You misunderstood several of my points, and inferred several things which I don't actually believe. To clarify: Gold has been in a trading range, and one of my views is that a present market state is more likely to persist than not, until some signs of a shift in market state come along (in this case, a sustained breakout out of the range). For example, I would have a bullish bias in a clearly uptrending bull market, I would have a ranging bias in a clearly defined trading range, I would have a bearish bias in a bear market, and I would have no view in a choppy market or one that appears to be at a transition point from one state to another. Since the trading range is now clearly defined (according to my approach), and no breakout has occurred yet, my view is the range is likely to continue. I'm aware that naming a market state is simply a claim about the present and recent past, but since I think that implies something about odds of future price direction, I see no inconsistency in using it to make claims about the future (i.e. trading views and positions). When I said gold 'looks bullish' and 'looks bearish', I just meant that people are tending to get bullish when the market has gone up for a few days, some 'good news' has come out, risk appetite has blipped up etc; and vice versa after a few down days. I didn't mean that it actually IS bullish or bearish price action, just that it looks that way to many people trading it. I agree with you 100% that this price action is neither truly bullish or bearish, so you misunderstood me there. Buying the lows and shorting the highs of a trading range is perfectly reasonable IMO, if you do not see any signs that the range has broken down. This is especially true if you see a breakout attempt fail decisively, when the majority is trying to play the breakout and then gets burned as the price rebounds back into the range - these can be excellent trade setups. Even without that, putting on some options spreads that bet on the range continuing, can be a nice trading strategy. I definitely disagree that playing the eventually breakout is the only way to earn money from a trading range. Saying that the behaviour of market participants will affect future price behaviour is not anthropomorphizing the market. It is simply recognising that the positioning and trading decisions of market players will affect price. For example, if you know most people are heavily long a market, and are operating with trailing stops, then that gives you a prediction edge in those scenarios where the price starts to decline a lot - you know the stop-losses will tend to get triggered en masse once price moves significantly below support. Now, in situations like trends or major news events, other factors will tend to outweigh positioning, stop-placement etc. But in a trading range it's the opposite - the whole reason price is not moving a long way is because there is nothing big enough to cause a trend. Thus, fundamentals are not having a big enough shift to drive prices (up or down 5% is not value-significant or fundamentally significant price movement, it's within the realms of guesswork and margin of error as to fair value). Price action therefore becomes more driven by low conviction short-term traders, many of whom are still looking to catch the next big move. Thus they buy when the market has gone up a bit and 'looks bullish' (to them), and short when the reverse happens, and end up getting stopped out repeatedly and becoming gun shy. You get a succession of micro-squeezes where people get stopped out, the market reverses, they fear missing the next move so they get back in again, rinse & repeat. Based on my past experience, when a market is in a trading range for a while (e.g. 1 month+), yet sentiment seems to be dominated by traders reacting to short-term moves, and/or looking for the next big breakout, then the odds are better than normal that the range will continue. Yes, a large fundamental event can override this - but if this happens, and if the odds favoured an imminent breakout, the price would be at the edge of the range, would create a breakout, and would quickly start moving a long way beyond the range. Until that happens, the evidence is that large fundamental shifts are not what is driving recent price movements. So, it's not that trader positioning and recent price action *causes* the trading range to continue. It's rather that the recent price action is a *signal* that a major fundamentally-driven price trend is not occurring; and the trader flip-flopping and breakout-chasing (on flimsy evidence not supported by market action) is a signal that the current market action is dominated by weak hands and noise, rather than strong hands responding with conviction to decisive fundamental and other market developments. And the way to profit from that is to fade the behaviour of the weak hands - get in when they get squeezed out, and get out when they start to pile in. In other words, I am doing exactly what you recommend - I'm looking at the fundamentals and seeing the market reaction to them; I'm checking the charts and trader sentiment to get an idea for what is driving the market action. It's just that my conclusion is that there is a clear market state which can be profitably traded, and your conclusion is that the market is either unclear, or is clear but can't be traded profitably. Remember, I am not advocating being long or short right here at today's price. I am advocating betting on the trading range continuing, until it gets proven wrong by market developments. I.e. I recommend buying the lows and shorting the highs, and using options spreads to bet on stable prices, both with limited risk, and then exiting and reversing only if and when a genuine breakout occurs. Hope that clears things up.
Tilson gone. We very much hope our tipster is wrong: after all how will CNBC Fast Money viewers know to buy JCP at $27, and $26, and $25, and $24, and all the way down to $19 where it is today. Also who could have possibly foreseen the end of a mega long-biased end of a $345 Million fund which had over $125 million in long derivative equivalents? Oh wait...
Mortgage REITs may be getting a bit frothy. Nearly all of the big ones trading well above book value and have done secondaries in the last month. Investors are desperate for yield, and the MBS prices have been driven up to the point where they seem to be pricing in a massive QE consisting of MBS purchases. I'll be keeping a close eye on NLY.
Surprised it took this long. Seeing Tilson short NFLX all through peak mania stage, blow out his position near the top, and then buy into the decline for more drubbing, was like watching a slow motion train wreck. Tilson is a value investor like Rob Schneider is a serious actor.
By the way, for anyone who cares -- and congrats if you don't! -- I have migrated my verbose observations to this ET thread in the economics forum.
The Tilson bashing is hilarious. As far as I know he had 2 big funds, one that matched the SPX and one the destroyed all the other indices(to the upside). The one that matched probably beat the indices before fees. This means his picks consistently outperform that market So he makes bad picks from time to time but who doesn't?Bottom line is that he can pick stocks, that is the evidence derived from the numbers, everything else is just egoic bs
Why do you do this to yourself? It's like wrestling with a midget. "The numbers" for T2's performance look like all they added was leverage (see attached). This makes sense when you consider T2 was basically a Berkshire clone with some other stuff tacked on. And stock picking is only part of the process anyway - the other big piece is risk management. Maybe he's shutting down his fund / splitting ways with his partner to go pick stocks as an analyst, for some other manager who understands that.
Yeah dude, you analyzed T2 portfolio for 10 years and have all the numbers in terms of beta etc etc. Or maybe you don't and is just talking shit out of your ass as usual