Is this sell off only the beginning ?

longandshort said:
P = fcf / r - g
Ceteris paribus if r rises then P falls. Violence and depth of the move is based upon positioning, asset/sector rotation, and subsequent data. Fed started down this path in December, and meeting minutes were incrementally more hawkish.

If you pay attention and understand basic concepts like asset pricing (& sensitivities to macro factors) you’ll do ok. You won’t beat the market but you won’t be clueless (just slow, until you find edges & sources of alpha!).
More...
Or you could just sell the stocks that are breaking down. :)
 
NoahA said:
As true as this is, we are now stuck having to guess if they are just jawboning, or serious. We already knew they said they were going to speed up the reduction of bond buying, so I guess that meant by March they would have stopped. They also supposedly forecast 3 rate hikes, and that we knew as well before this past Wednesday.

But I think it was the fact that they are going to also be reducing their balance sheet, hence taking liquidity away, that got the market spooked. Its like the reverse of QE. So at first we had lots of QE. Then less QE, but still some. And instead of going to no QE, they are skipping this coasting stage and going right to tightening. At least this is how I understand it.

Of course what they end up doing is a whole different story, and will their position change if the market goes down 10%, 15%, 20%? So we technically still don't know if there will be any meaningful crash or just a 6-7% pullback. I bet they would love for the market to go sideways as they slowly take away the punchbowl. Its like the game of Jenga. Can they take enough blocks away without the whole thing falling down??
More...

Maybe it makes sense to rely more on reducing balance sheet vs. raising interest rates to remove liquidity. Raising interest rates increases all debt servicing costs including government and would also act to strengthen the dollar.
 
deaddog said:
Or you could just sell the stocks that are breaking down. :)
More...

Have shorted via put options those stocks that are breaking their uptrends. This deep pullback could become a huge stockmarket crash if the Federal Reserve raises interest rates. The Build Back BS bill will be put out in some form by the Democrats. If it includes huge tax increases on US corporations, that should be more than enough to crash the stockmarket. That is not counting the massive inflation maybe, 10 times worst than what we have so far. The prices of all goods and services will rise. Corporate earnings will take huge hits. It would be a huge bloodbath when it happens. Retirement accounts will all be walloped for everyone.
 
Last edited:
deaddog said:
I'm not shorting, just going to cash or adding to energy and banks.

Momo seems like a good bet.
More...

TSX is in the sweet spot to outperform relative to US markets this year ( whatever that is ). I expect commodity areas will outperform any short strategy assuming roughly equal trading skills and effort. I missed a few easy buys lately because I ran my cash down so I think keeping some in reserve is a good plan redeployng when stocks get oversold.
 
You must log in or register to reply here.
Back
Top