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The Really Useless Thread

  • #145,321
  • Nov 15, 2016 6:14pm Nov 15, 2016 6:14pm
[quote=sisse;9255854] Its pointless to trade to the long side after the current leg as all macro fundamentals are not aligned at all and major flow are short-circuiting in the background with hikes on the horizon.

Long side of current leg? What is that? Isn't "current leg" an arbitrary assumption? It's not pointless to put money at risk for "higher", whatever that may be. I'm trading spreads, they're pretty cheap and have great r:r. Even if I am completely wrong and they are a complete loss, it's a loss that I am managing.

If we break we will be entering in a sucker rally mode ...

We don't know that. Every previous ath that's way back in the rearview was a sucker rally?

It will be pointless to search for volatility plays to the long side in those circunsqnces. We are inches away from entering in cluster fck in the mid term in Equities. ...and as I mentioned before, no break, no shake, no nothing. If you are not already in long, there is nothing to see in US Equities until the pop (or flop) with the FED. sisse

Who said anything about volatility plays? I'm merely using options spreads to trade directionally at this point. I don't have anything for any expiry later than Dec 5.

There's many ways to skin a cat, sisse.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #145,322
  • Nov 15, 2016 6:52pm Nov 15, 2016 6:52pm
Quoting sisse
Q: If I give you $1000 and ask you to invest. I want the maximum return with obviously the minimum risk: Assumptions: -> We are in country ABC and 10yr yield is expected to increase 3 fold in the next few years -> Stock XYX is ATH (all time high), inflation and rates as expected to increase for at least 2 points in the same period -> Global Risk is expected to sharply increase next years and international trade to severely decrease at the same time: Would you start relocating your portfolio between Bonds or Stocks for next years or your will keep it the same until all factors expected are confirmed? What do you think is the impact between interest rates and stocks? What do you think is the impact between inflation and stocks? sisse
a) In lower global risk and global trade in place:
In short term there would be relocating part of the portfolio to safer as bond and stock price goes lower
In long term inflation will cause stock div up and more attractive, some funds return to stocks

* b) In assumed risk and low global trades, the shorter term effect is as above but in mid or long term, because of less market for products, the inflation and rise of r will not necessarily lead to higher stock div then somehow more funds will stay with safe bonds if there is any.


Please correct if I am wrong. thanks
...
  • #145,323
  • Edited 8:57pm Nov 15, 2016 7:08pm | Edited 8:57pm
Stuck working all day and now couldn't be happier to be soaking in this great discussion you guys have had here today. Much appreciate all contributions to it! An area I have, like Pharmor, always known I needed to understand much much better than I do. I'll be picking up that 400 pg tome that Fool recommended as well. A great primer of important concepts right here at tru as usual.
  • #145,324
  • Edited 10:53pm Nov 15, 2016 9:59pm | Edited 10:53pm
Nice conversations on bond correlations I see yesterday, jeez this thread is like a college education sometimes and even better as it's coupled with practical trading experience in real time ...priceless! (thanks sisse & all contributors).

So, let me see if I've got this straight and we can summarize the situation, and the following is just as much for me to try clarify things for myself as for anything else so please excuse as I may ramble ...

1. Bond Yields (eg US 10's) can be seen to have first reversed & started rising as far back as August initially on Fed hike expectations (as we know Fed continually flopped at each subsequent FOMC meeting however apart from minor kneejerks & pullbacks bond yields didn't reverse the new upwards trend and continued their slow steady rise). This is "Bond selling due to FED hikes" (RMT)

2. Back in pre-election week on the 28th Oct to be exact sisse mentioned several times that Risk was entering into play in the background as evidenced by bond movements (and other instruments eg CHF) and there was a brief discussion in the thread. At that point I wasn't fully comprehending but it now looks with hindsight from the chart that money was going back into bonds between 27th Oct & 4th Nov which would count as "Bond buying due to Risk Off"

3. On election night sisse called it again, impeccably it must be said, that the risk instruments & hedges taken on previously (in case of Drama) were already being dumped again even before counting was half over. Since we're talking bonds here then this would mean the return to the rising yield curve again with gusto after the brief pre-election risk-off buying. This is "Bond selling due to Risk (back) On" and also "Resumption of RMT"

