Was the recent bear market trivial?
- Thread starter formikatrading
- Start date
I think the implications are that the public view of the financial markets was not overly impacted by the bear market. Back to back bubbles? Who knows? Meanwhile, the trend is still up!
Quote from ig0r:
Scary stuff
This market looks strikingly similar to ~October 98 to ~April 99 (even the price levels!!), the final run up that occured there at the beginning of 99 was essentially correction-less
What do you do if you closed a nicley profitable book on 12/23 and came back today?
I am all ears.
I got CHTR , and a few homebuilders ss...that's it...
I guess call it a yr!
everything else ..well ya got me????
Yep, the trend is till up, until it is down.
Please for full disclosure, no one should take these negative comments as indicative of bearish positioning or the desire to take bearish positions.
Frankly, experienced traders know not to form opinions and instead to just trade price action!!
sure has trumped the fear of losing.
Derivatives.
It seems to me that the whole financial system is becoming much more volatile. Lots of players making bigger and bigger bets to increase their returns. To hedge their risk they are using derivatives more and more. Unfortunately the LTCM blowout shows us what happens when stresses occur, to these bets- even if they are hedged!
To me the great bull market blow off in 99/00 was a liquidity driven event that was magnified by huge derivatives exposures by many big players. The almost unbelievable exponential move went further than most big players believed was possible because they were able to hedge their exposure and so not pull their funds out.
Eventually the tide did turn and then the long hedging costs were seen as simply a waste of money and so our Bear market decline began in earnest. Those same derivatives worked to extend the downward move far beyond what should have been the case. Then when the decline reversed, the derivatives were again at work pushing the market so fast back up that it has many confused as to what is happening.
Whether or not there is manipulation by the Fed in the credit markets, gold markets, futures markets depends on your definition of manipulation. The main thing to remember is that the Fed will do anything to maintain the long term stability of the financial markets- including the use of massive derivative positions to pull the markets back into their view of "fair value".This gives us these huge swings back and forth making and losing fortunes at the same time.
Where will it all end? Are we heading for another bear market leg?
I think we are heading for more volatility. The risk to this strategy is if foreign investors get wrong footed too many times by the Fed that they decide that the US dollar risk is just not worth the reward of playing in the most liquid markets in the world. But if playing derivatives is their game they really have to be in the US to be able to satisfy their liquidity requirements so I don't expect a mass exodus from the US markets for this reason- thus the markets are underwritten by this foreign money to some extent.
It seems to me that the whole financial system is becoming much more volatile. Lots of players making bigger and bigger bets to increase their returns. To hedge their risk they are using derivatives more and more. Unfortunately the LTCM blowout shows us what happens when stresses occur, to these bets- even if they are hedged!
To me the great bull market blow off in 99/00 was a liquidity driven event that was magnified by huge derivatives exposures by many big players. The almost unbelievable exponential move went further than most big players believed was possible because they were able to hedge their exposure and so not pull their funds out.
Eventually the tide did turn and then the long hedging costs were seen as simply a waste of money and so our Bear market decline began in earnest. Those same derivatives worked to extend the downward move far beyond what should have been the case. Then when the decline reversed, the derivatives were again at work pushing the market so fast back up that it has many confused as to what is happening.
Whether or not there is manipulation by the Fed in the credit markets, gold markets, futures markets depends on your definition of manipulation. The main thing to remember is that the Fed will do anything to maintain the long term stability of the financial markets- including the use of massive derivative positions to pull the markets back into their view of "fair value".This gives us these huge swings back and forth making and losing fortunes at the same time.
Where will it all end? Are we heading for another bear market leg?
I think we are heading for more volatility. The risk to this strategy is if foreign investors get wrong footed too many times by the Fed that they decide that the US dollar risk is just not worth the reward of playing in the most liquid markets in the world. But if playing derivatives is their game they really have to be in the US to be able to satisfy their liquidity requirements so I don't expect a mass exodus from the US markets for this reason- thus the markets are underwritten by this foreign money to some extent.
History tells us that credit and money growth can only go so far in proping up a market. No market in the history of the world has ever gone up for very long simply because of the central banks printing presses. Greenspan can try as hard as he can, but he can't bend the laws of economics. Printing money doesn't make people rich.
I can't believe the DOW is only 1200 points off of it's all time high, considering the severe damage in the underpinnings of the economy. If we took the brand name of "USA" off of our country and presented justed the raw statistics, the lopsided trade figures, bloated government spending, very low savings rate, unbelievably high consumer debt, etc. we'd be in a perma-recession. 3rd world countries can't get away with 10% of GDP budget and trade deficits.
After November 2004, the real fun will begin. We'll start paying for this mess we're in.
I can't believe the DOW is only 1200 points off of it's all time high, considering the severe damage in the underpinnings of the economy. If we took the brand name of "USA" off of our country and presented justed the raw statistics, the lopsided trade figures, bloated government spending, very low savings rate, unbelievably high consumer debt, etc. we'd be in a perma-recession. 3rd world countries can't get away with 10% of GDP budget and trade deficits.
After November 2004, the real fun will begin. We'll start paying for this mess we're in.
I think overexpansion of credit and the litigation explosion could be time bombs.
I remember that Paul Tudor Jones said in "Market Wizards" that "I know from studying history that credit eventually kills all great societies . . . . We borrowed against the future, and soon we will have to pay" (page 134).
It's been about 15 years since he said that. So this issue isn't something that can be used to time short-term trades!
I remember that Paul Tudor Jones said in "Market Wizards" that "I know from studying history that credit eventually kills all great societies . . . . We borrowed against the future, and soon we will have to pay" (page 134).
It's been about 15 years since he said that. So this issue isn't something that can be used to time short-term trades!