June 20, 2013 at 3:23 pm

Avatar of amagnifico
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Joined: Jun. 3, 2013 Posts: 13

I dunno about you guys, but I was really surprised to see stocks down so much today. I mean, wasn’t the panic-selling yesterday afternoon (after the FOMC meeting/Bernanke speech) enough for that one event? I expected people to pick themselves up, dust off, and realize that what he said wasn’t really anything new.

The only thing I can think of is that the foreign markets tanked after the Fed thing too, so people decided to keep on panic-selling. Plus there was some bad data from China, I guess. But is that really enough to create a more than 2% drop these days? Or is there something else — besides panic on top of panic?

/endrant :)

June 21, 2013 at 11:41 am

Avatar of moderatorcarla
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Joined: May. 30, 2013 Posts: 18

I am actually hoping stocks keep tanking–we’ve seen a few mini corrections but nothing to really tame the crazy gains we’ve seen so far this year (still +10% YTD, even with yesterday’s selloff). Time to pick up some bargains.

As for the reason…who knows. My theory is that the correction has been long overdue, and really any bad news could have been the catalyst. It just happened to be the “taper tantrum.”

(Wish I could, but I can’t take credit for that term–heard it on NPR. )

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June 22, 2013 at 1:30 pm

Avatar of no3putts
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Joined: Jun. 22, 2013 Posts: 1

“I dunno about you guys, but I was really surprised to see stocks down so much today. I mean, wasn’t the panic-selling yesterday afternoon (after the FOMC meeting/Bernanke speech) enough for that one event? I expected people to pick themselves up, dust off, and realize that what he said wasn’t really anything new.

The only thing I can think of is that the foreign markets tanked after the Fed thing too, so people decided to keep on panic-selling. Plus there was some bad data from China, I guess. But is that really enough to create a more than 2% drop these days? Or is there something else — besides panic on top of panic?

/endrant :)

One reason could be the sharp increase in interest rates as of late. This will affect discount rates used to discount future earnings streams of companies and make them less valuable. Does that make sense to you?

June 22, 2013 at 2:33 pm

Avatar of buzz339
Trader
Joined: Jun. 22, 2013 Posts: 9

The extreme high level of the indexes has not been a function of economic fundamentals but merely a result of the reckless money pumping efforts by the Fed. Remember, back in December none other than the NY Fed stated that the S&P 500 would be around the 700 level had it not been for the variety of QE programs, which have lit equities on fire.

That doesn’t mean we don’t go higher, but it sure looks like we are near some sort of top to me. Risk to reward doesn’t look that great (10% upside vs 50% or more downside) on the U.S. markets. I personally am hoping we just chop around here for awhile in a 5-10% range and am selling puts in an attempt to take advantage of that.

Buzz339

June 24, 2013 at 12:00 pm

Avatar of moderatorval
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Joined: May. 30, 2013 Posts: 54

Yeah, so often selling premium is the better way to go. I think a lot of people are turned off by selling options because of the margin required. Buzz339, do you find the reward far outweighs the margin needed, or do you have a broker that has lower requirements?

“Everyone must choose two pains: The pain of discipline, or the pain of regret.” Jim Rohn

June 24, 2013 at 2:24 pm

Avatar of amagnifico
Trader
Joined: Jun. 3, 2013 Posts: 13
“I dunno about you guys, but I was really surprised to see stocks down so much today. I mean, wasn’t the panic-selling yesterday afternoon (after the FOMC meeting/Bernanke speech) enough for that one event? I expected people to pick themselves up, dust off, and realize that what he said wasn’t really anything new.

The only thing I can think of is that the foreign markets tanked after the Fed thing too, so people decided to keep on panic-selling. Plus there was some bad data from China, I guess. But is that really enough to create a more than 2% drop these days? Or is there something else — besides panic on top of panic?

/endrant :)

One reason could be the sharp increase in interest rates as of late. This will affect discount rates used to discount future earnings streams of companies and make them less valuable. Does that make sense to you?”

Hmm…yeah that absolutely does, just something I hadn’t considered! I had been focusing more on the fact that the Fed is still gonna keep buying up assets, but not so much about the interest rates and what that can do to these companies down the line. So I guess if you look at it that way, with the 30-yr Treasury yield going up and up to 3.6% as of today, the slump starts to make a lot more sense :)

June 25, 2013 at 10:27 pm

Avatar of mlakdm
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Joined: Jun. 26, 2013 Posts: 1

I think it’s because of the increased possibility of the Fed stopping the QE later this year. That would mean higher interest rates which means better alternatives in addition to stocks.

