Shhh...VIX says Investors Almost Asleep

[Glenn Black]

Re: Shhh...VIX says Investors Almost Asleep

We have a friend that keeps bragging about how well she's doing with her recent dabbling in the market (first timer). She picked-up BoA, GE, and one other "winner" (may be Ford). My wife and I keep telling her she's crazy, her results so far keep telling her she's a genius.

My theory is that these people do little research or future prediction. They see that stocks are quite cheap looking in the rearview mirror. They don't even care to find-out or ask why they are cheap. Being cheap vs recent history is their sole investment criteria.

Some people are buying stock that has never made a profit and has little or no dividend, but it's cheap at its 52 week low.

I see 7 types of investors:

Sharks Can we agree that the sharks on Wall Street will never learn, nor repent their evil ways. They are addicted to the game for life.

Greedy. When the stakes are so high, they can no longer resist. Buy BofA at $1.50 then wait a week and it's $3.00 They double there money in a week, that's 52 times their money in a year. They are driven/obsessive to get a leg up on everyone else, beat the odds.

Herd Goes where ever the majority are headed, or a specific gang that they hang out with. Safety in numbers, only as stupid (or brilliant) as my posse.

Smart They pay attention, analyze, and have an uncanny talent for picking the great ones and timing it perfectly.

Contrarians Move opposite to the herd, no thinking required.

Procrastinators A half-wave out of phase with the market, they get out when they should be staying in. Stay out until its too late. They make an art form out of buy high, sell low

Chicken Deer caught in the headlights, too afraid to move, rides it through in hope of better days. Set it & forget it ? (but they can't, so they worry).

To me, it seems the Chickens never left the market, same with the Sharks. The Greedy jumped back in 2 months ago, buy low, P/E at only 8. The Smart were in, then out, have been back in, but will soon exit again. The Procrastinators are thinking about getting back in now, or very soon.


The Dow has tracked the 100 day EMA through all of the collapse. We have a crossing point now, just like in May/08.

I went to 100% cash in April/08 (procrastinator ?). If I should have been out before that, then now is no time to be jumping back in.

There are some people who trust in themselves and their skills. They run red lights, they gun it when the railway barricade starts to come down, they do options/puts/calls/shorts/FOREX, and try picking up loose change on the road right in front of steamrollers. They're welcome to the extreme risks and loose change they gain. Not for me.

If Dow crosses 100 day EMA in next few days and heads up, maybe I'm wrong. Maybe Timmy and Ben fixed everything.

I don't think so. That's why I'm staying out. The roulette wheel still has magnets embedded in it. It's still a rigged game. Every hustler knows you have to keep the mark interested, tantalizing close to winning.

The Sharks play with the curve, they make it go up and down at just the right time so as to entice you to play again.

Same for all the bells and lights on a video lottery terminal. Software is designed to get you to put just one more coin in. One coin can't hurt. Soon you have lost your house.

No thanks. I'm staying out.

[chrisk]

Re: Shhh...VIX says Investors Almost Asleep

I'm buying puts on the broad indices here. Being bullish might have been contrarian a month ago, but not now. Have a look at put-call ratios:
http://www.indexindicators.com/chart...params-3y-x-x/

and II bull-bear percentage:
http://www.investorsintelligence.com...art.html?r=101#

(The recently declining VIX is a similar indicator.)

The peaks and troughs of these tend to correspond to peaks and troughs in the market, and argue that if anything we're near a peak right now. Of course that doesn't tell you how short- or long-term the peak is! But that's where I come back to my broad thesis, which is pretty in line with iTulip's. We're in a massive deleveraging process now, and at least for now the feds haven't done nearly enough to reverse it and create an inflation mentality. My guess is that most of the "green shoots" that people are hallucinating right now will be seen as illusions fairly soon, and we'll head back for another down leg in stocks, magnified this time by disillusionment.

Having said all that, I don't really think short-term timing is all that useful in general. I think the middle of a Great Unwind is one of the few times it might work, so that's my justification. And I'm mostly moving around small percentages of my total portfolio, which remains heavy in silver waiting for the inevitable POOM.

