A gift. Thank me after you get rich.

Quote from steve46:

Hello:

I have nothing to say to the original poster. In my opinion the guy is a con artist.

As regards the US economy, it is clear that we have always seen cyclic behavior. Also FOMC policy has often intervened in this cyclic behavior and not always in a positive fashion.

I am sure Dr. Roubini is a wonderful and skilled economist, and yet, even though I am not an economist, I suggest people look at the following

INTEREST RATES

When the FED began its policy of raising short term interest rates, ask yourself "what was the long term interest rate"?

and now, after a series of short term raises, "what is the current long term interest rate"?

What you will notice is that the bond market has behaved very well in that time. In fact the long term rates have DECLINED since that time.

INFLATION

Strangely both the public and some professional observers seem to believe that the increased cost of energy is inflationary. In fact this is not true. The cost of energy (particularly the cost of fuel) has acted as a tarif. Stop and THINK about it. We all HAVE TO USE OUR CARS. We have to take our children to their activities, we have to go to work, to schools, and we do so because we live in a society that by and large has not adapted to mass transit. Because we have to use fuel, we do so, but we cut back on other purchases. The net effect of this is to curtail other inflationary activities. Also this curtailment makes it difficult for manufacturers, wholesalers and retail distribution to obtain "pricing power". In other words, the rising cost of fuel is keeping prices of other capital goods from rising, because it limits demand for other goods. Figure it out.

Steve
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and in the end it will make the country a little bit more efficient: there will cut backs on unnecessary travel.

hopefully it will also increase the international shipping costs which in its turn will have the result of manufacturing more close to home, which aids the jobmarket, then because more gets manufactured close to home less imports happen etc etc....
 
Quote from BrandNewTrader:

You're right, I don't have the experience =). Which is why I welcome any advice! Right now I'm sticking to long puts with a range of expiry's and strikes. I've though about put spreads but (i think) the market's going to move so low that I'm not sure my lower strike puts would fetch premium worth the foregone upside.

Any ideas on how to maximize this trade?

I'm also going to play the rally after the pause at the next Fed meeting. SF Fed chairman (said to be one of most influential) basically said the Fed cant ignore the lag in the interest rate mechanism and keep raising until they see the effect take hold in the inflation numbers b/c if they keep raising until they see inflation abate, it means they would have gone to far and over-tightened. This is a reasonable point - and raises the likelihood of a Fed pause. I think a call spread would do the trick... market's going to rally, but not break through significant levels once people realize the Fed is panicking (by pausing) in the midst of a coming recession. That's when the rally disappears like ALL THE BIDS DROPPING OUT OF YOUR STOCK and poof. Hello severe correction+recession.
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From one noob to another ya better research this strategy more and narrow the time table because a shotgun technique without a more focused time line will @ the very least dilute a wind fall; and that is what it would be.

The other option of your options would be erosion, corrosion decay and implosion.

Then again you might really get lucky(if you believe in luck) and really bank on your cast of the net.

Something's gonna happen this OCT-NOV, I don't know what the trigger will be but I'm pretty sure it won't be due to inflationary rhetoric pressures or a scholar's recessionary/depression expectations.
 
I agree with his assessment of the economy. Actually i've been looking for that big bear trade since 2003, constantly losing my little "probe trades" ever since.

No matter how good a research report sounds, or how many people agree with it, it's the actual market action that determines my trades. I dont' make a move unless there is confirmation on the charts (which represent FACTS, not just opinions).

So until the SPX closes below 1220-1225, there's no point in adding to a put position or establishing one.
 
Quote from rimshaker:

...So until the SPX closes below 1220-1225, there's no point in adding to a put position or establishing one.
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SPX chart has alread suffered technical damage...

nitro
 
1. Anyone that thinks its a good idea for the government to run a surplus doesn't understand a capitalist system.

2. Show me ONE TIME in our past 200+ year history where deficit spending has had any negative impact on economic growth.

3. Don't bet against the American consumer. Household wealth is still near record levels. I have been hearing the same lame arguments that consumer spending is over yada yada yada.

4. Your handle is very apropriate, but unnecessary.


Quote from BrandNewTrader:

problem is the gov has its hands tied. The deficit is way to big to even allow the current rate of spending to continue, especially in a recession. We ran a DEFICIT during an economic boom when we should have been saving the surplus for a rainy day. During the Clinton era we ran a surplus and Bush proceeded to spend it all and much much more in the process.

This coming recession wont be like the post-bubble "lite" recession of 2001. During that period, the us consumer was resilient as a result of high savings and recent strong growth in real wages. Difference today is the consumer doesnt have any savings and has been pulling value out of their homes in order to spend and increasing their debt load (spending money they dont have) - they think they are pulling out equity, but only increasing and prolonging their indebtedness! Once the energy costs feed through the system and housing slump really set in you'll be surprised at how overextended the avg US consumer is. Consumer spending is in real trouble and Fed is going to have to raise rates or pause (way too optimistic) to contain inflation. So consumer demand is out the window. What about corporate demand?

