Two years flew by. Can't believe I didn't post anything in 2017..oh well back at it now. Ironically, the last post from April 2016 was that the market was still where it had been for quite a while. Obviously, its moved quite a bit since then..
After a two year bull market with a few blips of volatility, things are finally getting interesting. I'm not usually too bearish, certainly not a doom and gloomer, but I'm getting a major 2007 early 2008 vibe right now. Real estate is too hot, volatility is non existent (except for the last week), interest rates still have to rise at some point (don't they?) and we are due for at least a good hard pull back. Here's the chart that I'm watching on a quarterly basis..
Yep, the yield curve. I've heard opinions from people that I respect about how the Trump tax cuts are going to propel this market much farther..blah, blah. And they may be right but I still think it's interest rates. I'll post again soon with a more in depth look at what I'm talking about but for the time being, here's the short of it. The yield curve is flattening. Short rates have been going up and long rates are not going up much in response. This is the first time we've seen this in the yield curve in 10 years. It's the interest rates..stupid.
So what am I doing in response to this? Raising cash. I've sold off most broad exposure to the markets and am just day trading and swing trading. I've got a rent house that is way over valued based on the rental rates that the market gets..so I'm selling it in July when the tenant's lease is up. Is this a run for the hills scenario. No, probably not yet. But I want to have ample cash when things do start moving so that I can a) not get hurt by a sudden sell off and b) have cash on hand to take advantage of deals and trading opportunities.
One other thing that I want to expand on soon is the blow up in XIV and the sudden scrutiny in the "risky" volatility products. It's such a bummer that the etn is going away and I'm worried that regulators are going to screw up VXX, TVIX and SVXY. Those have been my cash cows for the last 5 years and what stinks is that there's not a good replacement for XIV. More to come soon on that.
Trade well.
George
TLT
After a two year bull market with a few blips of volatility, things are finally getting interesting. I'm not usually too bearish, certainly not a doom and gloomer, but I'm getting a major 2007 early 2008 vibe right now. Real estate is too hot, volatility is non existent (except for the last week), interest rates still have to rise at some point (don't they?) and we are due for at least a good hard pull back. Here's the chart that I'm watching on a quarterly basis..
So what am I doing in response to this? Raising cash. I've sold off most broad exposure to the markets and am just day trading and swing trading. I've got a rent house that is way over valued based on the rental rates that the market gets..so I'm selling it in July when the tenant's lease is up. Is this a run for the hills scenario. No, probably not yet. But I want to have ample cash when things do start moving so that I can a) not get hurt by a sudden sell off and b) have cash on hand to take advantage of deals and trading opportunities.
One other thing that I want to expand on soon is the blow up in XIV and the sudden scrutiny in the "risky" volatility products. It's such a bummer that the etn is going away and I'm worried that regulators are going to screw up VXX, TVIX and SVXY. Those have been my cash cows for the last 5 years and what stinks is that there's not a good replacement for XIV. More to come soon on that.
Trade well.
George
TLT