4. Not only do we have a continuation of the rising yields due to the Fed hikes (RMT trading mode), but now we also have "Trumponomics" entering the picture and steepening the curve even further...ie expected expansionary deficit spending and tax cuts contributing to future inflation (with possibly trade tariffs adding further to price pressures) ...making bonds even less palatable to hold and forcing yields up even more to compensate traders for the future increased inflation expectations ...while also putting pressure on the FED to hike at a swifter pace than was foreseen if inflation really does pick up. Now we have "Bond selling due to Inflation risk" and also "Resumption of RMT -Turbo"

5. That's all in the here & now. But we also have the spectre of future risk coming down the road ...Trump the unknown, Brexit 2, Equities possibly tanking, Italian Referendum, French & German elections, Eurozone, EM markets if FED hikes too fast etc etc ..oh yeah and and Bond Bubble bursting too of course ha! (Ray Dalio in the news about that yesterday too). But jeez what's supposed to happen if /when that happens along with the equity sell-off, or are those two events mutually exclusive? ...maybe in a catastrophic risk off scenario money would go to gold and safe haven currencies ... maybe food? (and guns for our US friends too ha ha )

Anyway so in accordance with the conversations here yesterday, whenever & wherever there's the possibility of a future risk event, bonds will tend to foresee these as far as possible in advance, quantify in some way the probability, magnitude and timing of the event and somehow represent that through it's pricing mechanism of the bonds at different points along the time curve (eg the closer the event the higher the premium) ...and so I suppose that's why we should try to analyse the bond market to help us get in early in our other instruments of choice, equities, currencies or whatever.
...and that all sounds a pretty daunting task to understand all those imponderables and inter-relationships but there's certainly no shortage of willing learners here on the thread if you want to try educate us sisse (and all the other valued contributors too I hasten to add of course). I suppose that's the crunch of the whole experience here on this thread ..we can draw all the maps in the world but to be on the right side of trades and be able to accurately develop our own 'outlooks' by ourselves without sisse's input we have to begin understanding how all these fundamentals interrelate ...something about every long journey beginning with small steps springs to mind!

Ha ha as an aside, it was interesting & kinda funny earlier today to witness the blossoming thread identity evolve and see how the RUT "pack" immediately closed ranks to defend the thread's honour ..no need for it really as PTL's witty retort had sufficed nicely I thought and you know ....that poor guy had only just wandered in ...and as his bad luck would have it ....it was a slow trading day, so the pack circled ...was really funny! .

Think I'll have to take the rest of the day off after such a long post, am knackered!
All the best guys!
Attached Image (click to enlarge)
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The spoken word is your master, the unspoken word your slave.
  • #145,325
  • Nov 15, 2016 10:20pm Nov 15, 2016 10:20pm
Holy Fck! I leave to get kids and come back to work to some VERY interesting discussion!!! Thanks you to Sisse first off, thank you to Pharmor, Fool, Fisher, Fadhl, and others. Sisse, I would like to offer you a one of a kind glass sphere for all the lessons I am learning here! It has definately taken a chunk of your time to do this! I get my mind blown at least several times a month (and sometimes in the same day). I have learned and I have laughed and then learned some more. Its time to go back to work now,,,just wanted to thank all of you and wish you well

Quote
http://www.forexfactory.com/showthre...17#post9255317

here its a no brainer to go for bonds over losing money on equities...gotcha

Quote
http://www.forexfactory.com/showthre...02#post9255402

Here I would have said the same answer as Pharmor...until you mentioned RISK...that is now my understanding of one of two times I would be thinking about how to shift from equities to bonds. Also the next question would be to take the least risk in bonds over equities for mid and long term positions and maybe play equities if already in and maybe start trailing positions

Quote
http://www.forexfactory.com/showthre...69#post9255469

1. I would start moving some into bonds to have safer investments while using a portion of my portfolio in equities until expectations are confirmed and then finish moving into bonds...I think

2. when interest rates are higher it costs more to get money to invest...therefor making your profit margins slimmer= less interested in investing into stocks. Also higher interest rates=less consumer spending=less corporate revenue=stock values drop...is right?

