February 27, 2017

Market Risk outweigh Rewards

" Yesterday all my troubles seemed so far away.
Now it looks as though they're here to stay.
Oh, I believe in yesterday."  --The Beatles, "Yesterday"

Above all, please remember that in a quant-dominated world, which worships at the altar of price, buyers live higher and sellers live lower.

As such, the irrationality of market valuations is too often rationalized by commentators and strategists as the market rise moves parabolically.

As I will discuss shortly in my opener, possibly for the first time in the rally there have been some concerning signposts.

I have recently suggested that we may be in the blow-off phase. I still believe so and I have observed too many talking heads in the business media rationalizing the irrational. Many of them are convinced they will know "when" to get out, but for now they are dancing while the music is playing.

It is my strong view that the market risks dramatically eclipse the market rewards.

As a consequence, I have added materially to my SPDR S&P 500 ETF (SPY) and PowerShares QQQ Trust (QQQ) shorts and to financial shorts such as Goldman Sachs (GS) and Lincoln National  (LNC) in light of the conflicting action in bonds (higher in price, lower in yield).


Position: Short QQQ, LNC, GS, SPY.

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