February 15, 2017

Obamacare - What will happen to it

There are a lot of unknowns about the overall health care market right now, as no one knows what will happen with the Affordable Care Act this year.

I am more than amused by calls on both the left and the right complaining or rejoicing that the ACA's repeal and/or replacement has not been put in motion yet. The new POTUS has not even got his cabinet nominees approved yet. It's amazing how little patience both sides of the aisle and their grassroots supporters have these days. The previous POTUS was in office almost two years before the ACA was passed, and it was even more years before full implementation occurred. It is not going to be altered or undone overnight.

via thestreet

February 14, 2017

This is a bull market - covered shorts

I've seen a lot of traders come and go. Usually, they go when they fail to adapt. Believe it or not, I knew people who couldn't handle the change from fractions to decimals, which happened over 15 years ago. I've seen many similar situations over the years.

I'm a technical trader, but I also try to respect the fundamentals. However, the level of attention that I'm willing to give fundamentals can change depending on the environment. Fundamentals didn't matter in 1999, when the Nasdaq climbed more than 80%. They mattered a heck of a lot more in March 2000, when stocks crashed.

I've covered most of my shorts. Many of those shorts were initiated when the market was drifting sideways, as it did for a good chunk of the past year. At the time, it made sense to play the market from both sides because it had no clear direction.

Now the direction is clear, and I've adjusted. It's no fun taking a loss on a stock such as Chipotle Mexican Grill, which I shorted at $385 and covered at $415, but I'm not going to exercise the same level of patience with shorts in a roaring bull market as I would in a weaker environment.

Nvidia is a great example of the current "damn the fundamentals, full speed ahead" market environment. The stock trades at 76x trailing earnings and 43x forward earnings. None of that matters right now because traders are simply buying every dip that Nvidia can muster.

That's not a knock on this stock, or any stock. As traders, it's our job to adjust to whatever environment the market presents.

This is a bull market, the S&P 500 is trading at all-time highs, and corporate taxes are likely to be slashed in the near future. If the market (or an individual stock) wants to go higher, why fight it?

February 13, 2017

Greek Debt Crisis - Nothing has changed

Going to the other extreme, the Greek debt crisis seems to be raising its ugly head once again for the umpteenth time since 2010. Recently the International Monetary Fund has suggested that a looming "debt Armageddon" potentially could pose a risk to the broader euro-zone. The German finance minister, of course, stated the country would need to leave the European Union to get a debt haircut.

This Mexican standoff was old years ago, but still has the potential to cause volatility in the euro-zone. The Germans will continue to "extend and pretend" on the Greek debt rather than provide any sort of debt forgiveness, which would be hard politically. 

The Greeks, on the other hand, continue to refuse to make the necessary labor and other structural reforms needed to make their economy competitive. Unfortunately, I don't see either side changing their stance.

February 8, 2017

full time trader vs part time trader

As I like to write, the only certainty is the lack of certainty. And I can't remember a point in time when I wasn't long some stocks--despite how negative I might be! (Right now I am quite negative on the markets)

But, I run a hedge fund (24/7) and I am trying to realize absolute returns for aggressive and wealthy investors with a shorter time frame than you should be looking at--of between six months to 18 months.

You likely have a job, and you are probably an investor on a part-time basis.

I am a full time investor/trader, a different animal than your personal account, IRA or 401(k).

I am quick on my feet and make swift decisions. I am nearly always in front of my turret and I understand the risks inherent with short selling (reward vs. risk is asymmetric!).

I have been doing this, day after day, for four decades.

And I attempt to utilize tight risk-control management to avoid mistakes when I am wrong in view. 

Consider these factors and conditions when you read my Diary and Jim's thoughtful and instructive words.