Volatility

Looking ahead September 12th could be pivotal day for two reasons

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One thing we talk about in our Investment Survival Workshops is learning to develop a horizon further out than tomorrow.  I know that sounds obvious but it’s harder to do than you think.  Most people including myself, hesitate for a moment to recall what they did yesterday and most of us wake up and think about what we are going to do that day, not the next day or the following week.  When I moved from Eastern Standard time to Mountain Standard time zone, I dreaded getting up two hours earlier in the predawn to read the papers and analyst … Read more

Are You Aggressive or Conservative? Better Check Your Beta..

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By: Harvey Sax   A lot of that depends on the beta of your portfolio.  But before we get into all of that, let’s go over just what beta is. Stock Beta is a ratio that indicates how a stock fluctuates with relation to the market.  Beta is an indicator of market risk also called volatility.  When you research a stock, look at the beta to get an idea as to how choppy the returns on this stock will be with relation to the market.  If this doesn’t align with your risk tolerance, this stock may not be for you. … Read more

Differentiating Between An Irrational Market Or Strong Bull Market Trend?

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Guest post by: Kirk Differentiating Between An Irrational Market Or Strong Bull Market Trend? These past two weeks have been tough as an options trader. Differentiating between trading an a possibly irrational market or bull market trend is sometimes very difficult to assess. We all know that the stock market can push us to extremes and then, just when we “give up” and “give in” the turn happens. Timing is really everything. Blow-off Top or Pull-Back? Most traders I talk to are in one of two schools of thought right now. Either you think this is the best shorting opportunity for the … Read more

‘s 2011 Hedge Fund Performance

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John Paulson’s 2011 Hedge Fund Performance   Despite a rather disastrous mess of 2011, Paulson has managed to keep redemptions down to just 8%..  An impressive achievement nonetheless, but is it due to belief in the strategy or belief in the brand?  Either way, his performance is a good illustration of how timing can cause even the soundest convictions to run awry.  Don’t forget the importance of a solid hedge when dealing with a timely trade..   The numbers are in for John Paulson’s Paulson & Co. The hedge fund finished 2011 with depressingly low returns reports the New York … Read more

‘s Only Wednesday: Urban Outfitters, WebMD, The White House, Swiss National Bank, and Italy

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Out of the markets and into the midst of  both earnings and elections seasons, volatility seems here to stay.  Here’s a quick recap of the most recent turnovers in the headlines the past few days, gathered from.. well, everywhere.   Clothing retailer Urban Outfitters Inc. said its Chief Executive Glen Senk resigned: The company named Chairman and co-founder Richard Hayne as his replacement.  Shares of the company fell 12 percent after the bell. They closed at $29.41 on Tuesday on the Nasdaq.via Urban Outfitters CEO resigns | Reuters. WebMD Chief Executive resigns: INDIANAPOLIS (AP) — WebMD Health Corp. CEO Wayne T. … Read more

Get Asymmetrical in 2012 – Barrons.com

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Get Asymmetrical in 2012 By STEVEN M. SEARS | MORE ARTICLES BY AUTHOR Learn to look at the stock market through the options market. Options are arguably the most sensitive instruments for divining the future of stocks. The smartest stock investors dominate the options market. When they are afraid a stock may fall, they buy puts. When they think a stock will rise, they buy calls. Implied volatility, which reveals their expectations of the future, shows if they expect the stock move sharply, or not. By dividing an option’s implied volatility by 16 — the square root of the number of trading … Read more

Options Traders See Higher Volatility Ahead – Barrons.com

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Bracing for a Return of Volatility By STEVEN M. SEARS | MORE ARTICLES BY AUTHOR Savvy options traders are taking advantage of the subdued VIX to buy low-cost protection   On Thursday, the stock market sent investors a critical message. If you failed to hear it, you missed information that matters more than the mostly rosy prognostications for the stock market in 2012 from Wall Street banks. The message: Volatile volatility is back from winter vacation, and likely here to stay for all of 2012. Even though stocks surged higher on Tuesday, the first day of the trading year, and inched higher … Read more

Volatility Cuts Hedge Fund Returns – Barrons.com

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Volatility Minces Returns By BEVERLY GOODMAN | MORE ARTICLES BY AUTHOR Why John Paulson—and many other hedge fund managers—did so poorly in 2011. Where have all the stockpickers gone? Even John Paulson has apologized. It’s no secret that 2011 was a tough year. But investors who sought refuge in hedge funds—especially those thought to excel in choppy markets—were sorely disappointed. Not to mention none the richer. As of Nov. 30, the 2,000 hedge funds tracked by Hedge Fund Research are down, on average, 4.5%, trailing the Standard & Poor’s 500 by almost four points. “This is only the third year … Read more

