Jan

24

 "You could never know when the elephants would come back, but when they did they always traveled the same path" . And the natives (and R. Humbergola) were always waiting for them.

Rocky "Humbergola" Humbert comments: 

Let the record reflect the fact that I have never traded a single share of Apple stock (long or short), however, I told a friend on October 9, 2012 that if I were inclined to trade this elephant, I would have shorted some on the most primitive moving average cross. But I didn't. And so I have nothing to brag about or substantive to say except that I continue to consider AAPL the single most difficult investment possible — a melange of technology, fashion and retail — all of which are well above my pay grade. And I would add that there is compelling (statistical) evidence that a company is biased to underperform the index after a longterm charismatic CEO leaves the helm…market capitalization and valuation not withstanding. As for my belief that the S&P at its current valuation offer a likely return in the very low single digits with a 3-5 year time horizon (which is still better than fed-targeted fixed income right now), I am continuing to sell individual securities but replacing them with S&P calls with single digit volatility as this strategy will ensure that when the ephelumps turn, I will not be left with a steaming pile of dung.

I hear a bunch of people calling tops and looking at the 1962-1982 analogies and so on, but I see very few people who were formerly bullish turning bearish and I see many smart people lagging the index and I've learned that it's better to be right than to be smart and I have demonstrated a utter lack of ability at calling the market in any timeframe relevant to people who sit in front of screens all day; hence I am using the gift of low vix to ensure that when the trend changes it will occur in a way that I will be profitable and wise but only after the fact. One last thing: the SPY historical vol at 30 and 100 days is 13.1 and 12.5. The TLT vol at 30 and 100 days is 12.6 and 13.17. SPY calls at the money cost 10.4% vol; and TLT at the money options cost 12.5%. There is some predictive grist here but the proof and execution are left as an exercise for the reader.


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