No way - businesses will have to either cut costs in line with lower sales/demand forecasts or risk having their stock prices tumble.

It's all going to happen very slowly. Wake up in Q1 2007 and realize we are in the midst of a recession and protracted bear market.
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:D
 
Quote from infolode:

From one noob to another ya better research this strategy more and narrow the time table because a shotgun technique without a more focused time line will @ the very least dilute a wind fall; and that is what it would be.

The other option of your options would be erosion, corrosion decay and implosion.

Then again you might really get lucky(if you believe in luck) and really bank on your cast of the net.

Something's gonna happen this OCT-NOV, I don't know what the trigger will be but I'm pretty sure it won't be due to inflationary rhetoric pressures or a scholar's recessionary/depression expectations.
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Thanks for the advice, but:

I don't want to narrow the timetable. I think the market will trend down for the duration of the (next) year. During this time we may see a crash/severe correction and/or short-term rallies. My goal isn't to trade options in and out of these events. My goal is to put on a long-dated trade now when the puts are cheap and the coming market turmoil hasn't yet been priced into the implied vol.

Erosion? Won't happen until 2007, and by then the options will be coming into the money. These are long-dated options - theta decay increases over time. The more time to expiration, the slower the theta decay.

what is corrosion decay?

Implosion? Well, I am long puts, so my risk is limited. At worst, I will be able to sell most of these off at a loss.

If I make money, it won't be luck. If I lose money, it will be because I made a bad trade. But if I make money, it won't be luck. Give me a fvcking break.

"inflationary rhetoric pressures or a scholar's recessionary/depression expectations"

what are you talking about? i don't think you know... i never said that rhetoric or roubini's predictions would move the market.

i don't think you thought carefully before posting
 
Quote from Arnie:

1. Anyone that thinks its a good idea for the government to run a surplus doesn't understand a capitalist system.

2. Show me ONE TIME in our past 200+ year history where deficit spending has had any negative impact on economic growth.

3. Don't bet against the American consumer. Household wealth is still near record levels. I have been hearing the same lame arguments that consumer spending is over yada yada yada.

4. Your handle is very apropriate, but unnecessary.


:D
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1. Anyone who thinks it's a good idea for the government to run a deficit during an expansionary phase in the cycle - effectively eliminating their fiscal buffer for the coming recession - really doesn't understand our capitalist system.

2. I can't do this, I'm not an economic encyclopedia. But I can tell you that a) 200 years is the wrong timeframe. The dollar has been fiat domestically since 1933, and internationally since 1971 - so take your pick, and b) your mentality is indicative of the thinking amongst those in government that has allowed our deficit and national debt to spiral out of control. The problem with the deficit is that we won't see any direct negative effects until the tipping point. And when that happens it's too late. It's like saying "look, no seatbelt and I'm fine!" But what happens when you run off the road?

Related question for you Arnie. Show me ONE example of a successful fiat currency in the 800 years fiat currencies have been used within a modern economic context?

The problem with deficit spending is that it is a direct representation of the main flaw of fiat currency systems. The gov has the power to print its own money in a fiat system, but it's not supposed to. Fiat currency systems would survive if governments could manage this. Our government can't. There are supposed to be checks and balances that ensure this doesn't happen in an out of control manner, but our political system makes it impossible for those checks and balances to work properly. That's the problem. We spend too much andnothing bad happens, so we print more and then spend that as well, then repeat.

Deficit spending is a necessary economic tool. Reckless deficit spending is the reason why there has never been a sustainable and successful fiat currency system in modern history.

3. Household wealth is still near record levels... right. It's called a peak. Now what happens is the decline in household wealth. Could it be that the rise in household wealth was tied to the exceptional rise in home values? Could it also be that as housing busts, so will household wealth?

4. Ok?


Next time you'd like to point out flaws in my thought process - make sure yours is sound first? :D
 
Quote from steve46:

You know the more I think about it, the better I like the idea.

Yep, I think you folks (those who agree with the famous Nobel Prize winning economist Dr. Roubini) should have the courage of your convictions. Not only should you committ a significant portion of your personal net worth, but if I were you, I would set about raising as much additional capital as possible.

I realize that one could go back to my list of Nobel Prize winners and perhaps review the opinions of other scholars, but really why do that when we have Dr. Roubini's word?

Finally we have the generosity of our Wharton Alumnus. What else could you folks want. At this point, if you hesitate, I think you are missing the boat. Now get out there and raise some cash!:)
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funny :p
 
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