3. inflation=higher prices=less consumer money supply=less revenue for corps=lower stock dividends and values

Quote
http://www.forexfactory.com/showthre...28#post9255628

"c" for me here ( love option D though...did you get that off of DJT's last speech?...lol

the analogy of milk in a pan and the stove really helped :-) thanks!!! I owe you a marble sir!!

THanks again and any insights or thoughts here are always welcomed :-)
  • #145,326
  • Nov 15, 2016 10:22pm Nov 15, 2016 10:22pm
totally unrel;ated question...how the hell are you guys inserting quotes into this...mine does not look the same
  • #145,327
  • Nov 15, 2016 10:27pm Nov 15, 2016 10:27pm
not getting any work done yet...have a question.

there are 10yr, 5yr, 2yr...etc bonds right?

Do the length of bond notes correspond in any way to the longevity of perceived risk?

ie. if theres perception of short lived risk would shorter bond length bonds move more than longer and vice-versa?

now back to work :_)
  • #145,328
  • Nov 15, 2016 10:37pm Nov 15, 2016 10:37pm
Quoting glassblower
not getting any work done yet...have a question. there are 10yr, 5yr, 2yr...etc bonds right? Do the length of bond notes correspond in any way to the longevity of perceived risk? ie. if theres perception of short lived risk would shorter bond length bonds move more than longer and vice-versa? now back to work :_)
It's about bond life; 10 year bond expires in 10 years, 5-year bond expires in 5 years, etc. Nothing with risk.
  • #145,329
  • Nov 15, 2016 10:45pm Nov 15, 2016 10:45pm
Quoting Fadhl
{quote} It's about bond life; 10 year bond expires in 10 years, 5-year bond expires in 5 years, etc. Nothing with risk.
so if I expected Risk and its effects to be short lived I wouldnt want a shorter bond life? and if I expecteds risk and its effects to last a longer while I wouldnt take longer safe haven?
  • #145,330
  • Nov 15, 2016 11:06pm Nov 15, 2016 11:06pm
Here...for lazy readers...and for us to keep funning around in between and not search way back...
Attached File(s)
File Type: zip Sisse Bonds VS Stocks lesson.zip   510 KB | 638 downloads
PVSRA
  • #145,331
  • Nov 15, 2016 11:10pm Nov 15, 2016 11:10pm
Quoting Fisher755
Here...for lazy readers...and for us to keep funning around in between and not search way back... {file}
downloaded...and many thanks to you!!!
  • #145,332
  • Nov 15, 2016 11:15pm Nov 15, 2016 11:15pm
Quoting glassblower
{quote} downloaded...and many thanks to you!!!
PVSRA
  • #145,333
  • Nov 15, 2016 11:29pm Nov 15, 2016 11:29pm
http://www.businessinsider.com/ray-d...6-11?r=UK&IR=T

"Last week, before the election results, Bridgewater predicted stock markets would plummet if Trump won the election. "