June 26, 2013 at 12:40 pm

Avatar of moderatorval
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Joined: May. 30, 2013 Posts: 54

“I think it’s because of the increased possibility of the Fed stopping the QE later this year. That would mean higher interest rates which means better alternatives in addition to stocks.”

Yeah, several of our advisors have mentioned interest rates specifically, including Ken Trester: “The culprit behind the current volatility is rising interest rates. Many analysts and media types are blaming the Fed for this, but does anyone really believe rates are going to stay at historic lows forever? The Fed can be blamed for pushing rates so low to begin with, but not for allowing them to rise again sometime in the future. That rates have been volatile without any significant economic growth is a telling sign.”

“Everyone must choose two pains: The pain of discipline, or the pain of regret.” Jim Rohn

June 26, 2013 at 10:48 pm

Avatar of buzz339
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Joined: Jun. 22, 2013 Posts: 9

“Yeah, so often selling premium is the better way to go. I think a lot of people are turned off by selling options because of the margin required. Buzz339, do you find the reward far outweighs the margin needed, or do you have a broker that has lower requirements? ”

Actually I sell cash secured puts in an IRA account. There is no margin. I would never use margin, as I am selling puts to potentially buy the equity at a discount. Using margin is akin to using a credit card because you don’t have the money. Just asking for trouble.

Buzz339

June 27, 2013 at 12:55 pm

Avatar of moderatorval
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Joined: May. 30, 2013 Posts: 54
“Yeah, so often selling premium is the better way to go. I think a lot of people are turned off by selling options because of the margin required. Buzz339, do you find the reward far outweighs the margin needed, or do you have a broker that has lower requirements? ”

Actually I sell cash secured puts in an IRA account. There is no margin. I would never use margin, as I am selling puts to potentially buy the equity at a discount. Using margin is akin to using a credit card because you don’t have the money. Just asking for trouble.”

REALLY? I’ve talked to a lot of folks about selling options in retirement accounts, and you’re the first one I’ve heard who’s been able to do it. I wonder if that’s another benefit of IB, or if that’s industry standard now and I’ve just missed the boat. But, as you said, if you don’t mind getting put the shares, it’s a smart way to go. I really appreciate your comment to that.

“Everyone must choose two pains: The pain of discipline, or the pain of regret.” Jim Rohn

June 27, 2013 at 12:55 pm

Avatar of moderatorval
Forum_Admin
Joined: May. 30, 2013 Posts: 54
“Yeah, so often selling premium is the better way to go. I think a lot of people are turned off by selling options because of the margin required. Buzz339, do you find the reward far outweighs the margin needed, or do you have a broker that has lower requirements? ”

Actually I sell cash secured puts in an IRA account. There is no margin. I would never use margin, as I am selling puts to potentially buy the equity at a discount. Using margin is akin to using a credit card because you don’t have the money. Just asking for trouble.”

REALLY? I’ve talked to a lot of folks about selling options in retirement accounts, and you’re the first one I’ve heard who’s been able to do it. I wonder if that’s another benefit of IB, or if that’s industry standard now and I’ve just missed the boat. But, as you said, if you don’t mind getting put the shares, it’s a smart way to go. I really appreciate your comment to that.

“Everyone must choose two pains: The pain of discipline, or the pain of regret.” Jim Rohn

June 27, 2013 at 1:00 pm

Avatar of moderatorval
Forum_Admin
Joined: May. 30, 2013 Posts: 54
“Yeah, so often selling premium is the better way to go. I think a lot of people are turned off by selling options because of the margin required. Buzz339, do you find the reward far outweighs the margin needed, or do you have a broker that has lower requirements? ”

Actually I sell cash secured puts in an IRA account. There is no margin. I would never use margin, as I am selling puts to potentially buy the equity at a discount. Using margin is akin to using a credit card because you don’t have the money. Just asking for trouble.”

REALLY? I’ve talked to a lot of folks about selling options in retirement accounts, and you’re the first one I’ve heard who’s been able to do it. I wonder if that’s another benefit of IB, or if that’s industry standard now and I’ve just missed the boat. But, as you said, if you don’t mind getting put the shares, it’s a smart way to go. I really appreciate your comment to that.

“Everyone must choose two pains: The pain of discipline, or the pain of regret.” Jim Rohn

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