge market crash occurs, then buy high dividend yielding dow type stocks with the 20% cash.
Another possiblity would be to hedge the portfolio, at least for the next 30 days. I’m not exactly sure what product I would hedge this with though.
The whole country will be getting their monthly statements this weekend, how they react on Monday will be very interesting.
Mark the "small hand"
October 12, 2008 at 7:23 pm
Mark,
It never hurts to have cash on hand as you never know when an opportunity will come knocking. As for hedging the portfolio, options would give you an exact known cost of the hedge…..buying options will only allow you to lose the price of the option.
Too bad for the parents bond hit. Corp bonds haven’[t been the place to be, but that outlook is changing, with the government actions. There’s many fine trading opportunities right now in corp bonds, and some real discounts and high yields.
Nik,
Closing of markets usually brings a big sell off when the markets re-open. That being said, in the USA markets, one wants to be a buyer in those panics, especially when it looks hopeless. Ideally, when the public loses interest and is pissed off at the market, that is the best time to buy.
Jeff
Jeff
masteroftheuniverse
October 14, 2008 at 11:42 pm
Jeff – I just got back from vacation & a seminar in NYC. I believe it was Thursday or Friday when all of the sellers of CDSs for Lehman had to settle up. That likely caused some selling in may have compounded things a bit more than normal.
Are you following credit markets & some of the spreads on corporate bonds vs. treasuries? I am looking for a good point to start investigating that side of the markets.
I think it will take me a while to get re-acclimated to the markets after being away from them for a bit, especially given all the volatility recently.
Regards,
Eric
Eric
October 15, 2008 at 12:57 am
Eric,
With all of the government guarantees getting ready to enacted, one could assume the spreads will narrow a bit. However, this logic might be already priced in the market, and if that’s the case, we’re in real trouble if the spread widens.
Jeff
masteroftheuniverse
October 15, 2008 at 1:35 am
jeff,
We had a little bit of snow this weekend. IT really snowed up north (Jackson and Yellowstone area) It frosted pretty hard this A.M. My dad said when corn and livestock dropped out friday a bunch of ranchers didnt take their cattle to the barn and you couldn’t buy any grain at the local elevators. Now granted Wyoming isn’t exactly a corn producing state still interesting nonetheless. Take care
Rhett
rhett
October 15, 2008 at 2:21 am
For anybody reading I meant salebarn not just a regular barn
rhett
October 15, 2008 at 2:23 am
Rhett,
I figured you meant sale barn. I wouldn’t mind if you posted prices in my blog, as I have an interest in cattle auctions and go to several a year. I know some locals up in Imokolee do pretty well at the barn there. My favorite barn in Arcadia got blown away by hurricane Charley, and hasn’t fully recovered, with most of the cattle going to the barn at Okeechobee.
Thanks,
jeff
masteroftheuniverse
October 15, 2008 at 2:41 am
I haven’t been to an auction in a while, I strayed away from the farming and ranching. My parents are okay with it though, I will eventually return. I will post prices if I know them, I just found it odd that my dad couldnt buy corn friday at the elevator for his cows. The guy at the elevator said everybody was waiting to sell, they didnt wanna sell 5.00 corn on Friday at 4.00. I have never been to the salebarns you talked about, although I bet my uncle has. He travels all over the county buying and selling.
Rhett
rhett
October 15, 2008 at 2:04 pm