...why are ANY hedge funds left in business? Those assholes are being replaced by automation same as the coal miners. And how hard is it to understand that starting multiple trade wars will not be so great for the US economy? Anyway, I think he's right about bonds...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #145,334
  • Nov 16, 2016 4:30am Nov 16, 2016 4:30am
Quoting The Fool
http://www.businessinsider.com/ray-d...6-11?r=UK&IR=T "Last week, before the election results, Bridgewater predicted stock markets would plummet if Trump won the election. " ...why are ANY hedge funds left in business? Those assholes are being replaced by automation same as the coal miners. And how hard is it to understand that starting multiple trade wars will not be so great for the US economy?...
Well there are many reasons why hedge funds are still in bussines, whether you consider those good or bad reasons they are there. But yes they are underperforming year by year, yet for the reasons that are there its still enough to get them going.
Anyways buckle up, we are going to get some major dollar strenght in next weeks/months, UCHF/EU/UIndex all opening targets. The only currency hanging in the air in terms of directional play against dollar might be GBP, Brexit will not happen in any near future or perhaps ever as it was expected, so the question is will the markets start pricing that in, will it require certain strong validation news to start the procees, or will it be done slowly. Judging the situation, the GBP is currently probably the most oversold currency across the board.
  • #145,335
  • Nov 16, 2016 4:39am Nov 16, 2016 4:39am
Quoting janpec1000
{quote} Well there are many reasons why hedge funds are still in bussines, whether you consider those good or bad reasons they are there. But yes they are underperforming year by year, yet for the reasons that are there its still enough to get them going. Anyways buckle up, we are going to get some major dollar strenght in next weeks/months, UCHF/EU/UIndex all opening targets. The only currency hanging in the air in terms of directional play against dollar might be GBP, Brexit will not happen in any near future or perhaps ever as it was expected,...
I don't agree with your view regarding USD strenght. Now this is already a bit old news and this is exactly how most retail traders trade- buying USD now when most of the move already well underway. But let's see. Also depending on TF of course.
PVSRA
  • #145,336
  • Nov 16, 2016 4:45am Nov 16, 2016 4:45am
Quoting Fisher755
{quote} I don't agree with your view regarding USD strenght. Now this is already a bit old news and this is exactly how most retail traders trade- buying USD now when most of the move already well underway. But let's see. Also depending on TF of course.
Okay fair enough, mind that my views are never projected from "buy it was going up for whole month, it should go further higher next", they are based on structural patterns that have been statistically counted trough extensive number of samples in history since 1800 till 2016. No matter whether using technical pattern or fundamental/economic pattern any view is based on repetition trough history which in the end is the only thing that you can trade on consistent basis.
But ofcourse it never means i am approaching this with being 100% correct, pattern has 75% reliability.
  • #145,337
  • Nov 16, 2016 4:55am Nov 16, 2016 4:55am
Quoting janpec1000
{quote} Okay fair enough, mind that my views are never projected from "buy it was going up for whole month, it should go further higher next", they are based on structural patterns that have been statistically counted trough extensive number of samples in history since 1800 till 2016. No matter whether using technical pattern or fundamental/economic pattern any view is based on repetition trough history which in the end is the only thing that you can trade on consistent basis. But ofcourse it never means i am approaching this with being 100% correct,...
Maybe it would help reading last few months back in this thread. This is FA thread, TA is used only as entry ( whatever one prefers).
All patterns, indicators and what not are lagging. This doesn't mean we don't use them of course but only as entry tool after mapping main direction. It is very interesting and it could help you much if you join in.
PVSRA
  • #145,338
  • Nov 16, 2016 5:01am Nov 16, 2016 5:01am
...and I will take that in Yen. Clearing main final target with the test 109.6x, only leaving the extension for the 'just in case' but aggressively trailling after NY opening...

Euro technically we have a new yearly low and the 1.07 handle as expected since Monday was knocked down for today's cut....session not over yet but the core of the flows are gone until NY.

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #145,339
  • Nov 16, 2016 5:03am Nov 16, 2016 5:03am
Quoting glassblower
not getting any work done yet...have a question. there are 10yr, 5yr, 2yr...etc bonds right? Do the length of bond notes correspond in any way to the longevity of perceived risk? ie. if theres perception of short lived risk would shorter bond length bonds move more than longer and vice-versa? now back to work :_)
read back to one of my first posts in the topic, i posted a link that touches on the length vs price. I believe it said the longer out the more sensitive. On phone or Id post it
  • #145,340
  • Nov 16, 2016 5:04am Nov 16, 2016 5:04am
Quoting sisse
...and I will take that in Yen. Clearing main final target with the test 109.6x, only leaving the extension for the 'just in case' but aggressively trailling after NY opening... Euro technically we have a new yearly low and the 1.07 handle as expected since Monday was knocked down for today's cut....session not over yet but the core of the flows are gone until NY. sisse
Good, just in time!

janpec1000 This is what I was talking about few posts back.
PVSRA
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