tag:blogger.com,1999:blog-11027528911364475.post7600001952071515351..comments2024-02-18T21:10:05.205-08:00Comments on EconomPic: Help Jake Invest...Jakehttp://www.blogger.com/profile/07946497592651234440noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-11027528911364475.post-39468063963597477012009-07-12T22:54:09.323-07:002009-07-12T22:54:09.323-07:00i absolutely agree with you Jake,
i got myself ou...i absolutely agree with you Jake,<br /><br />i got myself out of my trading position in corporates three weeks ago.<br /><br />it seems i might have been early but risk-reward doesn´t look good anymore.<br /><br />here´s why:<br /><br />-the trade is overcrowded.<br />there was a pure mania in corporates. everybody was touting it, inflows have been huge. i´m sure there are a lot of retail investors who bought but have no exact idea what they´re investing in.<br />so far there´s been only one way (up) - but once it turns, the herd coug ignite a selloff.<br /><br />-true. spreads are below their peaks.<br />but i do think that we´re in a completely new world of less leverage.<br />you just cannot take the highs or even the average of the last 10years as a benchmark.<br /><br />-spreads are pricing in a decent economic recovery. i´m still not convinced that is really going to happen.<br /><br />-finally you trade corporates not by spreads alone. there´s still the overall interest rate risk.<br />though i have a deflationary bias i still don´t know which way we will go.<br />you latest charts on CPI and the rate of change in utilization made me think again. inflation and hence higher rates might return sooner than thougt.<br /><br />so all in all i don´t like risk-reward at this point.<br /><br />as a stock trader i run a portfolio of balance short and long positions. right now i´m underinvested waiting for hints out of the earnings season.<br />my long term view is still bearish. so i can´t recommend buy+hold stocks.<br /><br />CASH is a position.<br /><br />those who have the ability to be PATIENT (if necessary for months) will be rewarded.GreenABnoreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-27397488328884634062009-07-11T13:53:19.858-07:002009-07-11T13:53:19.858-07:00good stuff Jake. I've seen a lot of smart peo...good stuff Jake. I've seen a lot of smart people like yourself come out and question if the risk/reward profile is worth it in corporates and junk bonds lately. But, I also think your point about preferring them to equities is still a prudent one. Will be interesting to watch going forward.<br /><br />Jay<br />(marketfolly)market follyhttps://www.blogger.com/profile/07691612544809256786noreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-46120034488960557012009-07-11T09:02:20.239-07:002009-07-11T09:02:20.239-07:00Hey Jake sorry to see you out of the markets.
I...Hey Jake sorry to see you out of the markets.<br />I'm starting to go back in heavy after exiting near the top and locking at the highest interest rate before they plummeted.<br />Too much doom and gloom = massive buy signals.<br />I love it when ppl try and guess the bottom, there are always pockets of value in these situations.<br />Sure we might go down more but seriously i can buy many stocks for 20c in the dollar with no debt. I dont understand why we are all worried. We should have been worried at 14,000 not now!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-7402601662675315892009-07-11T08:20:56.770-07:002009-07-11T08:20:56.770-07:00Jake keep up the good work. I've bookmarked ya...Jake keep up the good work. I've bookmarked ya.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-79418337759171835142009-07-10T20:57:11.645-07:002009-07-10T20:57:11.645-07:00How about the utilities sector? It hasn't much...How about the utilities sector? It hasn't much participated in the rally, but earnings have still held up.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-51195956105706414222009-07-10T14:47:53.714-07:002009-07-10T14:47:53.714-07:00Rates are still very low, so absolute returns for ...Rates are still very low, so absolute returns for bonds still aren't stellar, despite record spreads. Deflation will likely add a little more to real yields, but currency stability is a real question that has inflation and bond demand implications. Volatility and short duration seems like sound advice.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-9393203002423055472009-07-10T10:09:25.732-07:002009-07-10T10:09:25.732-07:00Jake,
I think you have the right idea - be carefu...Jake,<br /><br />I think you have the right idea - be careful. Asset valuations aren't at historic lows, especially give the backdrop of historic debt levels. It's hard to earn money, but easy to lose it. <br /><br />If you want to take some risk, be patient and even then be nimble. Take advantage of situations like the LQD & JNK sell-offs you found. Good deals are rare and they don't last long. <br /><br />The nice thing is that you actually think for yourself. Most don't. And, unlike hedge funds, you don't have a year end performance deadline or a high water mark.mabnoreply@blogger.com