[GRG55]

Re: Shhh...VIX says Investors Almost Asleep

cmbx and abx continue to implode.... WHAT AM I MISSING???

Animal spirits and being long the financials?

[Supercilious]

Re: Shhh...VIX says Investors Almost Asleep

I see 7 types of investors:

Sharks Can we agree that the sharks on Wall Street will never learn, nor repent their evil ways. They are addicted to the game for life.

Greedy. When the stakes are so high, they can no longer resist. Buy BofA at $1.50 then wait a week and it's $3.00 They double there money in a week, that's 52 times their money in a year. They are driven/obsessive to get a leg up on everyone else, beat the odds.

Herd Goes where ever the majority are headed, or a specific gang that they hang out with. Safety in numbers, only as stupid (or brilliant) as my posse.

Smart They pay attention, analyze, and have an uncanny talent for picking the great ones and timing it perfectly.

Contrarians Move opposite to the herd, no thinking required.

Procrastinators A half-wave out of phase with the market, they get out when they should be staying in. Stay out until its too late. They make an art form out of buy high, sell low

Chicken Deer caught in the headlights, too afraid to move, rides it through in hope of better days. Set it & forget it ? (but they can't, so they worry).

To me, it seems the Chickens never left the market, same with the Sharks. The Greedy jumped back in 2 months ago, buy low, P/E at only 8. The Smart were in, then out, have been back in, but will soon exit again. The Procrastinators are thinking about getting back in now, or very soon.

Those are words of wisdom....

[c1ue]

Re: Shhh...VIX says Investors Almost Asleep

Stockman,

You might consider expanding the timelines a bit:

LQD:

LQD.png

AGG:

agg.png

AGG doesn't look bad until you see the title: IShares Lehman Aggregate Bond Fund :rolleyes:

[santafe2]

Re: Shhh...VIX says Investors Almost Asleep

ECRI well respected by traders- keeps pointing to turn which is occurring, bears wil choose to dismiss this. If ECRI was beating the depression drum they would be more popular today.

Stockman, don't listen to ECRI talking heads, they don't matter. It's the ECRI tracking of the economy over the last 40+ years that matters. Here's where we are according to ECRI...um, 25% + down and not a depression?

ECRI_0309.jpg

[santafe2]

Re: Shhh...VIX says Investors Almost Asleep

VIX is now breaking 40, half of the peaks in Nov/Dec/08. Once it clears 30, all will be back to normal.

The VIX does not have a "normal" range. By the end of 2006 it had reverted to a range one would only find in history. It was then, at the end of 2006 with the VIX at 10, we knew one thing, volatility was in our future. With the VIX returning to a long term median range we can only compare other economic times with this time and reflect this observation against the current VIX level. When I do this, I see the VIX as very low, as extremely low, as nothing close to normal for our time.

In 1987 the VIX reached 150. This last October it only reached 90 but it may still be coiling. Thirty will not represent anything close to normal as we reflect back two years from now.

[stockman]

Re: Shhh...VIX says Investors Almost Asleep

Stockman,

You might consider expanding the timelines a bit:

LQD:

[ATTACH]1418[/ATTACH]

AGG:

[ATTACH]1417[/ATTACH]

AGG doesn't look bad until you see the title: IShares Lehman Aggregate Bond Fund :rolleyes:

Time line... I do focus more on short term conditions rather than long term, guilty. The current trend is positive; that could change tomorrow- and I would be willing to change sides. Equities are trading instruments for me, not investments.

If I were going to use just ONE fixed income ETF to monitor it would be the BLV. But I prefer to use the composite.

Looking at longer term data- a resumption of that parabolic trend would have me re-join you guys on 'armegedon watch'.

BAA TNX Spread 040909.jpg

[stockman]

Re: Shhh...VIX says Investors Almost Asleep

I'm buying puts on the broad indices here. Being bullish might have been contrarian a month ago, but not now. Have a look at put-call ratios:
http://www.indexindicators.com/chart...params-3y-x-x/

and II bull-bear percentage:
http://www.investorsintelligence.com...art.html?r=101#

(The recently declining VIX is a similar indicator.)