Stock Market’s Sharp Swings Grow More Frequent – NYTimes.com

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Market Swings Are Becoming New Standard By LOUISE STORY and GRAHAM BOWLEY Published: September 11, 2011 The stock market just can’t seem to make up its mind. Enlarge This Image Paul Taggart/Bloomberg News A trader at the New York Stock Exchange last week, where significant swings were seen almost every day. Multimedia Graphic Era of Higher Stock Volatility Related Investors Brace as Europe Crisis Flares Up Again (September 12, 2011) Renewed Worries About Europe Shake Asian Markets (September 13, 2011) Add to Portfolio Barclays PLC Go to your Portfolio » Day after day, stocks swing sharply by hundreds of points. … Read more

LSE Trading Soars Amid Volatility

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High levels of volatility in global stock markets last week, triggered by Standard & Poor’s downgrade of U.S. debt and concerns over the euro zone, led to the third-highest number of daily trades at the London Stock Exchange. There were 1.54 million trades carried out on the LSE on Tuesday, Aug. 9, according to data from the U.K. exchange operator. This amounted to almost three times the average daily trading volume so far this year, which had been around 642,000 trades per day to the end of July. Full article available @: http://online.wsj.com/article/SB10001424053111903639404576514180786717862.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29&utm_content=Google+Reader

Trading Strategy in Volatile Markets

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Be cool and do not let this volatility spoil the long term investment plan If you listen to the financial noise in the main stream media you have heard and read lots of opinions about the state of the US, EU, and Global economy. The evidence suggests GDP growth is slowing, despite government stimulus, and many governments are running out of options given their high debt to GDP levels and record low interest rate policies. But, corporate profits and liquidity are very high, and many companies are beat analyst expectations. So while governments may be struggling, many companies are doing … Read more

A Wild Ride to Profits

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The stock market’s recent wild swings have unsettled many investors, but they have led to record profits for high-frequency traders following months of disappointing returns, industry analysts and money managers said. Some traders interrupted August vacations to return to their computers amid the global panic that triggered steep market selloffs, sharp upward swings and then more selling. Traders don’t know how long the extreme volatility and elevated trading volumes will last—but they don’t want to miss out, said investors and Wall Street trade-execution managers. Full article provided by WSJ @: http://online.wsj.com/article/SB10001424053111904253204576510371408072058.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29&utm_content=Google+Reader

Just Another Manic Monday?

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On Monday, I hooked up for lunch with someone who works at a successful Montreal hedge fund. He complimented me on my blog and then we started talking about alpha talent in Quebec. There are some exceptional hedge fund managers in this province that are being totally ignored by Quebec’s large institutions (for God knows what reason!). 

I would like all the global funds that read my blog to contact me (LKolivakis@gmail.com) and I’ll be glad to share more information on our alpha talent in Quebec. Many managers have worked in London, New York, Chicago and decided to move back to Montreal for personal reasons. I want to support them as much as possible because Montreal’s hedge fund community is small but offers tremendous potential. I want Montreal to become the fastest growing hedge fund center and will do everything I can to support our talented alpha managers.

The person who I had lunch with today introduced me to another person who is in the process of starting a relative value commodity fund. I spoke with this manager late this afternoon and was blown away by how sharp this guy is. Unlike most commodity fund managers who mostly trade front end oil futures, this manager and his small team have years of experience trading all commodities, including energy, metals, corn, sugar, and other soft commodities.

We had a great discussion on the financial crisis. Like me, he was extremely bearish back in 2006. I told him I was researching all these complex CDO-squared and CDO-

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The VIX, Defying Gravity. A Peek Behind the Curtain

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The VIX is pretty much color blind, it doesn’t differentiate between bullish or bearish activity. Simply put* If the market starts buying a bunch of calls (which is usually bullish), the VIX goes up…if the market starts buying a bunch of puts (which is usually a bearish trade), the VIX goes up.  Over the past years it’s usually been a lot of put buying that drove the VIX higher and higher. However now, people are using options much more as a capital enhancement tool and less as a capital preservations tool. Thus people are overwriting positions more than they ever have … Read more