Wednesday, January 20, 2016

Random Rant Jan 2016

"Unless you are short stocks, 2016 is starting off to a rocky start" - Overheard on CNBC

Well, good thing I'm short stocks then!

We are off to a wild year this 2016.

Many people think that we're in a minor correction and this is just a speed bump before we continue our ascent to even higher highs.

I mean, the US economy is recovering right?

Oil at $29 is a "subsidy to the consumer" is it not? Also doesn't it reduce business transportation costs? The whole theme when Oil was dropping from over $100 to $50 was that lower oil is good for the economy. Since then, we have somehow flip flopped to lower oil is bad for the economy. Come on guys, make up your fucking mind. Is lower oil good or bad for the economy?!?!

Since a year ago, I've been in the camp that Oil will continue to grind lower and there can't be any resolution in the early part of 2015. Whether I was right for whatever reasons, it's hard to say because no one knows what in the real cause. Maybe we'll never know.

In all seriousness, oil under $30 is pretty much a sure sign that we are already in a shit storm. Will it cause a credit crunch by the oil industry defaulting and domino-ing over to other industries? When one is short, one can only hope so.

However, on the bright side, this drawdown in oil has been impressive to say the least. Perhaps in the future people will be calling this the "The Great Oil Recession" or something along that lines. Looking at the drawdowns we are sitting on now, I'm more and more and more and more excited and tempted to dump more allocation into oil-related plays. My allocation to Keppel and Sembcorp would be uncomfortable to most people, I would reckon.

Recently, I had a fantastic play in my CFD account. I managed to short the US indices, namely the S&P500 from 2076 all the way to 2000 flat. That's a pretty brutal 76 points of profit there, leveraged up by 20 times with whatever base margin amount I was playing with. I did pussy out and cashed out with most of my profits, and I have been very very very sore about missing the next 100 point decline. I've been pushing shorts every few months for years now, and when the best shorting opportunity had come around, I pussied out? I was very disappointed with myself.

Most people that know my style can guess I'm more of a "mean-reversion" type of guy. That means I rarely take up positions that have already made big moves in one direction because I always think and feel that a snap-back is coming, rather than the momentum will continue driving it in one direction. However, I feel that this is quite special circumstances and I decided, against the judgement of my regular logic, to enable "crash mode override" and I'm pressing my shorts again.

I'm back in the market shorting the S&P500 through CFDs and my average price is 1896. I think that we're going for a heavy spike lower if we breach the ~1870 mark. How low can we go if we do have a waterfall decline? I think 1700 might be a good level for a breather if we are heading lower.

Since I think we are heading lower, that also doesn't look too bright and sunny for the local stock market. Basically these days, if the US markets closer lower, so will the Singapore market. We had an interesting up day today, but the current lackluster performance in the US markets might rock the boat when Singapore opens. Personally, I think the the Singapore stock market is more than fairly valued at this time, in fact I think it is even slightly undervalued. I have been slowly picking up local stocks in the recent weeks, but I stress the keyword slowly. There's nothing to say that cheap can't get any cheaper.

Talking about the economy, everywhere I hear that things are looking bad. I've heard of 2 retrenchment exercise at friend's workplaces since the start of 2016. I've heard many of my graduated juniors are having a lot of trouble finding a job. Strangely enough, many many of them have turned to selling insurance and being financial advisers. Like seriously. Like fucking a lot. It's mindblowing how many people I know are doing it, especially when I feel like 90% of them haven't a clue of what they are peddling. Scratch that. 100%. I've yet to meet a financial adviser (in real life) that actually knows what they are doing and why. But anyway, this isn't a post about me dissing financial advisers. My point is that the job market is so bad that lots of people are turning to the insurance industry to absorb them in, especially when they have zero background, zero experience and zero passion. Yes, you cute 23 year old girl who graduated with a degree that has absolutely nothing to do with finance or insurance, let me sign this $1 million policy with you. /sarc

In the big picture of things, because I've been saving up for a house downpayment and getting my itchy hands away from playing with this money, I'm actually a lot more interested and concerned with the housing market than the stock market. I'm going to be putting in A LOT more money in my house compared to whatever I'll put into the stock market even if it crashes 50% tomorrow. I need housing to crash so I can finally move out and get my own place!

Finally, in case it wasn't clear enough yet, yes, I'm an asshole hoping for all hell to break lose.

8 comments:

  1. Hi,

    I like that joke on the cute 23 year-old insurance agent :)

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    Replies
    1. Hi DK,

      Those are the best sort of 23 year old insurance agents in my opinion ;) haha!

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  2. Some thoughts on fresh grads flocking to insurance:

    The insurance sales job - they will defend themselves by saying they are trying to get their prospect the right type insurance. Yet they have incentive to sell the shittiest and most expensive investment linked policies which most of us reading this should know that it is a fucking scam.

    Compare it to a glamorous job like a trader at goldman sachs- it is arguable he adds value by keeping the markets in equilibrium and allow for efficient allocation of capital.

    But that is obviously not his main concern. He will do anything as long as it is profitable for him. Humans are selfish and look out for themselves first.

    In that case, who is the more righteous one? I used to hate on the insurance sales gig too. Then I realized everyone is just trying to make a living.

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    Replies
    1. Yes, people should have the freedom to choose whatever job they want, regardless of motivations. However, when their job-related activities inherently results in negative externalities onto society, this is where some sort of intervention is justified, and terms like righteous, morals come into play.

      Not one of the top executives of too big to fail financial institutions faced criminal charges despite their heinous actions. These people are trying to make a living, right?

      Delete
    2. Yes, but I find myself wanting to be in the position of the TBTF execs. The one dolling out the fucking, not the one getting fucked. In a capitalist society nobody cares about social cost of their actions.

      Another thing that irks me about these insurance sales people is they form a cult mentality, and some of them truly believe they are peddling gold.



      Delete
    3. Then you are merely a hypocrite, there is nothing more to say.

      Delete
  3. Everyone's trying to make a living yes, but that doesn't justify misrepresenting / lying about your products and fleecing ordinary folks who don't know better. Yet this is what most of the insurance agents I come across do!

    I had the misfortune recently of meeting a young man who claimed to be in the top 1% of agents at Prudential. He recommended a regular savings plan and assured me repeatedly that the 3% interest the plan provides was guaranteed. I requested to look at the payout table, and lo and behold, the fine print right at the bottom stated clearly that the 3% return was not guaranteed (it's just an assumption!) Since this guy is in the top 1%, he probably is on what they call the Million Dollar Round Table (makes more than 1 million in commissions over a year). One can only imagine how many people were taken in by his promise of a "low-risk surefire 3% return p.a. savings plan"...

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  4. Hi guys,

    I sense that the topic here is between legality and morality.

    Somethings just aren't criminalized (yet), but that doesn't make them morality right to do (then again, who is to say what is right or wrong?). This is probably one the biggest problems we have, which is the lack of punishment for people who knowingly and willfully who do (seemingly) immoral things, since they have no fear of consequences, other than a possibly tormented soul, which doesn't bother some people since they don't have one to speak of.

    I could go on and on about insurance agents, but I guess most people that accidentally wander here already know the better, so I'll give that a rest.

    ReplyDelete

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