The peaks and troughs of these tend to correspond to peaks and troughs in the market, and argue that if anything we're near a peak right now. Of course that doesn't tell you how short- or long-term the peak is! But that's where I come back to my broad thesis, which is pretty in line with iTulip's. We're in a massive deleveraging process now, and at least for now the feds haven't done nearly enough to reverse it and create an inflation mentality. My guess is that most of the "green shoots" that people are hallucinating right now will be seen as illusions fairly soon, and we'll head back for another down leg in stocks, magnified this time by disillusionment.

Having said all that, I don't really think short-term timing is all that useful in general. I think the middle of a Great Unwind is one of the few times it might work, so that's my justification. And I'm mostly moving around small percentages of my total portfolio, which remains heavy in silver waiting for the inevitable POOM.

IF I were looking for reasons to play the short side I'd be looking at the total short fund asset levels in the S&P funds at Rydex and the ETFs. The current level is back down near 3 year lows. On the flip side you don't see them loading up on longs yet. But that would take more time/stability. I am concerned 1st with short term however. To play the downsdie again I would need to see a break down in market action- when a market can maintain overbought conditions it is safer to be long or be out.

[nero3]

Re: Shhh...VIX says Investors Almost Asleep

Time line... I do focus more on short term conditions rather than long term, guilty. The current trend is positive; that could change tomorrow- and I would be willing to change sides. Equities are trading instruments for me, not investments.

If I were going to use just ONE fixed income ETF to monitor it would be the BLV. But I prefer to use the composite.

Looking at longer term data- a resumption of that parabolic trend would have me re-join you guys on 'armegedon watch'.

[ATTACH]1421[/ATTACH]

Very good chart. I see this as some "super sized" 1998, rather than what happened in 2002. Based on that I suspect something might grow into a huge, huge bubble similar to the nasdaq after 1999, meaning we are still in the "super bubble", but then again, who really knows.

[ricket]

Re: Shhh...VIX says Investors Almost Asleep

Very good chart. I see this as some "super sized" 1998, rather than what happened in 2002. Based on that I suspect something might grow into a huge, huge bubble similar to the nasdaq after 1999, meaning we are still in the "super bubble", but then again, who really knows.

Do tell, what part of our economy shall this "super bubble" continue in?

ALT-E? Not if big oil can help it.

Everything else? Looks like the FIRE economy screwed the pooch on that one.

Unless we get some groundbreaking new invention (unlikely given that money for research is being sucked up by the banksters) then I don't see our economy going anywhere anytime soon.

[santafe2]

Re: Shhh...VIX says Investors Almost Asleep

Do tell, what part of our economy shall this "super bubble" continue in?

ALT-E? Not if big oil can help it.

So far, not much growth in Alt-E this year and certainly no bubble. California was always the king of renewable energy installations but it has cooled off considerably. There have been some unlikely candidate states stepping in to take up the slack but overall, there's little growth in this industry and prices continue to fall. The M&A activity is crazy however as large European and Japanese firms continue to buy up independent players.

[nero3]

Re: Shhh...VIX says Investors Almost Asleep

Do tell, what part of our economy shall this "super bubble" continue in?

ALT-E? Not if big oil can help it.

Everything else? Looks like the FIRE economy screwed the pooch on that one.

Unless we get some groundbreaking new invention (unlikely given that money for research is being sucked up by the banksters) then I don't see our economy going anywhere anytime soon.

I think the secular bear market in US stocks from 2000 will go on, to somewhere between 2014-2016. From then and on there will be a secular bull market in the US stock market. What is getting started now are just a cyclical bull market in the US stock market, while a secular bull market will continue in emerging economies. Think of what happened in late 2007 , as 1987 for the secular emerging market bull.

[goadam1]

Re: Shhh...VIX says Investors Almost Asleep

fearless leader had abandoned us for his book. Green shoots talk is everywhere. Nero is running wild. Fred wants to talk about short selling. Metalman says it's not the end of the world.